FRINGE BENEFITS RULES

SUBSIDIARY LEGISLATION 123.55

FRINGE BENEFITS RULES

1st January, 2001

LEGAL NOTICE 125 of 2001, as amended by Legal Notices 76 and 102

of 2006, 101, 147 and 409 of 2007, 292 and 336 of 2010, 205 of 2017 and

298 of 2023.

PART A - GENERAL

The title of these rules is the Fringe Benefits Rules.

(1)

In these rules, unless the context otherwise requires -

"the Act" means the Income Tax Act;

"associated company" means a company that is related to another

company to which reference is made in the context in which this

term is used in a way that -

(a) the two companies form part of the same group; or

(b) the two companies are owned or controlled directly or

indirectly as to more than 50% by the same persons;

"beneficiary" means a person to whom a benefit is or is deemed

to be provided;

"benefit" means anything that is deemed to be a benefit in terms

of rule 9, 17, 20, 26, 28, 30, 32, 36, 39 or 45

Provided that, notwithstanding anything to the contrary

contained in these rules, the private use of an aircraft by an

individual who -

(a) is an employee or officer of an employer, company or

partnership whose business activities include the

ownership, leasing, or operation of any one or more

aircraft or aircraft engine which is used for or

employed in the international transport of passengers

or goods, and

(b) is not resident in Malta,

shall not be deemed to constitute a benefit for the purposes of these

rules;

"controlling position" has the meaning assigned to it in sub-rule

(2) of this rule;

"director" means -

(a) any person occupying the position of director of a

company by whatever name he may be called;

(b) any person carrying out substantially the same

functions in relation to the direction of the company as

those carried out by a director;

(c) any person in accordance with whose direction or

instructions the directors of a company are accustomed

to act;

"employee" means an individual who performs services under a

contract of employment whether written or not with another person;

"employer" means a person who engages or has engaged another

person to perform services under a contract of employment;

"member of the family" of a person means the spouse, ascendant,

direct descendant or an adoptive child of that person, or the spouse

of such ascendant, descendant or adoptive child or an individual

who ordinarily resides in the same residence as that person,

whether related to him or not;

"officer" means the holder of an office and includes also an

individual who -

(a) is a director of a company; or

(b) holds directly or indirectly more than 5% of the

ordinary share capital or of the voting rights in a

company; or

(c) is a partner in a partnership;

"partnership" means a civil or commercial partnership

constituted under or in accordance with Maltese law other than a

company;

"property" means any kind of movable or immovable property;

"provider of a benefit" means a person who provides or who is

deemed to provide a benefit.

(2) In these rules a person shall be deemed to be in a

controlling position in a company if -

(a) he is an individual who holds directly or indirectly

25% or more of the ordinary share capital or the voting

rights in that company or in an associated company; or

(b) he is an individual who holds, directly or indirectly,

shares in that company and the shares so held, together

with any shares held directly or indirectly in that

company or an associated company by a member or

members of his family, amount to or represent an

aggregate of more than 50% of the ordinary share

capital or the voting rights in that company; or

(c) he is an individual who is a director of that company or

of an associated company but is not registered with the

competent authority set up under the Employment and

Training Services Act as a whole time employee with

that company or with an associated company.

(1) Except where otherwise provided in these rules, a

benefit shall be deemed to be provided by reason of an employment

or office if -

(a) it is provided by an employer to his employee; or

(b) it is provided by a company or a partnership to an

individual who holds an office in that company or

partnership; or

(c) it is provided by a company to an individual who was

an employee or officer of that company as a reward

for, or in recognition of, services rendered to that

company; or

(d) it is provided by a company on a continuing or regular

basis to an individual who, at the time it was first

provided or at the time that the company decided to

provide it, was an employee or an officer of that

company; or

(e) it is provided to the holder of an office by a person

who is responsible for the payment of remuneration for

duties performed under the terms of appointment to

that office; or

(f)

it is provided as a reward for services rendered by a

person in the course of the performance of his duties as

employee or officer of another person where that

benefit is provided by a third party.

(2) The presumptions referred to in sub-rule (1)(a), (b), (d) and

(e) may be rebutted by evidence that -

(a) the benefit is a donation made by an individual on

purely personal considerations; or

(b) the benefit is provided in settlement or on account of a

debt that is not related to any services rendered in the

course of an employment or office; or

(c) the benefit is a distribution of profits by a company or

a partnership to a person in his capacity as shareholder

or partner of that company or partnership or represents

drawings made by a partner on account of his share of

profits of the partnership, and is accounted for as such

in the records of that company or partnership.

Where a benefit is deemed to arise by reason of an

employment or office, the income represented by the value of that

benefit shall be 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.

For the purpose of rule 3 -

(a) a benefit provided by a company to an individual who

is not an employee or an officer of that company but

who is an employee or an officer of an associated

company shall be deemed to be a benefit provided by

the associated company;

(b) a benefit provided by a company to an individual who

is not an employee or an officer of that company but

who is a member of the family of an employee or an

officer of that company or of an associated company

shall be deemed to be a benefit provided to the said

officer or employee;

(c) a benefit provided by an employer, other than a

company, to an individual who is not an employee of

that employer but who is a member of the family of an

employee of that employer shall be deemed to be a

benefit provided to the said employee;

(d) a benefit provided to an employee by a third party

shall be deemed to be provided by the employer if the

benefit is provided on the employer’s instructions,

whether direct or explicit or otherwise, or through his

intervention.

(1) The value of a benefit shall be determined in

accordance with the provisions of these rules.

