By virtue of LN 140 of 2018, Malta has introduced new tax rules which provide tax incentives to employees employed in a qualified employment in maritime activities and in the servicing of offshore oil and gas industry.
The tax incentives consist of a flat rate of tax of 15% on the employees’ employment income, provided the said employees are in receipt of an annual employment income of at least Eur65,000 (excluding fringe benefits). Any income in excess of Eur5,000,000 will not be subject to any tax. Eligibility for the reduced rate of tax is applicable for 5 years for EU nationals and 4 years for TCNs. Such individuals may apply for a one time extension of 5 and 4 years respectively.
For the employee to benefit from the reduced rate of tax, he /she must be in receipt of employment income from an eligible office which is an employment defined as key for the operations of the particular undertaking and whose function is confirmed by the competent authority, based on an administrative assessment procedure and which is held with any of the following:
- any undertaking holding a Document of Compliance (DOC) issued in terms of the International Safety Management (ISM) Code or a Seafarer Recruitment and Placement Services Licence issued in terms of the Maritime Labour Convention, 2006; or
- any undertaking engaging the particular individual for work on board any ship, excluding ships operating on regular services as well as ships whose use or operation requires certification in terms of the Commercial Vessels Regulations and which are berthed or anchored within the territorial waters of Malta or any port in Malta for at least a period of one month over a calendar year; or
- any undertaking which carries on mainly a trade or business consisting in the Servicing of the offshore oil and gas and ancillary services industry.
The list eligible employment and offices can be found in the Schedule to rules.