REPATRIATION OF PERSONS ESTABLISHED IN A FIELD OF EXCELLENCE RULES

REPATRIATION OF PERSONS

ESTABLISHED IN A FIELD OF EXCELLENCE

SUBSIDIARY LEGISLATION 123.142

REPATRIATION OF PERSONS ESTABLISHED

IN A FIELD OF EXCELLENCE RULES

1st January, 2013 *

LEGAL NOTICE 111 of 2013.

The title of these rules is the Repatriation of Maltese

Persons established in a Field of Excellence Rules.

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 of which the beneficiary holds more than 25%

of the shares and with whom the beneficiary is employed at any

time during the year, 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 of Revenue;

"Corporation" means the Malta Enterprise Corporation

established in terms of the Malta Enterprise Act;

"eligible person" means an individual who is established in a

field of excellence and returns as an ordinary resident in Malta

provided that he had been ordinarily resident in Malta for at least

twenty years but has not been ordinarily resident in Malta for the

ten consecutive years prior to his return to Malta;

"field of excellence" means an area of professional competence

in which an eligible person has excelled and which area is relevant

for the manufacturing and research and development sectors, as

may be defined in Guidelines which may be issued by Malta

Enterprise Corporation in terms of the Malta Enterprise Act;

"qualifying contract of employment" means the employment of

an eligible person in a field of excellence in such sector/s as may be

defined in the Guidelines;

"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.

(1) Income from a qualifying contract of employment

qualifies under these rules when it is received by an eligible person

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 seventy-five thousand euro (€75,000) and consists of

emoluments received by an eligible person.

*see regulation 1(2) of these Regulations as originally promulgated.

REPATRIATION OF PERSONS

ESTABLISHED IN A FIELD OF EXCELLENCE

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

be such if such contract of employment is approved in writing by

the Corporation.

(1) A beneficiary is an eligible person who, to the

satisfaction of the Corporation, 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 proves to the satisfaction of Malta Enterprise

Corporation that he is in possession of educational

and, or professional qualifications as are relevant in

the profession or sector specified in the binding job

offer or in the qualifying contract of employment as

these may be further defined in Guidelines which may

be issued by Malta Enterprise Corporation in terms of

the Malta Enterprise Act;

(c) 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 Malta Enterprise Corporation.

(2) A beneficiary shall fully disclose for tax purposes and

declare 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 which is chargeable to tax in Malta.

(1) When an individual exercises the option available

under article 56(25) 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 seventy-five thousand

euro (€75,000)

Provided that the rate of 15% shall apply without

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

off of any kind, sohowever that, notwithstanding the generality of

the foregoing, a beneficiary shall be allowed deductions of tax

under article 23 of the Income Tax Management Act

Provided that where an individual exercises the option available

under article 56(25) of the Act, the income that is charged to tax at

the rate of 15% shall be deemed to constitute the first part of the

individual’s total income for the year of assessment in question and

the tax on the remaining income shall be calculated at the rate or

rates that would have been applicable to that remaining income had

REPATRIATION OF PERSONS

ESTABLISHED IN A FIELD OF EXCELLENCE

the option not been exercised.

(2) The option available under article 56(25) of the Act may

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

year of assessment 2013.

(3) The option available under article 56(25) of the Act shall

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 after returning to

reside in Malta.

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.

(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

Corporation may require that individual to produce, within the time

indicated by the Commissioner and the Corporation in that request,

such further information and documents as the Commissioner and

the Corporation 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 Corporation in accordance with this rule, the

Commissioner and the Corporation may order that article 56(25) 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(25) of the Act shall

be exercised by means of a declaration signed by the beneficiary

and endorsed by the Corporation 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.

REPATRIATION OF PERSONS

ESTABLISHED IN A FIELD OF EXCELLENCE

(1) For the purposes of rule 4, the Corporation 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 Corporation may require and shall contain the

information and documents therein requested.

For the purposes of rule 9, the Corporation shall, following

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

the Commissioner.