(2) Except where otherwise provided in these rules, when the

value of a benefit is expressed as an annual value that benefit shall

be deemed to have a value of one-twelfth of the annual value for

each whole calendar month during which that benefit is provided

and of one of three hundred and sixty-five of the annual value for

each day of any part of a month during which it is provided.

(3) When the annual value of a benefit is changed by reason of

any event that takes place after the commencement of the provision

of that benefit then, for the purpose of determining the value of the

benefit for the month during which that event takes place, the

provisions of sub-rule (2) shall apply as if the benefit provided

from the date when that event takes place were a separate benefit

from that provided prior to that date.

(4) When any provision of these rules produces a negative

value of a benefit that benefit shall be deemed to have no value.

(5) Any value determined in accordance with these rules shall

be rounded up or down to the nearest euro.

(6) Where the benefit consists in the use of property and more

than one beneficiary makes use of the same property the provider

of that benefit shall determine the annual value of the benefit in

accordance with the other provisions of these rules and he shall

then apportion that value between the beneficiaries in such manner

as to him may appear reasonable in the circumstances or as may be

determined by the Commissioner.

(1) When the valuation of a benefit includes the

determination of the price, hereinafter referred to as "the market

then, subject to the other provisions of this rule, an expert valuation

shall constitute sufficient evidence of that price.

(2) When an expert valuation is made at the request of the

Commissioner, hereinafter referred to as "the Commissioner ’s

valuation", and another expert valuation relating to the same

property is made at the request of the provider of the benefit or of

the beneficiary, hereinafter referred to as "the beneficiary’s

valuation", the following provisions shall apply

(a) if the beneficiary’s valuation is produced to the

Commissioner before the Commissioner’s valuation is

made and the market price indicated in the

Commissioner’s valuation does not exceed by more

than 15% that indicated in the beneficiary’s valuation,

the beneficiary’s valuation shall constitute evidence of

that price to the exclusion of the Commissioner’s

valuation;

(b) if the beneficiary’s valuation is produced after the

Commissioner’s valuation has been made, or if the

market price indicated in the Commissioner’s

valuation exceeds by more than 15% that indicated in

the beneficiary’s valuation, the Commissioner’s

valuation shall, subject to the provisions of sub-rule

(3) hereof, constitute evidence of that price to the

exclusion of the beneficiary’s valuation: provided that

nothing in this sub-paragraph shall prevent the

Commissioner’s valuation from being questioned in an

appeal against a tax assessment made in accordance

with the relevant provisions of the Income Tax

Management Act.

(3) In an appeal filed in the Administrative Review Tribunal an

expert valuation exhibited by either party, when confirmed by the

valuer under oath, shall constitute sufficient evidence of the market

likewise confirmed by the valuer under oath, in which case the

following provisions shall apply

(a) when the provisions of sub-rule (2)(a) are applicable,

the Tribunal shall decide the matter in accordance with

those provisions;

(b) in any other case the Tribunal shall appoint an

independent expert valuer to draw up and confirm

under oath a further expert valuation and, subject to

any consideration which the Tribunal may consider

appropriate, decide the matter accordingly.

(4) An expert valuation shall not, merely on the basis of the

foregoing provisions of this rule, constitute evidence of any matter

relevant to the determination of the value of a benefit other than the

market price.

(5) When a declaration of the value of a benefit made by the

beneficiary or by the provider of the benefit is supported by an

expert valuation produced to the Commissioner, and the value

declared results to be less than the value that is finally determined

to be the correct value, the declaration shall not, to the extent that it

is so supported, be held to represent an omission for the purposes of

article 56(12) of the Act or an offence for the purposes of Part IX of

the Income Tax Management Act or a default for the purposes of

the Final Settlement System (FSS) Rules

Provided that the provisions of or prescribed under the

Income Tax Acts relating to the tax (but not additional tax)

chargeable and payable with respect to the benefit, to interest

payable on the late payment of that tax and to the amount of tax

that should be deducted from emoluments and remitted to the

Commissioner by a payer shall apply by reference to the correct

value of the benefit as finally determined.

(6) In this rule "expert valuation" means a written opinion of

the market price as on the date relevant for that purpose in

accordance with the provisions of these rules drawn up by a person

recognised by the Commissioner or by the Administrative Review

Tribunal, as the case may be, as competent to express an expert

opinion on that price containing a description of the property in

question and stating briefly the relevant considerations.

(1) When a benefit consists in the use of property it shall

be deemed to be first provided -

(a) if the property is immovable property, on the day on

which that property is first used by the beneficiary;

(b) in any other case, on the day on which that property is

first made available for the use of the beneficiary,

and, in any case, that benefit shall be deemed to continue to be

provided for as long as that property remains available for the use

of the beneficiary.

(2) When the property is movable property and it is not

available to the beneficiary on account of repairs or some other

temporary cause for a period that is less than 30 consecutive days,

that property shall be deemed to remain available to the beneficiary

during that period; and when the period of unavailability is 30

consecutive days or more that property shall not be deemed to

available to the beneficiary during that period.

(3) When property is made available to a beneficiary to replace

similar property in a period during which, in accordance with sub-

rule (2), the latter property is deemed to remain available to that

beneficiary, the value of the benefit for that period shall be

determined by reference to the value of the latter property without

reference to the value of the former property.

(4) Property shall not be deemed to be available to a

beneficiary for any period during which it is exclusively used by or

specifically reserved for the exclusive use of third parties in the

course of the business of the provider of the benefit.

