HIGHLY QUALIFIED PERSONS RULES

SUBSIDIARY LEGISLATION 123.126

HIGHLY QUALIFIED PERSONS RULES

1st January, 2010 *

LEGAL NOTICE 106 of 2011, as amended by Legal Notices 192 and 428

of 2011, 306 of 2012, 152 of 2013, 16 of 2014, 225 of 2015, 7 of 2017, 192

of 2017, 141 of 2018, 209 of 2019 and 29 of 2021 and Act XL of 2023.

The title of these rules is the Highly Qualified Persons Rules.

(Rules 2 and 13)

Eligible employments and offices

(1) Employments or offices with companies licensed and/or

recognised by the competent authority or with undertakings holding

an air operators’ certificate issued by the competent authority,

consisting in the following employments or offices

(a)

Chief Executive Officer, Chief Risk Officer (including

Fraud and Investigations Officer), Chief Financial Officer,

Chief Operations Officer (including Aviation Accountable

Manager), Chief Technology Officer, Chief Commercial

Officer,

(b)

Portfolio Manager, Chief Investment Officer, Senior

Trader/Trader, Senior Analyst (including Structuring

Professional), Actuarial Professional, Chief Underwriting

Officer, Chief Insurance Technical Officer, Odds Compiler

Specialist, Head of Research and Development (including

Search Engine Optimisation and Systems Architecture),

Aviation Continuing Airworthiness Manager, Aviation Flight

Operations Manager, Aviation Training Manager, and

Aviation Ground Operations Manager,

(c)

Head of Marketing (including Head of Distribution

Channels), Head of Investor Relations.

(2) Employments with undertakings holding an aerodrome

licence issued by the competent authority, consisting in employment as

Chief Executive Officer.

(3) Employment in the Assisted Reproductive Technology sector

consisting in employment as

(a) Embryologist;

(b) Responsible Person;

(c) Lead Quality Manager.

(1)

In these rules, unless the context otherwise requires

"the Act" means the Income Tax Act;

"artificial arrangement" shall include an arrangement in terms of

which a beneficiary receives any benefit or payment, in whatever

form, from a person who is related to his employer and such

beneficiary does not declare for tax purposes such benefit or

payment in Malta or is not liable to tax on such income in Malta;

"Commissioner" means the Commissioner for Revenue;

"competent authority" means respectively

(a) the body referred to in article 12(1) of the Financial

Institutions Act, in respect of any employment or

office with any company licensed and, or recognised

by the said body; and

(b) the body referred to in article 9 of the Lotteries and

Other Games Act † , in respect of any employment or

office with any company licensed and, or recognised

by the said body; and

(c) the Authority for Transport in Malta established in terms

of article 5 of the Authority for Transport in Malta Act, in

respect of any employment or office with any

undertaking holding an air operators’ certificate issued in

terms of article 35 of the Air Navigation Act, or an

aerodrome license issued in terms of article 75 of the Air

Navigation Act; and

(d) Office of the Chief Medical Officer to Government;

"eligible off ice" is an employment or office listed in the

Schedule;

"professional qualifications" means qualifications attested by

evidence of education qualifications or, by way of derogation,

when provided for by national law, attested by at least five years of

professional experience of a level comparable to education

qualifications and which is relevant in the profession or sector

specified in the work contract or binding job offer;

"education qualification" means any diploma, certificate or other

*See rule 1(2) of these Rules, as originally promulgated, and as amended by Legal

Notice 192 of 2011.

†Repealed by Act XVI of 2019.

evidence of formal qualifi cations issued by an educational

establishment attesting the successful completion of a post-

secondary education programme, namely a set of courses provided

b y an ed ucati onal est abli shment recognised as a education

institution by the State in which it is situated. An education

qualification shall be taken into account, on condition that the

studies needed to acquire it lasted at least three years;

"professional experience" means the actual and lawful pursuit of

the profession concerned;

"public interest" includes the interests of public safety, the

protection of public order, national security, territorial integrity,

public health or morals;

"rights acquired under this law" means the right to elect to pay

tax at the reduced rate of tax contemplated in article 56(21) of the

Act and these rules;

"these rules" shall include the provisions of article 56(21) of the

Act and the rules contained in these Rules;

"third-country national" means any person who is not a citizen of

the European Union within the meaning of Article 20 of the Treaty

on the European Union and the Treaty on the Functioning of the

European Union.

(2)

A person shall be deemed to be related to a body of persons

if

(a) that person and the body of persons are, directly or

indirectly, controlled or beneficially owned to the

extent of more than twenty-five percent (25%) by the

same persons; or

(b) that person owns, directly or indirectly, more than

twenty-five percent (25%) of the ordinary share capital

or voting rights of the body of persons.

