Legal Notice 282 of 2019 has amended the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules which were originally promulgated in 2013.
Under the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules (the “Rules”), which have come into force specifically under the auspices of the Maltese Income Tax Act, expatriates holding an eligible office under a qualifying contract of employment directly engaged in carrying out of duties or management of research, development, design, analytical or innovation activities, may opt to benefit from a reduced flat rate of tax of 15% on their employment income derived in respect of work or duties carried out in Malta. Malta Enterprise have issued specific guidelines on what is considered to be an eligible office.
The legal notice has also amended the minimum threshold of gross annual salary for one to be eligible under these Rules. Previously, in accordance to the Rules issued in 2013, the threshold was a gross annual salary of forty-five thousand Euro (€45,000). This has now increased to an annual gross salary of at least fifty-two thousand Euro (€52,000) as of year of assessment 2020.
The duration of the qualifying period of applicability of these Rules once an assessment has been made and an individual is confirmed as a beneficiary to these Rules has also been revised. On inception of these Rules, the qualifying period was for a duration of not more than three (3) consecutive years commencing from the year preceding the first year of assessment in which the beneficiary is first liable to tax. Legal Notice 282 of 2019 has now amended the qualifying period to a consecutive period of up to four (4) years, and by application, the benefit would be able to be extended to a qualifying period not exceeding five (5) consecutive years, subject to approval by Malta Enterprise.
Malta Enterprise have now also adopted a monitoring system once an individual becomes a beneficiary of these Rules. On an annual basis, the beneficiary will be requested to provide Malta Enterprise updated documentation, as may be required, to ensure that a beneficiary still maintains the minimum requirements adopted by the Rules.
Further significant changes have been made to the Rules, first of which is the fact that the Rules will now provide the possibility for a beneficiary under the Rules to change his employment, and should such change be subject to continued adherence to the Rules, that is, the beneficiary enters into a new contract of employment which is also considered to be an eligible office, the beneficiary shall continue to benefit from these Rules subject to the period between the termination of the initial eligible office contract of employment and the commencement of the other is not more than thirty (30) days.
Another noteworthy change relates to the right for a beneficiary to acquire immovable property situated in Malta. Prior to the issuance of the legal notice, a beneficiary had the option to either lease or purchase immovable property in Malta. Through the legal notice, rights acquired under these Rules shall be withdrawn if a beneficiary directly or indirectly acquires immovable property. Thus beneficiaries must opt to lease immovable property in Malta whilst under the auspices of these Rules, however, individuals may later opt to purchase immovable property once the qualifying period for their respective years of assessment is over.
Lastly, the legal notice advises that determinations of applications, by Malta Enterprise, under these Rules will be for a period until the 31st of December 2025.
About the Author
This article was authored by Dr Christina Borg Debono. Christina read Law at the University of Malta and was conferred a Bachelor of Laws with European Studies in 2011 and a Diploma of Notary Public in 2012. She obtained her Doctor of Laws in 2014 after having presented her thesis entitled “Should Criminal Law Stop at the Touchline? A Comparative Analysis of how Criminal Law is applied in the Sports Field.” During her previous experience as a student trainee, Christina was mainly exposed to the legal areas of civil and criminal litigation, contract drafting and legal matters with regard to sport.
Since joining CSB Legal, Christina has distinguished herself as an immigration, yachting and intellectual property specialist, with an eye for detail and sound knowledge of the Law and practice.
Christina has been a member of the Chamber of Advocates since 2005 and is also a member of the Investment Migration Council.
Areas of Practice: Company Law, Immigration, Yachting, Intellectual Property and Employment Law.