PART B

CATEGORY 1 BENEFITS - BENEFITS RELATING TO MOTOR

VEHICLES

In this Part, unless the context otherwise requires -

"vehicle" means any mechanically propelled vehicle constructed

or adapted as a means of transport for individuals, and any vehicle

which is constructed or adapted for the conveyance of goods but

which is also suitable as a means of transport for individuals, but

shall not apply to -

(a) a vehicle with a design weight of more than 3500

kilograms;

(b) a motor cycle;

(c) a vehicle specially built or adapted for use by a

severely disabled person and used by such person for

travelling between his home and his workplace;

(d)

a van;

(e) such other vehicle as the Commissioner may specify

by order in writing;

"van" means a mechanically propelled road panel vehicle or

utility or any other commercial vehicle whose construction is

primarily suited for the conveyance of goods with no seating

capacity for passengers except for seating adjacent to the driver.

(1) The private use by an individual of a vehicle that is

owned or held under a title of lease by another person shall be

deemed to be a benefit provided by the said person to the said

individual.

(2) There shall be deemed to be private use of a vehicle by an

individual in any of the following circumstances

(a) if the vehicle is placed at the exclusive disposal of that

individual;

(b) if the vehicle is regularly available for use by that

individual outside the hours during which he normally

performs his duties as an employee or an officer of the

provider of the benefit;

(c) if the vehicle is regularly kept overnight or during

weekends under the charge of that individual in any

place which is not the business premises of the

provider of the benefit or within 100 meters thereof;

(d) if the vehicle is regularly used by that individual for

purposes not directly linked with his employment or

office.

(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.

(4) Notwithstanding the other provisions of this rule the use of

a vehicle shall not be deemed to be a private use if the

Commissioner determines that it constitutes an official use.

The annual value of the benefit referred to in rule 9, shall

be arrived at first by finding the aggregate of

-

the vehicle use value determined in accordance with

rule 11,

-

the maintenance value of the vehicle determined in

accordance with rule 12, and

-

the fuel value of the vehicle determined in accordance

with rule 13

and then multiplying the result by -

-

the private use percentage determined in accordance

with rule 14.

(1) The vehicle use value is 17% of the vehicle value if the

vehicle is not more than 6 years old and 10% of the vehicle value in

any other case.

(2) A vehicle shall be deemed to be more than 6 years old on

and after the sixth anniversary of the date when it was first

registered for road use, whether in Malta or outside Malta.

(1) The maintenance value of a vehicle is 3% of the

vehicle value if the vehicle value does not exceed €28,000 and 5%

of the vehicle value in any other case.

(2) The maintenance value of a vehicle shall be deemed to

represent all costs incurred by the provider of the benefit relating to

the use of the vehicle, including the road licence, the driving

licence, insurance cover, repairs and servicing, but excluding fuel

and garaging of the vehicle: provided that the maintenance value of

a vehicle shall be determined in accordance with sub-rule (1)

regardless of the cost actually incurred by the provider of the

benefit and even where the said costs are borne fully or partly by

the beneficiary.

(1) Subject to the other provisions of this rule the fuel

value of a vehicle is 3% of the vehicle value if the vehicle value

does not exceed €28,000, and 5% of the vehicle value in any other

case.

(2) The fuel value of a vehicle shall be deemed to represent the

costs incurred by the provider of the benefit relating to the fuel

consumed in the use of the vehicle whether such costs are incurred

by way of reimbursement in full or in part to the beneficiary against

the production of receipts or by way of payments to third parties

supplying the fuel.

(3) When the fuel costs are fully borne by the beneficiary and

are not reimbursed, in full or in part, by the provider of the benefit

the fuel value of a vehicle shall be taken at €0.

(4) When the provider of the benefit makes payments to the

beneficiary relating to fuel costs other than by way of a

reimbursement against the production of receipts, the fuel value of

a vehicle shall be taken at €0 but those payments shall constitute a

separate benefit as provided in rule 17.

(1) Saving the provisions of sub-rule (2), the private use

percentage of a vehicle shall be determined by reference to the

vehicle value as follows

Car value

Private use percentage

Not exceeding €16,310

30%

Exceeding €16,310 but not €21,000

40%

Exceeding €21,000 but not €32,620

50%

Exceeding €32,620 but not €46,600

55%

Exceeding €46,600

60%

(2) The private use percentage of vehicle shall be 0% where, in

any particular case -

(a) the vehicle value does not exceed €16,310; and

(b) the said vehicle is used wholly or mainly for point to

point services by an employee who is a salesman or a

support person in the performance of his duties or for

such other similar services as may be approved by the

Commissioner; and

(c) the Commissioner approves in writing the applicability

of this rule to that case.

(1) For the purposes of rules 10 to 14, the vehicle value

means the aggregate of

(a) the price of the vehicle;

(b) the cost of any accessories that may be fitted in the

vehicle and not included in the price of the vehicle.

(2)

In this rule, the price of the vehicle means

(a) in the case of a vehicle owned by the provider of the

benefit, and subject to the other provisions of this

paragraph, the actual cost of the vehicle as shown in

the invoice for the purchase of that vehicle, including

any taxes and delivery charges, increased by any

special discounts not available generally to purchasers

buying the same type of vehicle from the same

supplier at the same time as that of the purchase of the

vehicle in question;

(b) in the case of a vehicle, other than a classic vehicle -

(i)

that is not owned by the provider of the said

benefit; or

(ii) that was purchased prior to the 1 January 2001

and its actual cost cannot be properly

established; or

(iii) that is provided out of the provider’s own stock;

or

(iv) that was acquired by the provider second hand,

such price as may be shown for a vehicle of that same

or comparable model in a price list drawn up or

approved by the Commissioner;

(c) in the case of a classic car, the price which that vehicle

would fetch if sold on the open market on the date

when the benefit is first provided.

