Highly Qualified Persons

  • By:Corrieri Cilia Legal
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Highly Qualified Persons Rules

By means of Legal Notice 106 of 2011, as amended, the Maltese government introduced the Highly Qualified Persons Rules (HQP). The HQP intends to attract highly qualified individuals who are able to occupy an “eligible office” within a licensed entity in, the financial services, gaming and aviation industries. The rules entered into force with retrospective effect from the 1st of January 2010 and apply to income brought forward to charge for the year of assessment 2011.

Scheme Conditions

In order to benefit from the rules an individual will have to satisfy the following conditions;

  1. Employment IncomeThe individual must have income derived from a qualifying contract of employment. Income must be derived from an eligible office by virtue of a contract of employment with a Maltese company. Such income excluding fringe benefits, must at least amount to at least €80,100 and €81,205 for basis year 2013 and 2014 respectively. This amount will be adjusted annually in line with the Retail Price Index.
  2. Qualifying Contract of EmploymentIn order to be considered to have entered a qualifying contract of employment the individual must;
    1. Be deriving income from employment in Malta;
    2. Has an actual employment contract that is subject to the laws of Malta;
    3. Prove that the contract outlines genuine and effective work in Malta;
    4. Prove that he/she performs activities of an eligible office;
    5. Prove that he/she is in possession of professional qualification qualifications and at least 5 years professional experience;
    6. Prove that he/she has not benefitted from deductions available to investment services expatriates;
    7. Fully disclose emoluments received in respect of the income arising from a qualifying contract of employment and related income as chargeable to tax in Malta.
  3. Further Conditions
    1. The individual must be in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
    2. He/she resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
    3. He/she is in possession of a valid travel document;
    4. He/she is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family.
    5. With the exception of an “eligible office” in the Aviation industry he/she must not be domiciled in Malta.

Tax Treatment

Once an individual’s application is approved he/she is thereafter granted a special tax status in accordance with the HQP rules (hereinafter the ‘HQP Beneficiary’). The HQP Beneficiary will be subject to a rate of 15 cents on every euro thereof (hereinafter the ‘Special Rate’) on individual income arising from the qualifying contract. The flat rate will be imposed on income from the qualifying contract up to a capping of €5,000,000.  Income above €5,000,000 from such qualifying contract is exempt income. It should be noted that the Special Rates apply for a maximum of five consecutive years in the case of EEA or Swiss nationals and for a maximum of four consecutive years in the case of third country nationals.

Ongoing Obligations

The HQP Beneficiary’s special tax status will be terminated if the HQP Beneficiary if;

  1. The income is paid by an employer or a related person to that employer who receives any benefits under the business incentive laws; or
  2. No longer holding an “eligible office; or
  3. A claim is made for any relief, deduction, reduction, or set-off of any kind except for any income tax deducted at source;

The special tax status will also be terminated if the HQP Beneficiary is a third country national and;

  1. Physically stays in Malta for more than 1,460 days; or
  2. Directly or indirectly acquires rights or a direct or indirect beneficial interest over immovable property situated in Malta; or,

Definition of “eligible office”

  • Actuarial Professional
  • Aviation Flight Operations Manager
  • Chief Commercial Officer
  • Chief Insurance Technical Officer
  • Chief Risk Officer (including Fraud and Investigations Officer)
  • Hear of Distribution Channels
  • Head of Research and Development; (including Search Engine Optimisation and Systems Architecture)
  • Senior Trader/Trader
  • Aviation Ground Operations Manager
  • Chief Executive Officer
  • Chief Investment Officer
  • Chief Technology Officer
  • Head of Investor Relations
  • Portfolio Manager
  • Odds Compiler Specialist
  • Aviation Continuing Airworthiness Manager
  • Aviation Training Manager
  • Chief Financial Officer
  • Chief Operations Officer (including Aviation Accountable Manager)
  • Chief Underwriting Officer
  • Head of Marketing (including Head of Distribution Channels)
  • Senior Analyst (including Structuring Professional)

 

Qualifying Employment in Innovation and Creativity Rules

By means of Legal Notice 106 of 2013 the Maltese government introduced the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules (hereinafter the ‘Rules’). The Rules intend to attract qualified individuals directly engaged in the development of innovative and creative digital products who are able to occupy an “eligible office”. The rules entered into force on the 1st of January 2013 and apply to income brought forward to charge for the year of assessment 2013.

Scheme Conditions

In order to benefit from the rules an individual will have to satisfy the following conditions;

  1. Employment IncomeThe individual must have income derived from a qualifying contract of employment. Income must be derived from an eligible office by virtue of a contract of employment with a Maltese company. Such income net of fringe benefits, must at least amount to at least €45,000 for basis year 2013. This amount will be adjusted annually in line with the Retail Price Index.
  2. Qualifying Contract of EmploymentIn order to be considered to have entered a qualifying contract of employment the individual must;
    1. Be deriving income from employment in Malta;
    2. Has an actual employment contract that is subject to the laws of Malta;
    3. Prove that the contract outlines genuine and effective work in Malta;
    4. Prove that he/she performs activities of an eligible office;
    5. Prove that he/she is in possession of professional qualification qualifications or professional experience;
    6. Fully disclose emoluments received in respect of the income arising from a qualifying contract of employment and related income as chargeable to tax in Malta.
  3. Further Conditions
    1. The individual must be in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
    2. He/she resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
    3. He/she is in possession of a valid travel document;
    4. He/she is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family.
    5. He/she must not be domiciled in Malta.

Tax Treatment

An individual granted a special tax status in accordance with the Rules (hereinafter the ‘Beneficiary’) will be subject to a rate of 15 cents on every euro thereof (hereinafter the ‘Special Rate’) on individual income arising from the qualifying contract. The flat rate will be imposed on income from the qualifying contract up to a capping of €5,000,000.  Income above €5,000,000 from such qualifying contract is exempt income. It should be noted that the Special Rates apply for a maximum of four consecutive years in the case of EEA or Swiss nationals and for a maximum of three consecutive years in the case of third country nationals

Ongoing Obligations

The Beneficiary’s special tax status will be terminated if the HQP Beneficiary if;

  1. The income is paid by an employer or a related person to that employer who receives any benefits under the business incentive laws; or
  2. No longer holding an “eligible office; or
  3. A claim is made for any relief, deduction, reduction, or set-off of any kind except for any income tax deducted at source;

The special tax status will also be terminated if the Beneficiary is a third country national and;

  1. Physically stays in Malta for more than 1,460 days; or
  2. Directly or indirectly acquires rights or a direct or indirect beneficial interest over immovable property situated in Malta; or,

Definition of “eligible office”

  • Chief Executive Officer
  • Head of Writing
  • Software Engineering Director
  • Head of Art Design and Visualization
  • Commercial Director (Digital Licensing)
  • Game Designer
  • Producer
  • Chief Technical Officer
  • Lead In-World Writer
  • Game Developer
  • Art Director
  • Head of Game Design
  • Audio Director
  • Head of Marketing
  • Chief Creative Officer
  • Lead Game Programmer
  • Director of Online Community
  • Digital Artist
  • Game Director
  • Video Director

 

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