Final Settlement System (FSS) (Amendment) Rules 2020

The FSS rules were recently amended by virtue of the publication of Legal Notice 246 of 2020.  The new rules, which are effective as from 1st January 2020 complement the rules which were also issued earlier on this year with respect to the 15% reduced rate of tax on qualifying overtime income.  Please refer to the […]

Written By Stephen Balzan

On June 22, 2020
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The FSS rules were recently amended by virtue of the publication of Legal Notice 246 of 2020.  The new rules, which are effective as from 1st January 2020 complement the rules which were also issued earlier on this year with respect to the 15% reduced rate of tax on qualifying overtime income.  Please refer to the news item on qualifying overtime income on our website here.

The following are the main amendments to the FSS rules:

  • Employers are to deduct tax at the rate of 15%  on all emoluments that represent qualifying overtime income
  • Such qualifying overtime income shall not form part of the employee’s chargeable income and need not be declared in any self-assessment income tax return form
  • The tax deducted on such qualifying overtime income shall be final and shall not be available as a credit, set off or refund against the tax liability of the employee
  • The employee may at any time give instructions to his employer not to apply the 15% tax rate on his qualifying overtime income
  • An employee may if he so elects, declare his qualifying overtime income on which tax has been deducted at source at 15% in his personal income tax return
  • Forms FS5, FS3 and FS7 will be amended accordingly, which will now include the gross emoluments paid to an employee that represents qualifying overtime income and the total tax deducted thereon in terms of these rules

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].