(3) When any accessories are fitted after the commencement of

the benefit, the vehicle value shall be adjusted as from the date they

are fitted.

(4)

In this rule a vehicle is a classic vehicle if

(a) it is more than 15 years old; and

(b) its price, determined in accordance with sub-rule

(2)(c), is more than €23,300; and

(c) its original price was less than the price determined in

accordance with sub-rule (2)(c).

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.

(1) A vehicle allowance paid by a person to an individual

shall be deemed to be a benefit provided by the former to the latter.

(2) For the purpose of this rule a vehicle allowance paid to an

individual means

(a) any payment to that individual relating to the use of

his vehicle whether by way of reimbursement of costs

or otherwise;

(b) any payment to third parties to cover fuel or other

costs incurred by that individual in the use of his

vehicle;

(c) any payment to that individual relating to fuel costs

incurred in the use of a vehicle owned or held under a

title of lease by the provider of the benefit where the

payment is not made by way of reimbursement against

the production of receipts.

(1) Subject to the other provisions of this rule the value of

the vehicle allowance referred to in rule 17 is the total amount so

paid.

(2)

Where -

(a) the allowance is paid to an employee in terms of the

provisions of a collective agreement or of his contract

of service with respect to the use of his vehicle for the

purpose of the employer’s business; and

(b) the beneficiary is not a person in a controlling

position; and

(c) the employee is not entitled to the private use of

another vehicle owned or held under a title of lease by

the employer,

the value determined in accordance with sub-rule (1) hereof shall

be reduced by 50% provided that the maximum total reduction that

may be so allowed in any calendar year with respect to any one

beneficiary is €1,170.

(3) When a beneficiary is in receipt of a vehicle allowance

from more than one employer the maximum total reduction of

€1,170 referred to in sub-rule (2) shall apply with respect to the

aggregate allowances he receives as if they were one allowance.

(4) An employee who receives a vehicle allowance may claim

in his income tax return for a year of assessment a deduction

against the value of the benefit determined in accordance with the

foregoing provisions of this rule with respect to the expenses he

incurred in the year preceding that year of assessment in the use of

the vehicle and a deduction for the wear and tear of that vehicle to

the extent that such expenses and wear and tear relate to the use of

the vehicle for the purpose of his employer ’s business and are

allowable in terms of article 14 and all the other relevant provisions

of the Act, but the maximum deduction that may be so claimed is

the amount by which the total of such expenses and wear and tear

deduction exceeds the amount of the reduction from the value of

the benefit referred to in sub-rules (2) and (3)

Provided also that such deductions shall only be allowable

(a) the conditions listed in sub-rule (2)(a), (b) and (c) are

all satisfied; and

(b) the employee is in possession of documents proving

the said expenses and the purpose for which they were

incurred; and

(c) the income declared by the employee in his income tax

return includes the value of the benefit computed in

accordance with the foregoing sub-rules of this rule;

and

(d) the claim for the deductions is supported by a

computation showing the details relevant to the

determination of the amount due as a deduction in

accordance with this rule.

(5) The vehicle allowance referred to in rule 17 shall be

deemed to have no value if -

(a) the vehicle allowance consists in a reimbursement of

costs incurred by the employee in the use of his

vehicle for the purposes of his employer’s business;

and

(b) such reimbursement is made by reference to the

distance actually covered at a rate not exceeding 35

cents per kilometre; and

(c) the employer has logged the details to which any such

reimbursement refers, including the purpose,

destination and distance of each journey.

PART C

CATEGORY 2 BENEFITS - USE OF PROPERTY

For the purposes of this Part

(a) the market value of immovable property is the value

which that property would fetch if sold in the open

market free and unencumbered and with vacant

possession at the time that property is or was first used

by the beneficiary increased by the cost of any

additions and improvements made to that property

after that time;

(b) the cost of immovable property is the price for which

the owner acquired that property increased by the cost

of

any

construction

works,

additions

and

improvements made to that property after the date of

the acquisition; and for the purpose of this paragraph

when property is held by a person under a title of

perpetual or temporary emphyteusis the price for the

acquisition thereof shall be deemed to be the price or

premium, if any, paid or payable in accordance with

the deed of emphyteusis;

(c) the market value of movable property is the price

which that property would fetch if sold in the open

market on the first day of the calendar year during

which the benefit in question is provided, taking into

account the value of any accessories, improvements

and additions existing as on that date;

(d) the cost of movable property is the price for which it

was acquired increased by the cost of any accessories,

improvements and additions incurred after the date of

the acquisition and existing at the time of the provision

of the benefit; and for the purpose of this paragraph

the price for the acquisition of movable property that

was acquired more than six years before any specific

date shall, as from that date, be deemed to be 60% of

the actual price.

(1) The private use by a person of any property, 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, that is owned or held under

a title of lease by another person shall be deemed to be a benefit

provided by the latter to the former.

(2) The use of consumable things shall not be treated as a

benefit to which this rule refers but a Category 3 benefit to which

Part D of these rules applies.

