SENIOR EMPLOYEES OF FAMILY OFFICES, BACK OFFICES AND TREASURY MANAGEMENT OPERATIONS TAX RULES

OFFICES AND TREASURY MANAGEMENT OPERATIONS

TAX

SUBSIDIARY LEGISLATION 123.218

SENIOR EMPLOYEES OF FAMILY OFFICES, BACK

OFFICES AND TREASURY MANAGEMENT

OPERATIONS TAX RULES

1st January, 2025 *

LEGAL NOTICE 250 of 2025.

The title of these rules is the Senior Employees of Family

Offices, Back Offices and Treasury Management Operations Tax

Rules.

(rules 2 and 3)

Eligible offices

Part I

The following are the eligible offices with companies or other

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undertakings referred to in Part II

1. Head of the Back Office and, or Chief Executive

Officer, General Manager, Country Head, Managing Director or

equivalent designation;

2. Chief and, or Head Risk Officer;

3. Chief and, or Head Compliance and Anti-Money

Laundering Officer;

4. Chief and, or Head Risk Officer, including Fraud

and Investigations Officer;

5. Portfolio Manager;

6. Chief and, or Head Investment Officer;

7. Senior Trader;

8. Senior Structuring Professional.

Part II

Eligible offices shall be held with the following companies or

other undertakings

(a)

in the context of Single Family Offices

(i)

fund managers established in Malta which

are exempt from the requirement for an investment

services licence in terms of regulation 3(1)(f) of the

Investment Services Act (Exemption) Regulations, to the

extent that the Notified PIF they manage is a family office

vehicle which invests the private wealth of investors

without raising external capital;

(ii)

fund managers established in Malta which

are exempt from the requirement for an investment

services licence in terms of regulation 3(1)(t) of the

Investment Services Act (Exemption) Regulations, to the

extent that the Notified PIF they manage is a family office

vehicle which invests the private wealth of investors

without raising external capital;

(iii) registered trustees which invest, on behalf

of a family trust, inter alia in a Notified PIF which is

managed by a fund manager which is exempt from the

requirement for an investment services licence in terms of

regulation 3(1)(f) or regulation 3(1)(t) of the Investment

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Services Act (Exemption) Regulations, to the extent that

the Notified PIF they manage is a family office vehicle

which invests the private wealth of investors without

raising external capital;

(iv) licence holders which invest the private

wealth of investors without raising external capital. For

the purposes of this paragraph, "licence holder" shall also

include Notified PIFs;

(b)

in the context of Multi Family Offices, licence

holders which invest the private wealth of investors without

raising external capital;

(c)

undertakings carrying on Back Office services to

the undertakings referred to in paragraphs (a) or (b), and

confirmed as such in writing by the competent authority for the

purposes of these rules;

(d)

undertakings carrying on Treasury Management

operations to the undertakings referred to in paragraphs (a) or

(b), and confirmed as such in writing by the competent

authority for the purposes of these rules.

In these rules, unless the context otherwise requires

"Act" means the Income Tax Act;

"artificial arrangements" means arrangements the terms

thereof include

(a)

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;

(b)

arrangements of collusion between

employer and employee to ensure that a contract which

in substance does not fall within the scope of these rules

and article 56(21) of the Act, would be given a form

which enables it to qualify for benefits hereunder;

"Commissioner" means the Commissioner for Tax and

Customs;

"competent authority" means the Malta Financial

Services Authority established by the Malta Financial Services

Authority Act;

"eligible office" means an employment or an office listed

in the Schedule;

"licence holder" means a person who holds a licence

issued by the Malta Financial Services Authority;

"Multi Family Office" means a licence holder that

* These rules shall apply with effect from the year of assessment 2026. Vide Article 1(2)

of Legal Notice 250 of 2025.

