Highly Qualified Persons

In 2011 Malta introduced specific tax rules intended to attract top expertise and skill in the financial services and remote gaming sectors, enabling operators in these sectors to attract and recruit the highest qualified, experienced and senior professionals available globally.

Whilst Malta is a premium location to live and work in (regularly voted one of the best and safest places in the world), such highly qualified, experienced and senior personnel may also be entitled to benefit from a favourable Malta tax rate of 15% chargeable on employment income derived from his/her Malta employer. The Malta tax rate is reduced to nil on qualifying employment income exceeding €5,000,000 per annum.

Senior employees engaged by licensed operators in the financial services and remote gaming sectors may benefit from a flat rate of 15% on employment income derived in respect of work or duties carried out in Malta (or in respect of any period spent outside Malta in connection with such work or duties). The senior positions specified in the Rules are the following:

• Chief Executive Officer;
• Chief Risk Officer (including Fraud and Investigations Office);
• Chief Financial Officer;
• Chief Operations Officer;
• Chief Technology Officer;
• Chief Commercial Officer;
• Portfolio Manager;
• Chief Investment Officer;
• Senior Trader/Trader;
• Senior Analyst (including Structuring Professional);
• Actuarial Professional;
• Chief Underwriting Officer;
• Chief Insurance Technical Officer;
• Odds Compiler Specialist
• Head of Research and Development (including Search Engine Optimisation and Systems Architecture);
• Head of Marketing (including Head of Distribution Channels);
• Head of Investor Relations.

In order to benefit from this favourable tax treatment, the employee must:

1. be employed to fill a senior position (or to perform equivalent activities) and be in possession of professional qualifications or acceptable professional experience;
2. be entitled to remuneration of at least €75,000 (exclusive of the annual value of any fringe benefits) in terms of a contract of employment;
3. be in receipt of stable and regular resources which are sufficient to maintain him/herself and his/her family members without recourse to domestic social assistance;
4. reside in accommodation regarded as normal for a comparable family in Malta;
5. not be domiciled in Malta;
6. be in possession of a valid travel document;
7. be in possession of adequate health insurance;
8. not benefit under any alternative incentives available in Malta;
9. be protected as an employee under applicable Maltese laws.

The Rules provide that no Malta tax would be chargeable in respect of qualifying employment income exceeding €5,000,000.

An individual eligible to opt to pay tax on employment income at the reduced rate of 15% (in terms of the Rules) would be required to apply to the Malta Financial Services Authority (MFSA) or the Lotteries and Gaming Authority (LGA), as may be applicable, for a formal determination confirming eligibility to the favourable tax rate. The eligible individual would then be required to submit a prescribed form (endorsed by the LGA/MFSA) to the local tax authorities together with his/her tax return.

The Rules do not apply in respect of individuals who were employed under a contract of employment requiring the performance of duties in Malta for a period exceeding 2 years preceding the 1^st January, 2011.

Furthermore, certain additional restrictions apply in respect of EEA and Swiss nationals and citizens of non-EU Member States. Accordingly, the tax benefits under the Rules are available to EEA and Swiss nationals for a maximum consecutive period of 5 years and to non-EU citizens for a maximum consecutive period of 4 years (commencing in the year in which the taxpayer is first liable to tax in Malta). The 5 and 4 year maximum periods would be further reduced in respect of EEA and Swiss nationals and citizens of non-EU Member States who were employed under a contract of employment requiring the performance of duties in Malta up to 2 years prior to the 1^st January, 2011.

No maximum period or additional restrictions are prescribed for the application of the Rules in favour of nationals of EU Member States.

For further information about how Zammit & Associates – Advocates can help you with your personal tax requirements kindly contact us on tax [at] zammit-law [dot] com