Rules for Highly Qualified Persons extended to individuals working in the aviation industry

By virtue of Legal Notice 306 of 2012, the application of the Highly Qualified Persons Rules has now been extended from the financial services and gaming industries to also include the aviation industry. Certain senior positions within the aviation industry are now also considered as eligible offices, including the posts of Chief Executive Officer, Chief Financial officer, Chief Operations Officer and Chef Commercial Officer Aviation Accountable Manager, Aviation Continuing Airworthiness Inspector, Aviation Flight Operations Inspector and Aviation Training Manager.

Thus holders of such offices with qualifying aviation undertakings will be eligible for the 15% reduced rate of tax on their employment income. Benefits are available for a period of five consecutive years for EEA and Swiss nationals and for a period of four consecutive years for third country nationals.

In order to qualify for the reduced rate of tax, the individual must be employed with an undertaking holding an air operators’ certificate issued by Transport Malta. Individuals who were employed with a company holding an air operators’ certificate prior to 1st January 2012 cannot benefit from the reduced rate of tax.

Minimum annual emoluments from such eligible offices (excluding fringe benefits) is of Eur75,000. The individual must have the necessary professional qualifications and cannot be domiciled in Malta. Income amounting to more than Eur5,000,000 p.a. and derived from a qualifying contract of employment will not be subject to tax in Malta on the amount exceeding Eur5,000,000.

The amendments to the rules as outlined above have been introduced with retrospective application, coming into force on the 1 January, 2012.

For more information please contact:

Stephen Balzan – Tax Partner