Subject to the other provisions of this Part there shall be

deemed to be private use of property by an individual -

(a) when that property is immovable property and he uses

it for his accommodation or private enjoyment or for

any other purpose other than solely as a place for the

performance of his duties as an employee or an officer;

(b) when that property is movable property and he uses it

wholly or mainly in any manner other than in the

normal course of his duties as an employee or an

officer.

Accommodation of an individual in immovable property,

including the use of any furniture situated therein, shall not

constitute a private use -

(a) where the immovable property is an official residence

allocated by a public authority or by an institution of a

public nature to the occupier in his capacity as the

holder of an office; or

(b) where the accommodation is provided temporarily on

account of special measures for the personal security

of the beneficiary; or

(c) where -

(i)

the said immovable property is the employer’s

business premises or premises attached or

adjacent to the employer’s business premises;

and

(ii) the beneficiary is an employee who is not a

person in a controlling position; and

(iii) the accommodation of the employee in that

particular immovable property is necessary for

the better performance of his duties; and

(iv) the employment is one for which it is customary

for employers carrying on the same business as

the provider of the benefit in question to provide

accommodation for their employees.

Notwithstanding the other provisions of these rules, the

accommodation of an individual in immovable property belonging

to a company during any financial year of that company, including

the use of any furniture situated therein, shall not be deemed to

constitute a benefit provided by that company to that individual or

to a member of his family by reason of an employment or office if

all the following conditions are satisfied -

(a) during that year the company does not carry on a trade

or business and does not own any property whatsoever

other than -

(i) the immovable property in question;

(ii) any other immovable property which is occupied

by an individual as long as all the conditions of

this rule are satisfied with respect to that

accommodation;

(iii) cash and bank deposits;

(b) during that year the company does not have any

liabilities other than by way of long term loans from a

bank or a financial institution or from an individual

who is directly or indirectly a shareholder in that

company;

(c) where the company has any liability referred to in

paragraph (b) that liability is not secured in any

manner by an associated company;

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;

(d) the company does not, for the year of assessment to

which that financial year refers, claim any group relief

or any deduction with respect to losses incurred in a

FRINGE BENEFITS

trade, business, profession or

vocation

brought

forward from any previous year;

(e) the accommodation is provided to a person who is

directly or indirectly a shareholder of that company or

to members of his family who is, or all of whom are,

not employees of the company and not in receipt of

any form of remuneration whatsoever from that

company.

(1) Subject to the other provisions of this rule, the annual

value of the benefit referred to in rule 20 shall be determined as

follows

(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;

(b) where the property is leased to the provider of the

benefit and is owned by a person who is not a related

person the said value shall be the rent payable for the

year in question: provided that when the property is

sublet to the provider of the benefit by a related person

the said value shall be the amount of the rent payable

for the year in question to a non-related person.

(2)

For the purpose of sub-rule (1) a related person means

(a) in relation to a company

(i) an associated company; or

(ii) a person who holds, directly or indirectly, shares

in that company;

(b) in relation to a partnership

(i)

a company or a partnership that is owned or

controlled, directly or indirectly, as to more than

50% by the partners of that partnership; or

(ii) a person who owns, directly or indirectly, an

interest in that partnership;

(c) in relation to an individual

(i) a member of his family; or

(ii) a company or a partnership in which he, directly

or indirectly, holds a share or owns an interest.

(3) When the provider of the benefit incurs or reimburses

expenses connected with the private use of property including, but

not limited to, expenses -

(a) for the maintenance, repair, upkeep, licences or

insurance of the property;

(b) for the settlement of bills for services, facilities or

amenities provided in the property;

(c) representing a share of common expenses or fees

charged in connection with a bloc of properties of

which that property forms part,

the value of the benefit shall, for any month in which any such

expenses are incurred or reimbursed, be increased by the amount of

the said expenses.

(4) Notwithstanding the foregoing provisions of this rule,

when the benefit referred to in rule 20 consists of accommodation

in a hotel or a guest-house, the said value shall be the amount

chargeable by that hotel or guest-house for a year at the rate

charged to guests therein for similar accommodation.

(5) Where the beneficiary pays, during any calendar year, rent

for the private use of property, the annual value of the benefit for

that year shall be reduced by the amount of the rent so paid in that

year.

PART D

CATEGORY 3 BENEFITS - OTHER BENEFITS

In this Part D, unless the context otherwise requires "in-

house benefit reduction" with respect to the value of a benefit

referred to in this Part means the lower of €700 and the value of

that benefit before the said reduction

Provided that the total in-house benefit reduction with

respect to all benefits that qualify therefor provided by a person or

persons to the same beneficiary during any year shall be the lower

of €700 and the total value of the said benefits before the said

reduction

Provided further that the in-house benefit reduction with

respect to the value of a benefit provided to a person in a

controlling position shall be €0.

(1) The grant by a person to another person of a loan at

beneficial terms shall be deemed to be a benefit provided by the

former to the latter.

(2)

For the purpose of this rule -

(a) "loan" includes any advance or credit and any amount

shown in the records of a person as owed by another

person;

(b) a loan shall be deemed to have been granted at

beneficial terms if no interest is payable by the

beneficiary or if the interest so payable is less than the

benchmark rate;

(c) the benchmark rate of interest on a loan is such rate as

may be determined by the Commissioner from time to

time and the Commissioner may, for such purpose,

determine different rates for loans granted in different

circumstances

Provided that -

(i) * the benchmark rate of interest on a loan granted

by a bank set up or licensed under Maltese law

or by a financial institution authorised to lend

money to the general public in accordance with

Maltese law to an employee of such bank or

financial institution shall be

(A) in the case of a loan for the purchase of a home,

the average rate on loans to residents of Malta

for the purchase of a house, calculated by

reference to the interest rates prevailing at the

end of each month during the twelve (12) month

period ending on 30 September of the previous

calendar year, as published by the Central Bank

of Malta in the statistics database on interest

rates and other key financial market rates;

(B) in any other case, the rate on the main refinancing

operations as applied by the Central Bank of Malta

as prevailing at the end of the previous calendar

year;

(ii) unless and until a different rate is determined by

the Commissioner the benchmark rate of interest

on any other loan shall be 6.5% per annum.

