Reduced rate of tax on overseas employment income

By means of ACT VII of 2022, Article 56(17) of the Income Tax Act has been amended with effect from the calendar year 2022. Article 56(17) of the ITA provides that an individual may opt to be taxed at the reduced rate of 15% on employment income payable under a contract of employment requiring the […]

Written By Stephen Balzan

On April 19, 2022
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By means of ACT VII of 2022, Article 56(17) of the Income Tax Act has been amended with effect from the calendar year 2022.

Article 56(17) of the ITA provides that an individual may opt to be taxed at the reduced rate of 15% on employment income payable under a contract of employment requiring the performance of work or of duties mainly outside Malta.  Such income shall be deemed to constitute the first part of the individual’s total income.

Additional restrictions have been introduced to the above-mentioned as follows:

  1. The employment contract must be for a period of at least 12 month or last at least 12 month; and
  2. The employee must not be present in Malta for a period or periods that, in total, amount to more than 30 days, excluding any periods that the employee is in Malta on vacation, due to sickness or any period preceding the commencement or termination of the contract

The second restriction mentioned above has finally brought to an end the various interpretations given by the Commissioner for Revenue and tax practitioners alike of the term ‘mainly outside Malta’.

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 +356 21378672 or send us an email on [email protected].