Malta's Commissioner For Tax And Customs Issued Rules And Guidelines On Personal Tax Benefits For Senior Employees Of Family Offices

Malta has introduced the Senior Employees of Family Offices, Back Offices and Treasury Management Operations Tax Rules ("Rules"), establishing a framework designed to attract and retain senior and specialised professionals within Malta's wealth management and financial services sectors.

These Rules should be read together with the Guidelines ("Guidelines") issued by the Malta Tax and Customs Administration ("MTCA"), which define eligible persons, applicable conditions, and the procedure for benefiting from the 15% reduced income tax rate under Article 56(21) of the Income Tax Act ("Act").

The Malta Financial Services Authority ("MFSA") acts as the competent authority for determinations under the Rules, while the MTCA administers enforcement and tax matters.

When compared to the similar incentives under the Highly Qualified Persons Rules, this scheme provides for lower income thresholds and a higher income cap.

Sectors and Roles Covered

The Rules apply to the following roles:

1. Head of the Back Office
2. Chief Executive Officer
3. General Manager
4. Country Head
5. Managing Director or equivalent designation
6. Chief and Head of Risk Officer
7. Chief and Head of Compliant and Anti-Money Laundering Officer
8. Chief and, or Head Risk Officer, including Fraud and Investigations Officer
9. Portfolio Manager
10. Chief and, or Head Investment Officer
11. Senior Trader
12. Senior Structuring Professional

These eligible offices must be held with undertakings specified in Part II of the Schedule to the Guidelines. These include Single Family Offices and Multi Family Offices that invest private wealth without raising external capital, certain fund managers and registered trustees in the family office context, and undertakings carrying on Back Office or Treasury Management operations to those family office undertakings. Back Office and Treasury Management undertakings must be confirmed in writing by the MFSA for the purposes of the Rules.

However, the Guidelines do not simply adopt a title-based approach; they also set out the expected functions and responsibilities of each eligible role in significant detail. This ensures that the fiscal incentive is not just available to those with the job title specified above, but is reserved for those individuals who truly perform senior, specialised and decision-making functions within the sectors abovementioned.

Key Dates

• First applicable year: basis year 2025, year of assessment 2026. The option may not be exercised for any year of assessment preceding 2026.
• Application window: applications may be made between 1 January 2025 and 31 December 2034.
• Acceptance grace period: no application shall be accepted after 31 December 2035. The Rules seem to suggest that the grace period should be calculated with the maximum timeline of 90 days for the acceptance of the application (i.e. it is highly unlikely that the application will be accepted if it is submitted, for instance, a week before 31 December 2035 – the 90 day maximum deadline does not extend the grace period by which the applications may be accepted).
• Scheme end: no benefits apply in relation to income earned after 31 December 2040. Thus, the beneficiaries applying closer to the end of the scheme are not eligible for extension as the Rules stand right now. This may however change, if the Rules will be extended in the future.

Fiscal Incentive Overview

A qualifying individual may elect for employment income under Article 4(1)(b) of the Act to be taxed at a flat rate of fifteen per cent (15%). Qualifying income consists of emoluments under a qualifying contract of employment and excludes the annual value of any fringe benefits. Emoluments may relate to duties carried out in Malta and to any period spent outside Malta in relation to those duties, or to leave during the carrying out of those duties.

The benefits apply in relation to qualifying employment income earned during a period of five years commencing with the year for which a formal determination is issued, provided the option has been exercised. Two further extensions of five years each are available, subject to continued adherence to the Rules and the Act. No benefits apply in relation to income earned after 31 December 2040.

The annual minimum is sixty-five thousand euro (€65,000). The minimum shall be increased by ten-thousand-euro (€10,000) every five (5) years, with effect from the year subsequent to the year in which the Rules come into force. The adjustment applies to both new applications and renewals, and amounts are to be adjusted proportionately where a determination is issued during part of a calendar year or where beneficiary status ceases during a year. The 15% rate applies to emoluments not exceeding seven million euro (€7,000,000). Any emoluments in excess constitute remaining income which is to be taxed at the rate or rates that would have applied had the option not been exercised.

Beneficiaries opting for this regime are not entitled to any relief, deduction, reduction, credit or set‑off of any kind, save for deductions of tax in accordance with Article 23 of the Income Tax Management Act.

