Repatriation of Maltese professionals to work in Malta

A new incentive scheme was introduced by means of Legal Notice 110 of 2013 in which Maltese professionals, established in a field of excellence who return back to Malta as ordinary residents may opt to have their employment income in respect of work exercised in Malta, chargeable to tax at a flat rate of 15% in lieu of progressive rates of tax which can be as high as 35%.

The employee in question must prove that he has been ordinarily resident in Malta for at least 20 years, but has not been ordinarily resident in Malta for the 10 consecutive years prior to his return to Malta. The employee must have a qualifying contract of employment in which he is employed in a field of excellence in the areas of manufacturing and R&D, in such sectors as may be defined by Guidelines still to be issued by Malta Enterprise (ME).

The employee must receive under the qualifying contract of employment an employment income of a minimum value of Eur75,000 per annum exclusive of any fringe benefits. Prior approval in writing is required by ME.

A beneficiary under the scheme must meet all the following conditions:

  • He derives employment income in respect of work or duties carried out in Malta, or in respect of any period spent outside Malta in connection with such work or duties, or on leave during the carrying out of such work or duties.
  • He proves to the satisfaction of ME that he is in possession of the requisite educational and / or professional qualifications relevant to the profession or sector of field of excellence.
  • He is protected as an employee under Maltese law for the purpose of exercising genuine and effective work for or under the direction of someone else and has the requisite adequate and specific competence as approved by ME.
  • He declares for Maltese income tax purposes. all his income received under the qualifying contract of employment and all income received from a person related to his employer.

Such income will be deemed to be the individual’s first part of his income and will be subject to a flat rate of tax of 15% without the possibility to claim any deductions, relief, set-offs or credits. Any other income received by the beneficiary, will be subject to tax at the rate of 35%.

The scheme is effective as from 1 January 2013. It applies for a consecutive period of up to five years and commences from the year in which the person was first liable to tax after returning to reside in Malta. The option may not be exercised in respect of any year of assessment preceding year of assessment 2013.

For more details please contact

Stephen Balzan – Tax Partner

Elaine Buttigieg – Tax Consultant