Fringe Benefits (Amendment) Rules, 2017

L.N. 205 of 2017

INCOME TAX ACT

(CAP. 123)

Fringe Benefits (Amendment) Rules, 2017

IN exercise of the powers conferred by articles 4(1)(b) and 96 of

the Income Tax Act, the Minister for Finance has made the following

rules:-

The title of these rules is the Fringe Benefits (Amendment) Citation.

Rules, 2017, and these rules shall be read and construed as one with

the Fringe Benefits Rules, hereinafter referred to as "the principal S.L.123.55

rules".

Rule 2 of the principal rules shall be amended as follows

Amends rule 2

of the principal

rules.

(a) in sub-rule (1) thereof, in the definition "associated

company", immediately after the word "means" there shall be

added the words "a company"; and

(b) in paragraph (b) of sub-rule (2) thereof, immediately

after the words "in that company", wherever they occur, there

shall be added the words "or an associated company".

Immediately after rule 3 of the principal rules there shall Adds new rule

to the principal

be added the following new rule

rules.

" Benefit

Where a benefit is deemed to arise by

arising by

reason of an employment or office, the income

reason of an

represented by the value of that benefit shall be

employment or

office.

deemed to arise in the country where the

services in terms of the relative contract of

employment or office are wholly or principally

performed

Provided that any benefit that is

deemed to arise by reason of a directorship in a

company shall be deemed to arise in the country

where that company is managed and

controlled.".

In rule 8 of the principal rules, the definition "vehicle" Amends rule 8

of the principal

shall be amended as follows

rules.

(a) for the words "including a van and any other

vehicle" there shall be substituted the words "and any vehicle";

and

(b) paragraph (d) thereof shall be re-numbered as

paragraph (e) and immediately after paragraph (c) thereof there

shall be added the following new paragraph

"(d) a van;".

For sub-rule (3) of rule 9 of the principal rules, there shall

be substituted the following

"(3) The provisions of paragraph (c), but not of the other

paragraphs, of sub-rule (2) shall not apply with respect to the

use of a vehicle by an employee who is required to use that

vehicle wholly in the performance of his duties as a messenger

or a driver.".

In rule 10 of the principal rules, the words ",except when it

relates to the use of a van," shall be deleted and, in the marginal note

thereto, the words "excluding a van" shall be deleted.

In sub-rule (2) of rule 14 of the principal rules, for the

words "shall be 20%" there shall be substituted the words "shall be

0%".

For rule 16 of the principal rules there shall be substituted

the following

"16. The private use of a mechanically propelled vehicle

that is constructed or adapted as a means of land transport, and

that is excluded from the definition of "vehicle" in terms of

paragraph (a), (b), (c), (d) or (e) of the said definition in rule 8,

shall be deemed to have no value.".

In paragraph (b) of rule 19, the words "increased by five

times the ground rent payable" shall be deleted.

In sub-rule (1) of rule 20 of the principal rules, for the

words "other than a vehicle as defined in Part B hereof" there shall be

substituted the words "other than a mechanically propelled vehicle

that is constructed or adapted as a means of land transport, and that

falls within the definition of "vehicle" in rule 8 or that is excluded

from that definition in terms of paragraph (a), (b), (c), (d) or (e)

thereof".

In paragraph (c) of rule 23 of the principal rules, for the

words "and the creditor is not a debtor of an associated company"

there shall be substituted the following

"and -

(i) the creditor is not a debtor of an associated

company; or

(ii) the creditor is a bank which is a debtor of an

associated company but the bank’s debt in favour of that

associated company is not for a long term loan and is not

connected with the financing of the loan to the property

owning company;".

For paragraph (a) of sub-rule (1) of rule 24 of the principal Amends rule 24

of the principal

rules, there shall be substituted the following

rules.

"(a) where the property is owned by the provider of the

benefit or by a related person, the said value shall be

(i) in the case of immovable property, 5% of the

higher of the market value and the cost of the property

Provided that where the property is held

under a title of emphyteusis, the said value shall be the

higher of

(A)

5% of the market value; and

(B)

the total of

-

5% of the cost of the property, and

- an amount equivalent to the relative

annual ground rent;

(ii) in the case of movable property, 12% of the

higher of the market value and the cost of the property;".

The proviso to sub-rule (2) of rule 26 of the principal rules Amends rule 26

of the principal

shall be amended as follows

rules.

(a) in paragraph (i) thereof, for the words "the central

intervention rate of the Central Bank of Malta" there shall be

substituted the words "the rate on the main refinancing

operations as applied by the Central Bank of Malta"; and

(b) in paragraph (ii) thereof, for the words "8.5% per

annum" there shall be substituted the words "6.5% per annum".

In the proviso to rule 27 of the principal rules, for the Amends rule 27

words "the in-house benefit reduction.", there shall be substituted the of

rules.

words "the in-house benefit reduction:" and immediately thereafter

there shall be added the following new proviso

"Provided also that the value of a loan by a company to a

shareholder who holds more than 25% of the ordinary share

capital and voting rights in that company shall be zero.".

For rule 33 of the principal rules there shall be substituted

the following

"33. (1) Subject to sub-rules (2), (3) and (4), the value of

a benefit referred to in rule 32 is the excess, if any, of the value

of the property or service over the consideration paid by the

beneficiary.

(2) When the benefit referred to in rule 32 consists in

the transfer of a motor vehicle and the beneficiary had, before

the transfer, made private use of that motor vehicle as provided

in rule 9, the value determined in accordance with sub-rule (1)

shall be reduced by the total value of the fringe benefit that was

deemed in accordance with Part B to have been provided to that

beneficiary as a result of the private use of that motor vehicle

provided that the value so reduced shall not be less than zero.