Personal and Professional Requirements

An individual is a beneficiary only if all of the conditions in Rule 4 are satisfied. These include:

1. First employment in Malta in an eligible office under a contract of employment requiring the performance of duties in Malta, provided that no income referred to in Article 4(1)(a) or 4(1)(b) of the Act was derived before 1 January 2025.
2. Protection as an employee under Maltese law for the purpose of exercising genuine and effective work, payment for such work, and possession of adequate and specific competence proven to the satisfaction of the MFSA.
3. Professional qualifications proven to the satisfaction of the MFSA. These may consist of education qualifications or, by way of derogation when provided for by national law, at least five years of professional experience of a level comparable to education qualifications and relevant to the profession or sector specified in the work contract or binding job offer.
4. No prior benefit under Article 6 of the Act.
5. Full disclosure for tax purposes and declaration of emoluments from the qualifying contract, and all income received from a person related to the employer in respect of activities substantively derived from the employment covered by the qualifying contract, as chargeable to tax in Malta.
6. Performance of activities of an eligible office.
7. Proof of stable and regular resources sufficient to maintain self and any family in Malta without recourse to the social assistance system; residence in accommodation regarded as normal in Malta for a comparable family and which satisfies the general health and safety standards in force in Malta; possession of a valid travel document; private medical insurance covering all risks normally covered for Maltese nationals for self and family; and not being domiciled in Malta.
8. Any other conditions imposed by the MFSA, including conditions relating to training personnel in the relevant field of expertise.

Application Process & Renewal Conditions

Applications are to be submitted to the MFSA between 1 January 2025 and 31 December 2034. No application shall be accepted by the MFSA after 31 December 2035.

The MFSA will issue a formal determination of eligibility or a refusal within a period of ninety (90) days from receipt of the application. Where further information is requested, the 90‑day period runs from the date of receipt of the requested information. Failure to comply without valid reason may result in refusal.

Application contents and enclosures should follow the Annex in the Guidelines. These include the contract of purchase of immovable property or lease contract; a copy of a utility bill, not of mobile telephone, or a bank statement not older than six months; a copy of private medical insurance; employer details and PE number; FS4; copy of passport or identity card and residence card; and, for third‑country nationals, proof of authorisation to work in Malta or evidence that an employment licence is not required.

A formal determination is signed by the Chief Executive Officer of the MFSA. Subsequent to this, the option under Article 56(21) is exercised by a declaration signed by the beneficiary and endorsed by the MFSA, in the form and manner required by the MTCA. The declaration specifies the years of assessment to which the option relates. The option may not be exercised for any year of assessment preceding 2026, and it is not validly exercised unless the income to which it applies is fully and correctly declared in the tax return filed by the return date.

Where the beneficiary wishes to renew the applicability of the fiscal incentive for a further five (5) year period, a renewal application must be filed in the year before the end of the relevant 5-year period, after the third month of that year and not later than the end of the ninth (9^th) month. This fiscal incentive is applicable only to income earned before 31 December 2040.

Anti-Abuse Provision

Where any person, in order to obtain benefits under the Rules, makes use of artificial arrangements, the MTCA shall, by order in writing, determine the amount of tax payable in such manner and amount as may be necessary to nullify benefits obtained.

Artificial arrangements include:

• where a beneficiary receives any benefit or payment, in whatever form, from a person related to the employer and such benefit or payment is not declared for tax purposes in Malta or is not liable to tax in Malta; and
• arrangements of collusion between employer and employee to ensure that a contract which in substance does not fall within the scope of the Rules and Article 56(21) of the Act is given a form enabling it to qualify.

The MTCA and the MFSA may require further information and documents to ascertain the right to exercise the option and to ensure proper application of the Rules. If an individual fails, without valid reason, to comply with requests, the option will not apply, and assessments will be raised at ordinary rates.

Lacunae and Questions Currently Unanswered

1. Interaction with tax treaties – Rule 8 forecloses reliefs and credits save for Article 23 of the Income Tax Management Act deductions. Where duties are performed abroad, clarification is desirable on the availability of foreign tax credits under the option. Presumably, the prohibition against deductions would also not apply to other sources of income not subject to the framework of the Rules.
2. Meaning of "first employment in Malta" – the proviso ties eligibility to first employment in an eligible office with no prior Article 4(1)(a) (trade, business, profession or vocation) or (b) (employment or office) income before 1 January 2025. Specific guidance on internships, short engagements or consultancy would assist to ensure whether this is an absolute disqualifier or whether certain prior types of income and engagements would be helpful.
3. Portability of the benefit when roles or employers change – the Rules do not state whether beneficiaries may change employer or role among eligible offices without losing status, provided thresholds and conditions remain satisfied. Guidance on continuity and any tolerance for gaps in employment would be valuable.

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.