By means of Legal Notice 250 of 2025, the Ministry responsible for Finance has published the above-mentioned rules which shall be deemed to have come into force on the 1st January 2025 and shall apply with effect from year of assessment 2026. A summary of the rules can be found below.
Reduced rate of tax on Employment income
Employment income received by a beneficiary under these rules from a qualifying contract of employment shall be subject to a reduced rate of tax of 15% at the option of the beneficiary. The annual employment income must be of at least Eur65,000 (excluding the annual value of any fringe benefits). The said minimum income shall be adjusted by an increase of Eur10,000 every 5 years from the year subsequent to the year in which these rules come into force.
The reduced rate of tax of 15% shall apply on an amount which does not exceed Eur7,000,000. Employment income in excess of Eur7,000,000 will be subject to the applicable rates of tax had the option not been exercised.
Beneficiaries under the rules
A beneficiary is an individual who satisfies all of the following conditions:
(a) An individual who derives employment income under a qualifying contract of employment
(b) His employment is one which is his first employment in Malta in an eligible office engaged on or after 1st January 2025
(c) He proves that he is in possession of the required professional qualifications
(d) He is in receipt of stable and regular resources
(e) He is in possession of a valid travel document
(f) He is in possession of private medical insurance
(g) He is not domiciled in Malta
Eligible Offices
The following are the eligible offices:
(a) Head of the Back Office and or CEO, General Manager, Country Head, Managing Director or equivalent
(b) Chief and or Head Risk Officer
(c) Chief and or Head Compliance and anti-Money Laundering Officer
(d) Chief and or Head Risk Officer, including Fraud and Investigations Officer
(e) Portfolio manager
(f) Chief and Head Investment Officer
(g) Senior Trader
(h) Senior Structuring Professional
Eligible Offices must be held with the following companies or other undertakings:
- In the context of Single Family Offices
- Certain fund managers which are exempt from the requirement for an investment services licence
- Certain registered trustees
- Licence holders (including Notified PIFs) which invest the private wealth of investors without raising external capital
2. In the context of Multi Family Offices, licence holders which invest the private wealth of investors without raising external capital
3. Undertakings carrying on Back Office services and Treasury Management operations to the undertakings referred to in 1. and 2. above and confirmed in writing by the MFSA
Application
An application to benefit from these rules may be made by not later than 31st December 2024. The processing of the application will take 90 days. The reduced rate of tax shall be applicable for 5 years and the beneficiary shall be eligible to two further extensions of 5 years. Benefits under these rules shall not apply in relation to employment income earned after 31st December 2040.
Disclaimer
The above does not constitute tax or legal advice and is up to date on the date it was published. Please ensure that you take appropriate advice from tax or legal professionals before making any decisions based on the above.
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