The expansion of the financial services and gaming industry since joining the EU and the flourishing of aviation services in recent years has prompted the Maltese government to recognize the increased need for highly qualified professionals in the target above sectors.

The objective of the Highly Qualified Person Rules is the creation of a particular incentive to attract highly qualified persons to occupy "eligible office" with companies licensed and/or recognized by the Malta Financial Services Authority, companies licensed by the Lotteries and Gaming Authority, and companies holding an Air Operators' Certificate.

An eligible office comprises employment in one of the following positions:

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

ELIGIBILITY CRITERIA

Employment Income

An individual's income from a qualifying contract of employment in an eligible office with a company licensed and/or recognized by the Malta Financial Services Authority, The Lotteries and Gaming Authority, or an aviation undertaking licensed by the Aviation Directorate at Transport Malta is subject to tax at a flat rate of 15%. The income should amount to at least €75,000 adjusted annually in line with the Retail Price Index. The 15% flat rate is imposed up to a maximum payment of €5,000,000 (five million euro); the excess is exempt from tax.

The 15% tax rate applies for a consecutive period of five years for EEA (that is, EU countries including Norway, Iceland, and Liechtenstein) and Swiss nationals and for a consecutive period of four years for TCNs. Individuals who already have a qualifying contract of employment in an "eligible office" two years before the entry into force of the scheme may benefit from the 15% tax rate for the remaining years of the scheme. This "grandfathering" solely applies to eligible offices in the financial services and gaming sectors.

As the case may be, the four or five-year period commences from the year when the individual concerned first becomes taxable in Malta.

Qualifying Contract of Employment

An individual may benefit from the 15% advantageous Malta tax rate if he/she satisfies the following cumulative employment conditions:

• derives employment income subject to income tax in Malta;
• has an employment contract subject to the laws of Malta and proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services), the Lotteries and Gaming Authority (in the case of Gaming Services), and to Transport Malta (in the case of Aviation Services) that the contract is drawn up for exercising genuine and practical work in Malta;
• proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services), or the Lotteries and Gaming Authority (in the case of Gaming Services) or Transport Malta (in the case of Aviation Services) that he has professional qualifications and has at least five years professional experience;
• has not benefitted from deductions available to investment services expatriates concerning relocation costs and other beliefs;
• fully discloses for tax purposes and declares payments received in respect of income from a qualifying contract of employment and all income received from a person related to his/her employer paying out payment from a qualifying contract as chargeable to tax in Malta;
• proves to the satisfaction of the Malta Financial Services Authority (in the case of Financial Services) or the Lotteries and Gaming Authority (in the case of Gaming Services) or Transport Malta (in the case of Aviation Services) that he performs activities of an eligible office; and
• Proves that:
  • he/she receives stable and regular resources which are sufficient to maintain himself/herself and the members of his family without recourse to the social assistance system in Malta;
  • he/she resides in accommodation regarded as usual for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
  • he/she owns a valid travel document in terms of Maltese Immigration Law;
  • he/she is in control of sickness insurance regarding all risks typically covered for Maltese nationals for himself and his family members.

Provisions in respect of split contracts have been introduced. An arrangement in which a beneficiary receives a payment from a person related to his employer and such amount is not declared for tax purposes in Malta is considered an artificial arrangement.