The annual value of the benefit referred to in rule 26 is the

interest that would be payable on the loan for the year in question if

it were chargeable at the benchmark rate reduced by the interest

paid on that loan by the beneficiary during that year

Provided that in the case of a loan to which paragraph (i) of

the proviso to rule 26(2)(c) applies, the annual value shall be

reduced by the in-house benefit reduction

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.

(1) Subject to the provisions of sub-rule (2), the provision

by a person of a free meal or a meal at a discounted price to another

person shall be deemed to be a benefit provided by the former to

the latter.

(2) The provision of a meal shall not be treated as the

provision of a benefit when it is provided -

* These rules shall apply with effect from year of assessment 2025.

(a) by an employer which is a hotel or a catering or similar

establishment in an area of a restaurant or a dining

room designated as being reserved solely for the use of

the staff or in any area at a time when meals are not

normally served to the public; or

(b) by any other employer in a canteen where meals are

served to the staff generally.

The value of the benefit referred to in rule 28 is the cost of

the meal incurred by the provider of the benefit reduced by the

Provided that when the said benefit is provided by a hotel

or a catering or similar establishment to its employee, the said

value shall be reduced by the in-house benefit reduction.

The provision of an airline or sea transport ticket or fare by

a person to another person at no consideration or at a discounted

consideration shall be deemed to be a benefit provided by the

former to the latter.

(1) Subject to the provisions of sub-rule (2) hereof, the

value of the benefit referred to in rule 30 shall be the excess, if any,

of the price at which the ticket or fare in question is normally sold

to the public over the price paid by the beneficiary for that ticket or

fare.

(2) When the ticket or fare is provided by a company that

operates an airline or a shipping line or by an associated company,

the value of the benefit referred to in rule 30 shall be the actual cost

incurred by that company in providing that benefit or 20% of the

pri ce at wh ich an econom y fare t icket o r f are for the sam e

destination is normally sold to the public, whichever is the higher,

reduced by the in-house benefit reduction.

(1) The transfer of the ownership of any property, other

than a transfer that falls within the scope of any other provision of

these rules, by a person to another person at no consideration or at a

consideration which is less than the value of that property, shall be

deemed to be a benefit provided by the former to the latter.

(2) The provision of a service, other than a service that falls

within the scope of any other provision of these rules, by a person

to another person at no consideration or at a consideration which is

less than the value of that service shall be deemed to be a benefit

provided by the former to the latter.

(3) When a person issues a voucher, coupon or other token that

gives the right to another person to acquire any property or service

at no consideration or at a consideration which is less than the

value of that property or service and that voucher, coupon or other

token is used for the acquisition of any such property or service, the

former shall be deemed to provide a benefit to the latter consisting

of the transfer of the ownership of property or the provision of a

service to which sub-rule (1) or (2), as the case may be, applies

Provided that the Commissioner may direct that the issue

and use of vouchers, coupons or tokens under any particular

scheme shall not be deemed to be a benefit provided by reason of

an employment or office if he is satisfied that the employer does

not supply the property or services in question and does not bear

any part of the cost therefor and that the scheme does not otherwise

have the nature of a reward for services rendered by the employees.

(4) The use by a person of consumable things belonging to

another person at no consideration or at a consideration which is

less than their value shall be deemed to be a benefit consisting in

the transfer of the ownership of those things to which sub-rule (1)

applies.

(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.

(1) For the purposes of rules 32 and 33 -

(a) "in-house property" means movable property, other

than a vehicle as defined in Part B of these rules,

manufactured, produced, processed or otherwise

treated or acquired for resale by the employer as part

of his own business;

(b) "in-house service" means a service, other than a

service that constitutes a benefit referred to in Part B

or Part C of these rules, provided by an employer as

part of his own business;

(c) the value of in-house property or an in-house service

shall be deemed to be the selling price normally

charged by the provider of the benefit for that or a

similar property or service, reduced by any discounts

available generally to purchasers buying the same type

of property or service from the same supplier at the

same time as that of the transfer of that property or the

provision of the service in question, and increased by

any costs incurred by the provider of the benefit in

transferring that property or providing that service;

(d) the value of any other property or service is the higher

of its market value and its cost, increased, in any case,

by any costs incurred by the provider of the benefit in

transferring that property or providing that service;

(e) the consideration paid by the beneficiary is the price

paid by him for the acquisition of the property or

service in question and when the beneficiary acquires

immovable property under an emphyteutical grant, the

consideration shall be deemed to be the premium, if

any, paid or payable in accordance with the deed of

emphyteusis increased by twenty times the annual

ground rent in the case of a perpetual emphyteusis and

by such lower amount as fairly represents the value of

the grant in the case of a temporary emphyteusis.

(2) The meaning of the term "employer" as used in sub-rule

(1)(a) and (b) shall be construed without reference to the provisions

of rule 4.

