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Malta's aviation industry offers an attractive personal tax regime for non-domiciled individuals employed in senior/managerial roles in the sector. The Qualifying Employment in Aviation (Personal Tax) Rules (the “Aviation Scheme”) enable eligible individuals to opt for a flat tax rate of 15% on qualifying employment income, subject to specified criteria.
What is the Aviation Scheme?
The Aviation Scheme was introduced via Legal Notice 177/2016 and is designed to attract qualified aviation professionals to Malta. It covers individuals not domiciled in Malta who are employed under a qualifying contract in an eligible office within the aviation industry. Under the scheme, the individual may opt to pay tax at a flat rate of 15% on income from that employment.
Key Eligibility Criteria
Employment and Role Criteria
Employment must be with a company in the aviation sector licensed or recognised under Maltese aviation/transport law. The contract must qualify as a “qualifying contract of employment” and the role must be an “eligible office”, typically senior/managerial levels in aviation or specialist technical positions (e.g., Aviation Accountable Manager, Aviation Continuing Airworthiness Inspector, Aviation Operations Inspector, Aviation Ground Operations Manager, Aviation Training Manager, Chief Executive Officer, Chief Financial Officer, Chief Commercial Officer, Chief Operations Officer, Chief Risk Officer (including Fraud and Investigations Officer), Chief Technology Officer, Head of Investor Relations, Head of Marketing (including Head of Distribution Channels), Head of Research and Development (including Search Engine Optimisation and Systems Architecture), Senior Analyst (including Structuring Professional)).
The individual must hold the relevant professional qualifications or demonstrate relevant experience for the role.
Individual Criteria
The individual must not be domiciled in Malta, and does not derive employment income subject to tax and received in respect of work carried out in Malta or any period spent outside Malta in connection with such work or duties. The individual has to prove to the satisfaction of the competent authority that they are in possession of professional qualifications, and are in receipt of stable and regular resources which are sufficient to maintain them and the members of their family (without recourse to the social assistance system in Malta).
Additionally, it has to reside in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta, is in possession of a valid travel document, and is in possession of sickness insurance (for themselves and members of their family).
Minimum Income and Tax Rate
The flat tax rate is 15% on the qualifying employment income. The minimum annual emolument (excluding fringe benefits) is €45,000. Income must be in respect of the eligible office and contract; fringe benefits are excluded from the threshold calculation.
Duration of Benefit
Originally, EEA/Swiss nationals could enjoy the 15% rate for 5 consecutive years, and third-country nationals for 4 consecutive years. Amendment in 2020 (Legal Notice 120/2020) equalised the period (5 years for all) and allowed a one-time extension of five years (so max 10 years). Further amendment in 2022 (Legal Notice 104/2022) allows two extensions of five years each (so a total of 15 consecutive years) for those meeting the scheme criteria and maintaining eligibility.
Application Process
The applicant must submit an application to the Authority for Transport in Malta for a formal determination of eligibility under the scheme. Once approved, the 15% rate is applied from the first year of assessment in which the individual is first liable to tax in Malta under the scheme.
Summary
In summary, Malta's Aviation Scheme remains a compelling tax option for senior aviation professionals who are non-domiciled in Malta and moving into eligible roles. With the flat 15% tax rate, a reasonable minimum income threshold, and benefit periods now extended up to 15 years (subject to arrangements), this can form a key part of relocation and compensation planning. But, as always, eligibility is contingent on meeting all criteria (employer licensing, role, income, domicile status, residence, insurance) and staying abreast of any legislative/administrative updates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