(1) Income from a qualifying contract of employment

qualifies under these rules when it is received by a beneficiary and

consists in income subject to tax under article 4(1)(b) of the Act

(exclusive of the annual value of any fringe benefits) of a minimum

of €75,000 and consists of emoluments from an eligible office.

(2) A qualifying contract of employment shall be considered to

be such if the employment activity contemplated in the contract of

employment is an eligible office.

A beneficiary is an individual who meets all of the

following conditions

(a) he is an individual who derives income subject to tax

under article 4(1)(b) of the Act, being emoluments

payable under a qualifying contract of employment,

and received 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;

(b) he is protected as an employee under Maltese law,

irrespective of the legal relationship, for the purpose

of exercising genuine and effective work for, or under

the direction of, someone else, is paid, and has the

required adequate and specific competence, as proven

to the satisfaction of the competent authority;

(c) he proves to the satisfaction of the competent authority

that he is in possession of professional qualifications;

(d) he is not a person who has benefitted under article 6

of the Act;

(e) he fully discloses for tax purposes and declares

emoluments received in respect of income from a

qualifying contract of employment and all income

received from a person related to his employer paying

out income from a qualifying contract as chargeable to

tax in Malta;

(f)

he proves to the satisfaction of the competent authority

that he performs activities of an eligible office; and

(g) he proves to the satisfaction of the competent authority

that

(i)

he is 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;

(ii) he 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;

(iii) he is in possession of a valid travel document;

(iv) he is in possession of sickness insurance in

respect of all risks normally covered for Maltese

nationals for himself and the members of his

family; and

(v) he is not domiciled in Malta.

(1) When an individual exercises the option available

under article 56(21) of the Act in respect of a year of assessment,

the minimum amount of income which shall be chargeable to tax at

the reduced rate provided for in that sub-article in respect of that

year of assessment shall be deemed to be €75,000

Provided that the minimum amount of income of €75,000

shall be adjusted annually in line with the Retail Price Index as

published in the Gazette by the National Statistics Office

Provided further that should income from a qualifying

contract of employment exceed the sum of €5,000,000, no further

tax would be charged on income from a qualifying contract of

employment in excess of €5,000,000

Provided also that the rate of 15% shall apply without

possibility to claim any relief, deduction, reduction, credit or set-

off of any kind. Notwithstanding the generality of foregoing, a

beneficiary shall be allowed deductions of tax under article 23 of

the Income Tax Management Act.

(2) The option available under article 56(21) of the Act may

not be exercised in respect of any year of assessment preceding the

year of assessment 2011.

(1) Subject to the provisions of rule (7), the option

available under article 56(21) of the Act shall, with respect to EEA

and Swiss nationals, apply for a consecutive period of five years

commencing from the year preceding the first year of assessment in

which that person is first liable to tax under the provisions of the

Act.

(2) Subject to the provisions of rule (7), the option available

under article 56(21) of the Act shall, with respect to third-country

nationals, apply for a consecutive period of four years commencing

from the year preceding the first year of assessment in which that

person is first liable to tax under the provisions of the Act.

(3) Rights acquired under this law shall be deemed to have

been withdrawn with immediate effect if the grant of benefits under

these rules and the beneficiary’s stay in Malta are not in the public

interest.

(4) Rights acquired under this law shall be deemed to have

been withdrawn with retrospective effect if a beneficiary is a third-

country national and he directly or indirectly acquires real rights

over immovable property situate in Malta or holds a beneficial

interest directly or indirectly consisting in, inter alia, of real rights

over immovable property situated in Malta.

(5) Notwithstanding anything to the contrary contained in these

rules, but subject to rule 14, any person who falls under the

provisions of sub-rule (1) or (2), irrespective of whether he has

opted to benefit from the provisions of these rules or otherwise,

upon submitting an application, shall be eligible to two further

extensions of four or five years, as the case may be, for his

qualifying period, subject to the continued adherence to the other

provisions of these rules

Provided that, this extension shall not be available to any

person who was resident in Malta prior to the 1 st January 2008, and

that the maximum qualifying period shall not exceed a consecutive

period of twelve or fifteen years, as the case may be, in the case of a

person who is not domiciled in Malta, commencing from the year

preceding the first year of assessment in which that person is first

liable to tax under the provisions of the Act.

(1) The option available under article 56(21) of the Act

may not be exercised by any person who was employed for a period

exceeding two years preceding the 1st January, 2010, under a

contract of employment requiring the performance of his duties in

Malta

Provided that in the case of persons employed with

undertakings holding an air operators’ certificate issued by the

competent authority, the option available under article 56(21) of the

Act shall not be exercised by any person who was employed prior to

the 1 st January, 2012.