(3) When a benefit provided by the employer consists in

the transfer of in-house property or the provision of an in-house

service, the value determined in accordance with sub-rule (1)

shall be reduced by the in-house benefit reduction.

(4) When in-house property or an in-house service is

provided to an employee on a working day and consumed or

availed of by the employee on the employer’s business premises

the benefit shall have no value.".

In sub-rule (2) of rule 34 of the principal rules, for the

words "to the deeming provisions of rule 4(a)" there shall be

substituted the words "to the provisions of rule 4".

For rule 35 of the principal rules there shall be substituted

the following

" Applicability

(1)

The provisions of the Act

of the Act to

shall apply without reference to these rules for

transfers of

the purpose of determining any tax chargeable in

property.

the hands of the provider of a benefit upon a

transfer to which rule 32 applies.

(2) When property is transferred by way

of a benefit to which rule 32 applies and the

beneficiary subsequently transfers that property,

and where the cost of acquisition of that property

is relevant in terms of the Act for the purpose of

determining the tax chargeable in the hands of

the beneficiary upon the said subsequent

transfer, the said cost shall be deemed to be an

amount equivalent to the consideration actually

paid by the beneficiary for the acquisition of the

property increased by the value of the said

benefit.".

18. Rule 36 of the principal rules shall be amended as follows: Amends rule 36

of the principal

rules.

(a)

sub-rule (2) thereof shall be substituted by the

following

"(2) When shares in a company are transferred to

an employee of that company or of an associated company

under a share award scheme, the transfer shall be deemed

to be a benefit provided by the employer company to that

employee by reason of his employment."; and

(b) immediately after sub-rule (2)

thereof,

as

substituted, there shall be added the following

"(3) A benefit referred to in sub-rule (1) or (2)

shall be deemed to be provided on each date that shares are

issued or transferred to the beneficiary in terms of the

share option scheme or share award scheme in question.".

19. For rule 37 of the principal rules there shall be substituted Substitutes rule

37 of the

the following

principal rules.

"37. (1) The value of a benefit referred to in rule 36 shall

be the excess, if any, of the price which the shares in question

would fetch if sold in the open market on the date when the

benefit is provided over the price paid or payable by the

beneficiary for those shares.

(2) The income represented by the value of the benefit

shall constitute chargeable income separate and distinct from

any other chargeable income of the beneficiary for the relative

year of assessment and shall be subject to tax at the rate of

fifteen cents for every euro.".

20. Sub-rule (2) of rule 39 of the principal rules shall be

amended as follows

(a) in paragraph (c) thereof, immediately after the

words "for a business purpose" there shall be added the words ",

relocation costs and costs of journeys between work shifts";

(b) for paragraph (j) thereof there shall be substituted

the following

"(j) the cost of providing insurance against

expenses for medical treatment or an insurance policy

under which a benefit is payable only in the event of the

death or injury of the insured while in service under a

scheme available generally to employees

Provided that this paragraph shall also apply

where the beneficiary is an officer of a company as long as

the said scheme is available generally to the employees of

that company;

Provided further that the amount of the cost

that is not to be deemed to constitute a benefit provided to

any beneficiary by reason of an employment or office in

terms of this paragraph shall not exceed three times the

cost of providing insurance as aforesaid to any other

beneficiary under that scheme;";

(c)

in paragraph (k) thereof, immediately after the

words "telephone set" there shall be added the words ", mobile

phone or a facsimile machine"; and

(d) paragraph (s) thereof shall be re-numbered as

paragraph (t) and immediately after paragraph (r) thereof there

shall be added the following new paragraph

"(s) the following health related costs

(i) the cost of a medical examination, test or

screening which an employee is required to

undergo in order to take a new employment or to

take up a new post with the same employer or to

gain entry to a superannuation fund;

(ii) the cost of medical care, medicine and

other medical treatment provided as a prevention

against injury or illness related to an employment

as part of a programme available generally to

employees exposed to the same work-related

health risks;

(iii) the cost of individual or group

counselling relating to safe work practices, health,

fitness, stress management or drug or alcohol

abuse that is given as part of a programme

available generally to employees exposed to the

same work-related health risks;".

21. Sub-rule (1) of rule 40 of the principal rules shall be Amends rule 40

of the principal

amended as follows

rules.

(a) in paragraph (c) thereof, for the words "shall be

disregarded." there shall be substituted the words “shall be

disregarded;”; and

(b) immediately after paragraph (c) thereof, there shall

be added the following new paragraphs

"(d) "relocation costs" means costs incurred by or

reimbursded to an employee in order to settle in a country,

other than his country of residence, for the purpose of

taking up a new employment or posting that lasts or is

expected to last for at least twelve months, or to resettle in

his country of residence upon the termination of that

employment or posting, including the cost of the journey

of the employee and of his spouse and dependent children

and the cost for the transportation of furniture and personal

effects but excluding accommodation costs;

(e) "costs of journeys between work shifts"

means the cost of the journey of an employee to his

country of residence immediately upon the end of a work

period and the cost of the journey of that employee from

his country of residence to the country where he is required

to report in order to resume his duties for the next work

period; and for this purpose "a work period" means a

recurrent period that normally lasts for not more than four

weeks, during which the employee is required to report

daily for work, and that is followed by a period of rest that

is normally at least one third of the work period: provided

that the Commissioner may, in any particular case,

recognise any other period as a work period for the

purpose of this paragraph.".

22. In paragraph (a) of rule 41 of the principal rules, for the Amends rule 41

words "journey by sea" there shall be substituted the words "journey of

rules.

by sea or by air".

B

€0.72