QUALIFYING EMPLOYMENT IN AVIATION (PERSONAL TAX) RULES

SUBSIDIARY LEGISLATION 123.168

QUALIFYING EMPLOYMENT IN AVIATION

(PERSONAL TAX) RULES

24th May, 2016

LEGAL NOTICE 177 of 2016, as amended by Legal Notice 1 of 2017, 378

of 2017 209 of 2019, 120 of 2020 and 104 of 2022.

The title of these rules is the Qualifying Employment in

Aviation (Personal Tax) Rules.

(Rule 2(1))

Eligible Employment and Offices

Chief Executive Officer

Chief Operations Officer

Chief Financial Officer

Chief Risk Officer

Chief Financial Officer

Chief Technology Officer

Chief Commercial Officer

Chief Investment Officer

Chief Insurance Officer

Accountable Manager

Deputy Accountable Manager

General Manager

Flight Operations Manager

Nominated Person Flight Operations

Training Manager

Nominated Person Training

Ground Operations

Nominated Person Ground Operations

Continuing Airworthiness Manager

Nominated Person Continuing Airworthiness

Compliance Manager

Quality Systems Manager

Safety Manager

Flight Dispatch Manager

Instructor Manager

Head of Marketing

Head of Public Relations

Actuary

Underwriting Manager

Risk Management Officer

Key account manager

Product coordinator

Material coordinator

Engineering reporter

Aeronautical engineer

Head of Maintenance Operations

Aviation Systems Developer

QUALIFYING EMPLOYMENT IN AVIATION

(PERSONAL TAX)

Key Aviation Specialist

(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 in respect of an

activity which is substantively derived from the employment covered

by the qualifying contract of employment 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 the Authority for Transport in Malta

established in terms of article 5 of the Authority for Transport in

Malta Act;

"eligible office" is an employment defined as key for the

operations of the company and whose function is confirmed by the

competent authority, based on an administrative assessment

procedure, and which is listed in the Schedule;

"education qualification" means any diploma, certificate or other

ev i de n ce of f o rma l q u al i fi ca tions issued by an educational

establishmen t attestin g the successful completion of a post

secondary education programme, namely a set of courses provided

by an educational establishment recognised as an education

institution by the State in which it is situated;

"professional experience" means the actual and lawful pursuit of

the profession concerned;

"professional qualifications" means qualifications attested by

evidence of education qualifications or, by way of derogation, when

provided for by national law, attested by 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;

"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 forty-five thousand euro (€45,000) 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 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 or

experience;

(d) 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;

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

that he performs activities of an eligible office; and

(f)

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

as s e s sm en t s h al l b e d e em ed t o b e f o r t y - f i v e t h o u sa n d e ur o

(€45,000), basis year 2015

Provided that should income from a qualifying contract of

employment exceed the sum of five million euro (€5,000,000), no

further tax would be charged on income from a qualifying contract of

employment in excess of five million euro (€5,000,000)

Provided 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 the 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 2017.

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

shall apply for a consecutive period of five years commencing from

the first year of assessment in which that person is first liable to tax

under the provisions of the Act.

(2) 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.

(3) Notwithstanding anything to the contrary contained in these

rules, any person who falls under the provisions of sub-rule (1),

irrespective of whether he has availed himself of the benefit

provided by these rules or not, shall be eligible, upon application, to

two extensions of five years each to his qualifying period, subject to

the continued adherence to the other provisions of these rules

Provided that the eligibility under these rules shall not

exceed a consecutive period of fifteen 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.

(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-rule.

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 Minister

responsible for justice shall determine whether a beneficiary’s stay

in Malta is not in the public interest.

For the purposes of rule 9, the competent authority shall,

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

required by the Commissioner.

QUALIFYING EMPLOYMENT IN AVIATION

(PERSONAL TAX)