Malta's Commissioner for Revenue published, on 19 June, new guidelines under Article 6 of the Income Tax Act on tax benefits for "investment services and insurance expatriates". The objective is to attract highly skilled expatriates to work in Malta in these specific sectors.
The government said the investment services and insurance sectors had both expanded rapidly in Malta since it joined the EU in 2004 and were showing a significant need for highly qualified workers.
An 'Investment Services Expatriate' is defined as any individual who is an employee of, or provides services to, a company that is:
- An investment services company holding an investment services licence issued under Article 6 of the Investment Services Act; or
- A company that is recognised by the relevant competent
authority for the purposes of Article 9A of Investment Services
Act, and whose activities solely comprise of the provision of the
- Investment advice to collective investment schemes as defined in the Investment Services Act.
An Insurance Expatriate is defined as any individual who is an employee of, or provides services to, a company that is:
- Authorised under Article 7 of the Insurance Business Act
- An insurance manager as defined in Article 2 of the Insurance Distribution Act
- Carrying on the business of insurance broking under article 12 of the Insurance Distribution Act.
To qualify, an Investment Services or an Insurance Expatriate must satisfy the above conditions and must further not be ordinarily resident or domiciled in Malta, or not have been resident in Malta for a minimum period of three years immediately preceding the year in which the employment or service provision in Malta commences.
Qualifying Investment Services or Insurance Expatriates will be eligible for exemption from tax on the following personal expenses paid by the employing investments services company or insurance company:
- Removal costs in respect of relocation to or from Malta
- Accommodation expenses incurred in Malta
- Travel costs in respect of visits to or from Malta by the expatriate and his immediate family
- Provision of a car in Malta
- A subvention of not more than €600 per calendar month
- Medical expenses and medical insurance
- School fees of respective children.
Such payments incurred by the employer on behalf of an employee are normally taxed in the employee's hands as fringe benefits. The exemption from tax is available to the expatriate for a period of ten years commencing with the first year in which the expatriate is liable to taxation in Malta.
Qualifying Investment Services or Insurance Expatriates will also be treated as not resident in Malta for the purposes of Article 12 (1)(c) of the Income Tax Act, such that the following income will be exempt from tax:
- Interest, discount, premium or royalties.
- Gains or profits from the transfer of, or on a transfer of any rights over, any units in a collective investment scheme, as defined in Article 2 of the Investment Services Act.
- Any units relating to linked long term business of insurance.
- Any interest of a partnership which is not a property partnership.
- Any shares or securities in a company which is not a property company.
These benefits will continue to apply for the duration of the individual's employment in Malta as an Investment Services or Insurance Expatriate.
Qualifying Investment Services or Insurance Expatriates will not also be able to benefit from the provisions of Malta's Highly Qualified Persons Rules. Registration under both the Highly Qualified Persons Rules and the provisions for Expatriates are mutually exclusive.
Originally published 21 July 2023.
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