HIGHLY QUALIFIED PERSONS REGULATIONS
Following an expansion in its financial, gaming and aviation services, Malta launched the Highly Qualified Persons scheme by means of Legal Notice 106 of 2011, so as to cater for additional highly qualified workers.
Under this scheme any EU national may apply to this special tax rate provided that he satisfies the following conditions:
Eligible Employment and Office
Applicants must be in possession of a qualifying contract of employment. This means that their employment activity should satisfy the requirements of an eligible office.
An applicant must be employed with a company licensed and/or recognized by the Malta Financial Services Authority, the Malta Gaming Authority and the Authority for Transport in Malta. Companies registered by the latter competent authority must hold an air operators’ certificate issued in terms of Article 4 of the Civil Aviation (Air Operators’ Certificate) Act or an aerodrome licence issued in terms of Article 71 of the Air Navigation Order.
The employment or office in question must consist of any of the following:
- Chief Executive Officer;
- Chief Risk Officer (including Fraud and Investigations Officer);
- Chief Financial Officer;
- Chief Operations Officer (including Aviation Accountable Manager);
- Chief Technology Officer;
- Chief Commercial Officer;
- Portofolio Manager;
- Chief Investment Officer;
- Senior Trader/Trader;
- Senior Analyst (including Structuring Professional);
- Actuarial Professional;
- Chief Underwriting Officer;
- Chief Insurance Technical Officer;
- Odd Compiler Specialist;
- Head of Research and Development (including Search Engine Optimisation and Systems Architecture);
- Aviation Continuing Airworthiness Manager;
- Aviation Flight Operations Manager;
- Aviation Training Manager;
- Aviation Ground Operations Manger;
- Head of Marketing (including Head of Distribution Channels); and
- Head of Investor Relations.
The applicant must prove that he has sufficient means to maintain himself and his dependants without recourse to the social assistance system of Malta. The qualifying contract of the applicant should secure a minimum income of €75,000, subject to tax under Article 4(1)(b) of the Income Tax Act. This sum consists of emoluments from an eligible office but excludes the annual value of any fringe benefits.
A person is no longer eligible under this Scheme, should the person paying him, be it his employer, or a person related to the employer, already be in receipt of benefit/s or other arrangements in terms of the business incentive laws.
The applicant must also hold adequate health insurance covering the EU territory in respect of all risks normally covered for Maltese nationals, for himself and the members of this family. The individual must satisfy a “fit and proper test” in order to be granted a permit under this Programme.
An applicant eligible under this scheme cannot be domiciled in Malta. S/he must be in possession of a valid travel document and of the necessary professional qualifications. The applicant must also reside in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta.
An applicant deriving income from a qualifying contract as mentioned above, may opt to benefit from the special rates provided for under Article 56(21) of the Income Tax Act. This entitles applicants to a tax rate of 15%. The Highly Qualified Persons scheme provides that tax at such a reduced rate is applicable for a minimum amount of income of €75,000, in respect of that year of assessment. Should the income from a qualifying contract of employment exceed the sum of €5,000,000, no further tax would be charged on income in excess of such sum.
The rate of 15% shall apply without possibility to claim any relief, deduction, reduction, credit or set-off of any kind, subject to allowable deductions in terms of Article 23 of the Income Tax Management Act.
These tax benefits are also applicable to EEA (including EU) and Swiss nationals for a consecutive period of 5 years, commencing in the year in which the applicant is first liable to tax in Malta. These would then be eligible for a one-time extension of 5 years upon application, irrespective of whether they have already availed themselves of the benefit provided under these rules or otherwise. Conversely, non-EU citizens benefit under the rules for a maximum consecutive period of 4 years.
Eligibility under these rules shall in no case exceed a consecutive period of ten years, commencing from the year preceding the first year of assessment in which that person is first liable to tax.
Submission of Application
Mifsud & Mifsud Advocates have an extensive experience in this field and may offer assistance to all those interested in the Highly Qualified Persons Scheme.