Amendment to The Highly Qualified Persons Rules

Legal Notice 192 of 2017 of the Income Tax Act (Chapter 123 of the Laws of Malta) has recently amended the Highly Qualified Person Rules (Subsidiary Legislation 123.126 of the Laws of Malta). The said rules were first introduced in 2011 when Malta established specific tax rules which mostly aimed at attracting top expertise and skills in the financial services, remote gaming and aviation departments, allowing operators in these specific sectors to entice and recruit the highest qualified, experienced and senior professionals available internationally.

Apart from the fact that Malta is an exceptional country to live in and also to work in, highly qualified, experienced and senior employees may also be entitled to gain from a favourable Malta tax rate of 15% chargeable on employment income derived from his/her Malta employer. The aforementioned tax rate of 15% is granted to EU, EEA and Swiss nationals for a period of five (5) years. The latter period shall start to run from the year when the individual is first liable to tax in Malta. The eligible individuals (EU, EEA and Swiss nationals) who apply for the said tax benefit shall be allowed a one-time extension for a further five years, once the application and required documents are submitted.

Apart from EU, EEA and Swiss nationals – the qualifying period of assessment for Third Country Nationals (“TCNs”) on the other hand, is only that of four (4) years, i.e. 1,460 days, and this again starts to run from the year when the individual is first liable to pay tax in Malta.

Following the amendments by, Legal Notice 192 of 2017, TCNs are given the option to benefit from a one-time extension, allowing them a further four (4) years in respect of the qualifying period. Thus, a TCN may stay in Malta for more than 1,460 days in respect of such extension and would not be required to leave after the first four (4) year period.

Therefore, through Legal Notice 192 of 2017 TCNs are placed on a level playing field with EU, EEA and Swiss nationals as they are now both able to apply for an extension to continue benefitting from the above-mentioned  tax rules.

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