(3)

For the purposes of sub-rule (1)(d) -

(a) the market value of property is the price which the

property would fetch if sold in the open market on the

date when the benefit is provided, taking into account

the condition of that property on that date and all other

relevant factors;

(b) the cost of property is the price paid by the provider of

the benefit for the acquisition thereof increased by the

cost of any additions, improvements or accessories

incurred after the acquisition thereof existing at the

time of the provision of the benefit

Provided that -

(i)

the price paid for the acquisition of movable

property that was acquired more than 6 years

before any specific date shall, as from that date,

be deemed to be 60% of the actual price;

(ii) the price paid for the acquisition of immovable

property under an emphyteutical grant shall be

deemed to be the premium, if any, paid or

payable in accordance with the deed of

emphyteusis increased by twenty times the

annual ground rent in the case of a perpetual

grant and by such lower amount as fairly

represents the value of the grant in the case of a

temporary grant.

(1) The provisions of the Act shall apply without

reference to these rules for the purpose of determining any tax

chargeable in 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.

(1) When a company grants an option to its employees or

to the employees of an associated company to acquire shares, that

option shall not be deemed to constitute a benefit but the exercise

by an employee of such an option shall be deemed to be a benefit

provided by the employer company to that employee.

(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.

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.

(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.

(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.

(1) When a share option is assigned to or renounced in

favour of any person, any gain thereby realised shall constitute a

capital gain for the purpose of article 5 of the Act.

(2) Any gain realised from the transfer of shares acquired

through the exercise of an option under a share option scheme shall

constitute a capital gain for the purposes of article 5 of the Act, and

in determining such gain the cost of the acquisition of the shares

shall be deemed to be the price which those shares would have

fetched if sold in the open market on the date of the exercise of the

option.

(1) Subject to the provisions of sub-rule (2), when a

person pays or reimburses, in full or in part, expenses incurred for

the benefit or in the interest of another person and where such

expenses are not included in the value of any other benefit referred

to in any of the foregoing rules, the former shall be deemed to

provide a benefit to the latter.

(2) The payment or reimbursement of expenses to which any

of the following paragraphs refers and that are incurred on or after

1st January, 2001 shall not be deemed to constitute a benefit

provided by reason of an employment or office

(a) expenses to which no other provision of these rules

applies necessarily incurred in the production of the

beneficiary’s income in his capacity as an employee or

the holder of an office;

(b) expenses incurred by an employee on the instructions

and in the exclusive interest of his employer where

such expenses are reimbursed by the employer against

the production of receipts;

(c) the costs of travel for a business purpose;

(d) the costs of travelling between Malta and Gozo for a

business purpose, relocation costs and costs of journeys

between work shifts;

(e) the cost of business related training;

(f)

subscriptions in respect of an employee’s membership

in a professional body recognised as such by the

Commissioner where that employee is employed in his

capacity as a member of the relative profession or

where that membership is a condition required by the

employer in terms of the contract of employment of

the beneficiary;

(g) the cost for providing insurance for business purposes;

(h) the cost incurred by an employer in providing

organised transport for his employees;

(i)

a present given to an employee to mark a festive

season or similar events provided it is not made in cash

and provided also that the total value of any such gifts

granted to any one employee during a calendar year

does not exceed €120 or such other higher amount as

may be approved by the Commissioner;

(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;

(k) costs incurred by and charged in the name of an

employee, as evidenced by receipts produced to the

employer, or by his employer for the provision of fixed

or mobile telephony services, including the cost of a

FRINGE BENEFITS

telephone set, mobile phone or a facsimile machine,

used by the employee for the purpose of the business

of the employer;

(l)

costs incurred in the provision of the use of a computer

and related equipment and software belonging to or

held under a title of lease by the employer and used by

an employee for the purpose of the business of the

employer;

(m) costs incurred in the provision to an employee of

internet services, as evidenced by receipts produced to

the employer, used by the employee for the purpose of

the business of the employer;

(n) the cost of the provision for the benefit of employees

of recreational facilities in the employer’s premises or

in premises available for that purpose to the employer;

(o) long service awards granted to an employee in

recognition of 15 years’ or more service to the extent

that the relative cost does not exceed €120 per year of

service and provided no similar award has been

granted to the same beneficiary within the previous 10

years;

(p) an award granted to an employee who is not a director

under a suggestion scheme or a scheme for the

promotion of safety at work organised for all

employees or all employees within a specified grade or

grades on equal terms, provided that the scheme is

outside the scope of the employees’ normal duties and

the award is of a reasonable amount;

(q) the cost of providing to employees uniforms and safety

clothing which they are under an obligation to wear in

terms of their contract of employment or of any law;

(r) the cost of the provision of childcare facilities for the

benefit of the employees, provided that the employee

receiving such benefit does not claim the deduction

provided for by article 14C of the Act;

(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;

(t)

any such other payment in kind or

cost or

reimbursement as may be approved

by the

Commissioner for the purpose of this rule.

(1) For the purposes of rule 39(2)(c) -

(a) "costs of travel" means the cost of a journey to a

destination outside Malta and back, including related

insurance, the costs of transport, accommodation and

meals, incurred by a person outside Malta and a

reasonable subsistence allowance;

(b) "business purpose" includes marketing a business or

concluding business transactions or attending business

seminars and business meetings or such other purposes

as may be approved by the Commissioner for the

purpose of this paragraph;

(c) when the purpose of travel outside Malta is not wholly

a business purpose no part of the travel costs shall be

treated as costs of travel for a business purpose

provided that any private element which is negligible

or which is purely incidental to the business purpose of

the travel shall be disregarded;

(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.

