By means of LN 120 of 2020, the Government of Malta has made a number of amendments to the rules by virtue of which individuals deriving income from a qualifying contract of employment shall have the option to benefit from a reduced rate of tax, subject to a number of conditions being satisfied. Such individuals holding an eligible office have the option to be taxed at the rate of 15% on their employment income in terms of article 56(21) of the Income Tax Act.
The reduced rate of tax is applicable for five consecutive years and the five year period is now available to all individuals, irrespective of their nationality. Before the publication of the Legal Notice, the option for third country nationals was only available for four consecutive years and to EEA and Swiss nationals for five consecutive years.
In terms of the said rules, EEA and Swiss nationals shall be eligible upon application for a one time extension of five years to their qualifying period, subject to the continue adherence of the applicable conditions. Third country nationals will now also have the possibility for the one time extension of a further five year period. Before the publication of this LN, the one time extension applicable to third country nationals was of four years.
The eligibility under these rules shall not 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 under the provisions of the Income Tax Act.
By virtue of this Legal Notice, third country nationals will benefit from the same rules in the same manner as EEA and Swiss nationals.