Malta

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate 0-35%
Income below € 9,100 will not be taxed.
This amount increased to € 10,500 in the case of persons using the parents rates and € 12,700 in the case of persons opting for the married rates.
Tax period Calender Year
Tax residency / Domicile according to domestic law When applied to an individual “Residency”  is defined as an individual who resides in Malta except for such temporary absences as to the Commissioner may seem reasonable and not inconsistent with the claim of such individual to be resident in Malta. From a practical perspective, a person who spends more than 183 days in Malta will be considered as residing herein  in view of the fact that the term “temporary residents” is defined as Persons who are in Malta only for temporary purposeand without any intent to establish residence in Malta and who would have not resided in Malta for more than 6 months.
The concept of domicile is not defined within our tax laws. The concept of domicile is based on UK Law. It is residence in a country with the intention of residing permanently in that country. Three types of Domicile are said to exist:
• Domicile of Origin (where an individual is born or the domicile of the father [mother in case of illegitimate children])
• Domicile of Choice (if an individual proofs that he has a stronger connection with a country other than that of his domicile of origin)
• Domicile by Operation of the law (this becomes natural by way of law…for example the wife gets the domicile of the husband)
Tax registration Yes, one would be required to complete the Expatriate Registration Form, stating one’s date of arrival in Malta and date of commencement of employment.
Employment income definition Gains  or  profits  from  any  employment  or  office including the value of any benefit provided by reason of any employment or office.
Examples of tax exemption Certain fringe benefits are tax exempt: Expenses incurred in the interest of the employer, Business travel, Relocation costs,Travelling between shifts, Training courses,  Subscriptions, Insurance for business purposes, Organised transport, certain Gifts, certain Insurance policies and health related costs, Telephones and computers,  Recreational or child minding facilities, Uniforms and safety clothing, Long service awards subject to some cappings and Suggestion scheme awards subject to certain conditions.
Specific expatriate concession In Malta there are number of Special Tax Regimes, with the aim of attracting Highly Qualified individuals working within the following industries: financial services, gaming services,  aviation services and very recently, Assisted Reproductive Technology sector.
A flat tax rate of 15% applies on such income provided a number of conditions are met (such as minimum income has to be €84,016).
Income of board members Directors’ fees paid by a company which is resigtered in Malta, is taxable in Malta. Tax is deducted through the The Final Settlement System ( a tax deduction methodology designed to produce accurate tax deductions from emoluments). This methodology ensures that the correct amount of tax is deducted from gross emoluments as they are received thus reducing the incidence of large refunds and tax bills arising from end of year tax assessments.
Tax returns Annually, to be submitted by not later than 30 June of the year following that in which the income is arising.
Tax payments Employment income is usually paid through the Final Settlement System.
TAX TREATIES
Employment income / income from board members Art 15/16 Model OECD Tax treaties
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts For employed persons, the social security contributions are shares by the employer and the employee. Persons born up to 31st December 1961, the contributions are as follows
10% of the income – if the weekly income is between €  172.52 and € 349.36 ; otherwise the weekly rate is capped at € 34.94.
For Persons born from 1st January 1962 onwards​, the rate is 10% of the income, if the weekly income is between €  172.52 and € 455.78; otherwise the weekly rate is capped at €45.58.
The above mentioned rates are to be payable by both the employer and the employee.
If the case of self-employed individuals, the rates are as follows. For Persons born up to 31st December 1961,  if the annual income is between € 10,195 and € 18,167 , the rate is 15%. Otherwise, the rate is capped at € 52.40 per week.
For Persons born from 1st January 1962 onwards​,  if the annual income is between € 10,195 and € 23,701, the rate is 15%. Otherwise, the rate is capped at € 68.37 per week.
An expat can continue to pay Social Security usual residence or eventual residence  provided he has the A1 Form in hand.
IMMIGRATION
Work permit
Visa
Residency permits / registration certificate
Driving license
STOCK OPTION PLAN An employer will  be  treated  as  providing  a  taxable  fringe  benefit  if  and  every  time  that  the  employee  exercises  the  option  and  acquires  shares  in  the  company.  The  value  of  the  benefit  is  the  excess,  if  any,  of  the  market  value  of  the  shares  at  the  time  when  the  shares  are  transferred  over  the  price  paid  for  those  shares  by  the  employee. The rate of  tax  on  this  value  is  charged  at  the  flat  rate  of  15%.
The  employee  may  subsequently  transfer  the  shares  at  a  profit.  For  the  purpose  of  determining  the  taxable  profit  in  such  an  event  the  cost  of  the  shares  is  not  be  the  price  actually  paid  by  the  employee  but  the  market  value  (if  higher)  established  for  the  purpose  of  determining  the  fringe  benefit.
ARTICLE 15 OF THE OECD MODEL
Most of Malta’s double taxation agreements are based on the OECD Model Convention in that employment should be taxable in the state of source, however, the taxing rights are reverted back to the state of residency if the following conditions are satified.
183 days The employee does spend more than 183 days in the state of Source.
Notion of employer The remuneration is paid by an employer who is not resident in that of Source.
Existence of a permanent establishment The employer does not have a PE in the state of source.
Elaine Marie Debono
Tax Supervisor
Send Email
Direct line:35622696305
Address: 32, Sovereign Building, Zaghfran Road, Attard ATD 9012, Malta
www.mazars.com.mt