(2) In this rule "reasonable subsistence allowance" means an

allowance calculated to compensate the employee for the increased

cost of living while abroad to the extent that such cost of living is

FRINGE BENEFITS

not compensated by the payment or reimbursement of the other

costs referred to in sub-rule (1)(a).

For the purpose of rule 39(2)(d) -

(a) "costs of travelling between Malta and Gozo" means

the cost of a journey by sea or by air to one of the said

islands and back by an employee who normally resides

in the other island, including the cost of the transport

of a vehicle on such journey and the cost of one meal

for each such journey; and where the visit to that

island lasts more than one day the term includes also

the cost of transport within that island, accommodation

and meals;

(b) "business purpose" has the meaning assigned to it in

paragraph (b), as subject to paragraph (c) of sub-rule

(1) of rule 40.

For the purpose of rule 39(2)(e) -

(a) "business related training" means a training course

undertaken by an employee that leads to the

acquisition of knowledge or skills which are necessary

for the performance of the duties under the relative

employment or to an increased effectiveness in the

performance of the employee’s present or prospective

duties, but that does not necessarily lead to any formal

qualification; and

(b) the costs of business related training are

(i) the course and examination fees;

(ii) the cost of essential books and course material;

(iii) when the course is conducted in a place away

from the employee’s usual place of work, the

additional expenses incurred in travelling to and

from that place;

(iv) if the course is held outside Malta the costs

specified in rule 40(1)(a).

For the purposes of rule 39(2)(g) "insurance for business

purposes" means

(a) indemnity cover against any liability for which an

officer of a company may be personally liable in terms

of any law by reason of his office; or

(b) insurance over the life of an individual or over

property belonging to him where such insurance is

required in connection with the provision of security

for a loan or other liability directly related to the

business of the employer of that individual or of the

company or partnership of which he is an officer.

For the purposes of paragraph of rule 39(2)(h) "organised

transport" means transport in a vehicle with a seating capacity of 10

or more persons from defined pick-up points to the place of work

and back, available generally to employees or to a category of

employees.

(1) Except as otherwise expressly provided in these rules

any payment in cash, whether by way of reimbursement, bonus,

gratuity, allowance or otherwise, by a person to another person

shall, unless accounted for as wages or salaries, be deemed to be a

benefit provided by the former to the latter and its value shall be

the amount so paid.

(2) Except as otherwise expressly provided in these rules any

thing, right, privilege, perquisite or perk, other than cash, given

under any title and in any manner whatsoever by a person to

another person shall be deemed to constitute a benefit provided by

the former to the latter and the value of such benefit shall be the

market value of that thing, right, privilege, perquisite or perk.

(3) Notwithstanding the other provisions of these rules where

the Commissioner is of the opinion that the value of any benefit is

negligible he may, by a notice in writing, direct that it shall be

treated as if it were not a benefit.

PART E - MISCELLANEOUS

(1) Except as expressly provided in these rules or in or

under the Income Tax Acts nothing contained in these rules shall be

construed as granting or denying a right to any person to claim a

deduction from his income with respect to the provision of any

benefit or any payment in cash or in kind to any other person and

the right to any such deduction shall be regulated by the relevant

provisions of the Income Tax Acts and the rules prescribed under

those Acts without reference to these rules.

(2) Except as expressly provided in these rules the value of

any benefit determined in accordance with the provisions thereof

shall be deemed to be net of all deductions that could otherwise be

claimed by the beneficiary and no further deductions may be

claimed in respect thereof.

(1) Any guidelines, explanations or instructions relating to

benefits to which these rules refer contained in a publication or

circular published by or under the authority of the Commissioner

and distributed or made available to employers or to taxpayers in

general, shall be read and construed as one with these rules and

shall have the same effect as these rules to the extent that they are

not in conflict with any rules prescribed, or guidelines,

explanations or instructions published at a later date and to the

extent that -

(a) they give a definition of any term or an interpretation

of any provision contained in these rules;

(b) they determine the manner in which any provision of

these rules is to be applied;

(c) they determine any matter which in accordance with

these rules may be determined by or is subject to the

approval or the discretion of the Commissioner.

(2) The provisions of sub-rule (1) are without prejudice to any

power of the Commissioner to determine any matter in the manner

provided in any other rule.

(1) Every employer and every company and partnership

that provides any property or the use of any property, or makes any

payment in cash or in kind to any employee or an officer shall keep

proper and sufficient records to enable the determination of the

extent to which such payment is, or is not, to be treated as a benefit

provided by reason of an employment or office and the

categorisation, valuation and tax treatment of any such benefit in

terms of these rules, and shall deliver to the Commissioner such

statements, information and returns as may be required for the said

p u r p o s e s o n s u c h d a t e or d a t e s a s m a y be sp e c i f i e d b y t he

Commissioner or as may be prescribed.

(2) The records, statements, information and returns referred

to in sub-rule (1) shall include

(a) any records and statements expressly specified in any

of the foregoing provisions of these rules;

(b) such other records, statements, information and returns

as may be directed by the Commissioner from time to

time or as may be prescribed.

(3) All records referred to in this rule and all supporting

documents shall be produced or made available for inspection by

the Commissioner whenever so requested by the Commissioner and

shall be kept for a period of not less than 6 years.

(4) The provisions of this rule are without prejudice to any

obligations imposed on any person to keep records or to furnish

records, statements, information and returns in accordance with any

provision of or prescribed under the Income Tax Acts.