Qualifying Employment in Innovation and Creativity (Personal Tax)
Malta Enterprise has been designated as the authority responsible for determining the eligibility or otherwise of an individual wishing to apply for the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules (the “Rules”). A successful applicant would be able to benefit from a beneficial tax rate of 15%, subject to receiving an annual income of at least €45,000. These Rules were brought into force through Subsidiary Legislation 123.141, specifically under the auspices of the Maltese Income Tax Act.
Essentially, the Rules were introduced to attract individuals working within certain industries which are mainly knowledge based, such as those working within the iGaming, engineering, technology and product development sectors. This initiative addresses the current scarcity of human resources within Malta’s certain aspects of labour market.
In order to qualify under these Rules individuals must be employed and occupying one of the following job descriptions:
- Industrial Research and Experimental Development, to the extent that the applicant holds a post graduate degree in sciences or engineering that is pertinent to the role undertaken by the applicant.
- Product development and product or process innovation, to the extent that the applicant holds post graduate degree in design, creativity, art, product development, sciences, or engineering. Yet again, such post graduate degree shall be pertinent to the undertaken role. Alternatively, the applicant must prove that he has been forming part of a team engaged in a comparable role for a minimum of three (3) years.
- An individual occupying a Senior Management role, subject to certain qualifications. In fact, the individual’s responsibilities should revolve around jobs relating to ingenuity and innovation. Furthermore, an individual occupying a Senior Management role must directly report to the firms’ Board of Directors.
Moreover, if an individual is interested in benefitting from the fiscal incentives provided for by the Rules, the following conditions must be fulfilled:
As aforementioned, the applicant should be able to show that he is receiving a minimum of €45,000 in income per annum;
The contract of employment shall be subject to the laws of Malta;
Must hold the necessary qualifications issued by an education establishment and must confirm that the applicant has successfully completed the post graduate degree/s. The latter shall also be recognised by the Malta Qualification Recognition Information Centre (MQRIC). Alternatively, the applicant must be able to show that he has previously occupied a role akin to that of the eligible office for a minimum of three (3) years;
The applicant should not have previously availed of deductions offered to investment services expatriates (any individual who is an employee of or provides services to an investment services company which holds an investment services license), in relation to relocation costs and other deductions;
For tax implications, the applicant must be able to reveal and affirm that he has received emoluments in relation to income derived from a qualifying contract of employment and all income received from an individual related to his/her employer paying out income from a qualifying contract as chargeable to tax in Malta;
The applicant must be able to prove that the occupation and the tasks performed fall within the definition the job description, as mentioned above;
The applicant shall prove that he receives stable and regular income. This income shall be considered to be enough to sustain himself and his family members, and such applicant shall prove that he is residing in standard accommodation which is akin to accommodation typically occupied by Maltese families;
Valid sickness insurance for himself and his family members. Such insurance should cover all risks which typically cover Maltese nationals;
The applicant shall be in possession of a valid travel document;
The applicant shall not be domiciled in Malta;
If the applicant’s employment commences on the 1st of January 2016, he shall be obliged to present documentation relating to the recruitment procedure. This shall include the provision of documentation showing how the call for employees was promoted; and
An individual shall only be eligible to benefit from the 15% tax rate if the individual does not control more than 25% of the shares within the employment undertaking.
The tax incentives are available to EU, EEA and Third Country Nationals for a maximum period of three (3) consecutive years, and which shall commence from the year preceding the year of assessment in which that person is first liable to pay tax. It is noteworthy to point out that Malta Enterprise and the Commissioner for Inland Revenue may request further information or documentation from prospective applicants in order to ascertain the individual’s right to benefit from the fiscal incentives provided for by these Rules and thus, to apply the Rules accordingly and in line with the Subsidiary Legislation.