By virtue of Article 56 (17) of the Income Tax Act, employment income derived in terms of an employment agreement which stipulates that :
- the performance of duties is to be carried out outside Malta and
- the duration of the said employment agreement is not less than 12 months (or one which lasts less than 12 months)
shall be deemed to constitute the first part of individual’s total income for that year and shall be charged to tax at the rate of 15%.
For the individual to benefit from this reduced rate of tax, he or she must not during the relevant year be present in Malta for an aggregate period of more than 30 days
In calculating the 30-day period, the days on which the employee is in Malta on vacation or sick leave is to be disregarded.
The Commissioner for Revenue has recently clarified that presence in Malta in the following scenarios will be treated as if the employee was in Malta on vacation leave and will therefore also be disregarded:
- an employee works abroad on a shift basis and stays in Malta in between shifts
- an employee works abroad on a time-on / time-off basis and stays in Malta during the time-off periods
- an employee works regularly abroad and stays in Malta during weekends and public holidays.