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exclusively manages the wealth of more than one (1) high-net-

worth family;

"Notified PIF" means a notified professional investor

fund established in accordance with the Investment Services Act

(List of Notified CISs) Regulations;

"professional

qualifications"

means

relevant

qualifications attested by evidence of education qualifications

or, by way of derogation, when provided for by national law,

attested by at least five (5) 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. For the purpose of this definition

(a)

"education qualification" means any

evidence of formal qualifications issued by an educational

establishment obtained after the successful completion of

a post-secondary education programme, namely a set of

courses provided by an educational establishment

recognised as a education institution by the jurisdiction in

which it is situated. An education qualification shall be

taken into account with regard to the benefits conferred

by these rules and article 56(21) of the Act, provided that

the relative course of studies needed to obtain such

qualification was for a minimum period of at least three

(3) years; and

(b) "professional experience" means the actual

and lawful pursuit of the profession concerned;

"registered trustee" means a trustee which is registered

with the competent authority in terms of article 43B of the

Trusts and Trustees Act;

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

pay tax at the reduced rate of tax provided by article 56(21) of

the Act and these rules;

"Single Family Office" means an undertaking that solely

manages the wealth of a single high-net-worth family.

(1)

Income from a qualifying contract of employment

that qualifies for the purposes of these rules when it is received by a

beneficiary and consists in income subject to tax in accordance with

article 4(1)(b) of the Act, excluding the annual value of any fringe

benefits, of a minimum of sixty-five thousand euro (€65,000) and

consists of emoluments from an eligible office

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Provided that the said minimum of sixty-five thousand

euro (€65,000) shall be adjusted by an increase of ten thousand euro

(€10,000) every five (5) years with effect from the year subsequent to

the year in which these rules come into force..

(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.

(3)

The employments and offices which are eligible for the

reduced rate of tax are listed in the Schedule.

A beneficiary is an individual who satisfies 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 with regard to

any period spent outside Malta in relation to such work or

duties, or on leave during the carrying out of such work or

duties;

(b)

his first employment in Malta is in an eligible

office under a contract of employment requiring the

performance of his duties in Malta

Provided that the beneficiary shall not have had income

referred to in article 4(1)(a) and (b) of the Act before 1st January 2025.

(c)

he is protected as an employee in accordance with

Maltese law, irrespective of the legal relationship between the

employee and the employer, 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;

(d)

he proves to the satisfaction of the competent

authority that he is in possession of the required professional

qualifications;

(e)

he is not an individual who has benefited under

article 6 of the Act;

(f)

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

who is related to his employer in respect of activities which are

substantively derived from the employment covered by the

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qualifying contract of employment as are chargeable to tax in

Malta;

(g)

he proves to the satisfaction of the competent

authority that he performs activities of an eligible office;

(h)

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 a

family in Malta comparable to his without recourse to the

social assistance system in Malta;

(ii)

he resides in accommodation regarded as

normal in Malta for himself, and where he forms part of a

family living in Malta, for a comparable family in Malta,

and which satisfies 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 private medical

insurance in respect of all risks normally covered for

Maltese nationals for himself and the members of his

family, irrespective of who carries the burden of the cost

of such insurance; and

(v)

he is not domiciled in Malta; and

(i)

such other conditions as may be deemed fit by the

competent authority, including conditions in respect of training

personnel in the field of expertise related to the relevant eligible

office of the beneficiary.

(1)

An application for a formal determination relating

to eligibility in accordance with these rules and article 56(21) of the

Act shall be made on such form or in such manner as the competent

authority, in agreement with the Commissioner, may require and shall

contain the information and documents therein requested

Provided that such an application may be made between

1 st January 2025 and 31 st December 2034

Provided further that no such application shall be

accepted by the competent authority after 31 st December 2035.

(2)

Such application shall be submitted to the competent

authority which shall process the application and issue a formal

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determination of eligibility under these rules and article 56(21) of the

Act or a refusal of the application, as the case may be, within a period

of ninety (90) days from receipt of the said application in such manner

as the Commissioner shall determine.

(3)

For the purpose of processing an application under these

rules, the competent authority may require the applicant to produce,

within the time indicated by it in such request, such further

information and documents as they may consider necessary, including

certifications and declarations of the employer of such individual.

Where such a request is made, the period of ninety (90) days referred

to in sub-rule (2) shall commence from date of receipt of the

information requested.

(4)

If an individual fails, without any valid reason, to fully

comply with any request made by the competent authority in

accordance with sub-rule (3) within the period indicated in the said

sub-rule, the competent authority shall refuse the application and

inform the Commissioner of such refusal.