(2) A person referred to in rule 6(1), other than a person

employed with an undertaking holding an air operators’ certificate

issued by the competent authority, who is an EEA or Swiss national

who up to two years before the entry into force of these rules was

employed under a contract of employment requiring the

performance of his duties in Malta, shall benefit from these rules

for not more than three consecutive years commencing from the

year of assessment 2011. In the event, that such an EEA or Swiss

national would have been employed as aforesaid for up to one year,

such person shall benefit under these rules for not more than four

consecutive years commencing from the year of assessment 2011.

(3) A person referred to in rule 6(2), other than a person

employed with an undertaking holding an air operators’ certificate

issued by the competent authority, who is a third-country national

who up to two years before the entry into force of these rules was

employed under a contract of employment requiring the

performance of his duties in Malta, shall benefit under these rules

for not more than two consecutive years commencing from the year

of assessment 2011. In the event that such a third-country national

would have been employed as aforesaid for up to one year, such

person shall benefit under these rules for not more than three

consecutive years commencing from the year of assessment 2011.

(1) Where any person, in order to obtain benefits under

these rules, makes use of artificial arrangements, the Commissioner

shall, by order in writing, determine the liability to tax of the said

person, for any year of assessment, in such manner and in such

amount as may be necessary, in the circumstances of the case to

nullify benefits obtained under these rules. A person who disagrees

with an order served upon him as aforesaid shall have the same

rights to object to that order and to appeal from a decision of the

Commissioner refusing that objection as if that order were an

assessment issued under the Income Tax Management Act and the

relevant provisions of that Act relating to objections and appeals

shall apply mutatis mutandis

Provided that if any person claims a benefit under these

rules when that person was not entitled to the said benefit, such

person shall be liable to pay a penalty equal to the amount of

benefit claimed and if the benefit was in fact paid to him that

person shall in addition be liable to repay the benefit received and

to additional tax of seven per cent per month or part thereof

commencing from the month in which the said benefit was paid to

him up to the month in which he repaid the benefit and any

payment made by the said person in respect of the tax repayable by

him in terms of this proviso shall first be applied against any

additional tax due thereon

Provided further that liability to pay additional tax in terms

of the preceding proviso shall not be applicable when the person

referred to therein proves that he has acted in good faith.

(2) For the purposes of this rule, ‘benefit’ shall mean the total

tax saved by an individual who elects to apply these rules.

(1) For the purpose of ascertaining an individual’s right to

exercise the option referred to in these rules and ensuring the

proper application of these rules, the Commissioner and the

competent authority may require that individual to produce, within

the time indicated by the Commissioner and the competent

authority in that request, such further information and documents

as the Commissioner and the competent authority may consider

necessary, including certifications and declarations of the employer

of that individual.

(2) If an individual fails, without any valid reason, to comply

with any request relating to his income made to him by the

Commissioner and the competent authority in accordance with this

rule, the Commissioner and the competent authority may order that

article 56(21) of the Act shall not apply to that income. In such a

case, the Commissioner may make an assessment and the tax on

that income shall be calculated at the rates provided for in the Act

without any reference to the said sub-article.

The option available under article 56(21) of the Act shall

be exercised by means of a declaration signed by the beneficiary

and endorsed by the competent authority made on such form or in

such manner as the Commissioner may require and attached to or

included in the tax return for the relative year of assessment. It

shall not be deemed to have been validly exercised unless the

income to which it applies has been fully and correctly declared in

the said tax return and unless the said declaration and tax return are

filed by not later than the relative tax return date

Provided that when the said declaration or the relative tax

return is filed later than the tax return date, the Commissioner may

treat the option as having been validly exercised if he is satisfied

that the delay was due to a reasonable excuse.

(1) For the purposes of rule 4, the competent authority

shall issue a formal determination relating to anything which needs

to be proven to its satisfaction in terms of these rules.

(2) An application for a formal determination relating to

eligibility under these rules shall be made on such form or in such

manner as the competent authority may require and shall contain

the information and documents therein requested.

(3) After consultation with the competent authority, the

M i n i s t e r r e s po n s i bl e f o r j u s t i c e s h a ll d e t e r m i n e w h e t h e r a

beneficiary’s stay in Malta is not in the public interest.

For the purposes of rule 10, the competent authority shall,

following an application, filed by a beneficiary, endorse the form

required by the Commissioner.

For the purposes of rule 3, the employments and offices

which are eligible for the reduced rate of tax are listed in the

Schedule.

No determination made by the competent authority in

accordance with rule 11 shall be issued after 31st December 2025, and

any such determination issued must refer to any employment in respect

of which the benefit provided by these rules commences by 31st

December 2026 and ceases to apply by 31st December 2030.