(5)

Within the period referred to in sub-rule (2) or (3), as the

case may be, the competent authority shall inform the Commissioner

of such determination or refusal. The Commissioner shall endorse

such determination or refusal and inform the applicant accordingly, in

such manner as the Commissioner shall determine.

(6)

The competent authority shall, on an annual basis, send a

list of applications received and their status to the Commissioner.

(1)

Once a formal determination of eligibility has

been issued by the competent authority in accordance with the

provisions of rule 5, the option available in accordance with article

56(21) of the Act may be exercised

Provided that such available option may not be exercised

in respect of any year of assessment preceding the year of assessment

2026. (2)

The said option shall be exercised by means of a

declaration signed by the beneficiary and endorsed by the competent

authority made on such form publicly available on the apposite

website or in such manner as the Commissioner may require. Such

declaration shall specify the years of assessment in relation to which

the exercise of the option relates.

(3)

The said option shall not be deemed to have been validly

exercised unless the income to which it applies has been fully and

correctly declared in the tax return and unless the said declaration and

tax return are filed by not later than the relative tax return date.

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(1)

The benefits under these rules and article 56(21) of

the Act shall apply in relation to employment income that is specified

in rule 4(a), and that is earned during a period of five (5) years which

commences to run from the year in relation to which a formal

determination was issued under the provisions of the rules and as

formally determined under rule 5(2)

Provided that the option under article 56(21) of the Act

has been exercised as provided under the provisions of rule 6.

(2)

Subject to the provisions of sub-rule (3), any individual

who benefits under the provisions of sub-rule (1), upon submitting an

application on such form or in such manner as the competent authority,

in agreement with the Commissioner, may require, shall be eligible to

two (2) further extensions of five (5) years for his qualifying period,

subject to the continued adherence to the other provisions of these rules

and article 56(21) of the Act. Such application shall be made during the

year before the end of the relevant five (5) year qualifying period.

(3)

Notwithstanding anything to the contrary contained in

these rules and article 56(21) of the Act, benefits under the provisions

of these rules and article 56(21) of the Act shall not apply in relation to

income earned after 31st December 2040.

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 sixty five thousand euro (€65,000)

Provided that the minimum amount of income of sixty-

five thousand euro (€65,000) shall be adjusted in line with the

provisions of the proviso to rule 3(1)

Provided further that the rate of fifteen percent (15%)

shall apply without the 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 in

accordance with article 23 of the Income Tax Management Act.

When an individual exercises the option available under

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

fifteen percent (15%) shall apply on an amount of emoluments payable

not exceeding seven million euro (€7,000,000). Any emoluments

payable in excess of the said amount of seven million euro

(€7,000,000) shall constitute remaining income for the purposes of

paragraph (a) of the proviso to article 56(21) of the Act and

consequently, the tax on such remaining income shall be calculated at

the rate or rates that would have been applicable to that remaining

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income had the option not been exercised.

(1)

For the purpose of ascertaining an individual’s

right to exercise the option referred to in article 56(21) of the Act and

ensuring the proper application of these rules and article 56(21) of the

Act, the Commissioner and, or the competent authority may require

such individual to produce, within the period indicated by the

Commissioner and, or the competent authority in that request, such

further information and documents as they may consider necessary,

including certifications and declarations of the employer in connection

to such 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, or the competent authority in accordance with this

rule, the Commissioner may order that article 56(21) of the Act shall

not apply to such income. In such a case, the Commissioner may carry

out an assessment and the tax on such income shall be calculated at the

rates provided for in the Act without any reference to article 56(21) of

the Act. Where an individual fails to produce the information

requested solely by the competent authority’s request, the said

competent authority shall inform the Commissioner without delay and

in any case not later than thirty (30) days of such failure.

(1)

Where any person, in order to obtain any benefits

under these rules, makes use of artificial arrangements, the

Commissioner shall, by order in writing, determine the amount of tax

that such person has to pay, 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.

(2)

A person who disagrees with an order served upon him in

accordance with sub-rule (1) shall have the same rights to object to

such order and to appeal from a decision of the Commissioner refusing

that objection as if that order were an assessment issued in accordance

with the Income Tax Management Act and the relevant provisions of

that Act relating to objections and appeals shall apply mutatis

mutandis.