Malta

Certain tax exemptions for investment services expatriates and insurance expatriates

Certain tax exemptions are provided to investment services expatriates and insurance expatriates as defined under the Maltese Income Tax Act and subject to the satisfaction of certain statutory conditions (these cannot be taken together with the Highly Qualified Persons Rules). An investment services expatriate and an insurance expatriate may not be subject to Maltese tax in respect of the following income (otherwise liable to tax) relating to expenditures incurred for the benefit of the expatriate or one’s immediate family by the investment service/insurance company for the first ten years of assessment from when the said expatriate becomes liable to Maltese tax. The respective expenses include:

• Removal costs when relocating to or from Malta.
• Accommodation expenses incurred in Malta.
• Travel costs to or from Malta.
• Provision of a car to be used by the expatriate in Malta.
• A subvention/cost of living allowance of not more than EUR 600 per month.
• Medical expenses and medical insurance.
• School fees for children.

Furthermore, interest, royalties, and capital gains on disposal of units in collective investment schemes and company shares/securities (subject to certain conditions) that are received by such expatriates are exempt from Maltese tax.

An investment services expatriate may also be exempt from payment of Maltese social security contributions, subject to certain conditions.

Voluntary Occupational Pension Scheme (VOPS) Rules

The VOPS Rules were recently amended to further enhance the fiscal measures already in place to incentivise the occupational pension system in Malta. The VOPS Rules apply to certain types of employers as defined, including self-occupied persons and associations representing employers and self-occupied persons. The fiscal measures introduced by the Rules can be summarised as comprising:

• An annual tax credit available to the employer amounting to the lower of 25% of the amount of contributions paid and EUR 750 for each employee in respect of whom the contributions are paid.
• Tax deductibility for the employer on the amount of contributions paid, subject to a capping.
• An annual tax credit available to employees who voluntarily make additional contributions into the employer’s scheme of 25% of the aggregate amount of the qualifying contributions made during a year, up to a maximum of EUR 750 or such other amount as may be prescribed by the Minister from time to time.
• Non-taxation for the employee under the Fringe Benefits Rules in respect of contributions made by the employer for the employee’s benefit.
• For a scheme to qualify under the VOPS Rules, it needs to allow individuals to start withdrawing benefits as from the age of 61 years but not later than the age of 70 years, in line with the objective of sustaining one’s income after retirement.

Personal Retirement Scheme (PRS) Rules

The PRS Rules are a set of tax measures intended to incentivise contributions to PRSs.

An annual tax credit is available to individuals who make contributions to a PRS of 25% of the aggregate amount of the qualifying contributions made during a year, up to a maximum of EUR 750. Similar to the VOPS, for a scheme to qualify under the PRS Rules, it needs to allow individuals to start withdrawing benefits as from the age of 61 years but not later than the age of 70 years.

Tax credit to parents of children with a disability

Parents of children with a disability will be entitled to an annual tax credit of EUR 500 per annum for each child, (increase from EUR 200) to assist with any private therapy that may be required.

Tax credit on higher educational qualifications 

Subject to the satisfaction of certain conditions, an individual under the age of 40 who attains a PhD or a Master’s degree or an equivalent qualification thereto (MQF Level 7 or 8) in 2018 or later may be eligible for a tax credit equivalent to the tax chargeable on the income for whole-time employment as from year of assessment 2020. If the individual pursues the relevant course of studies on a part-time basis, the tax credit is reduced by 50%. A reduction in the tax credit may also apply where the course of studies was commenced before 2017.

The Deduction and Tax Credits (Relevant Qualifications for Industry) Rules provide for a tax credit of up to 70% of the study costs paid for a certification, degree, or post-graduate degree, as approved by the Ministry of Education. The tax credit may only be claimed once the relevant qualification is obtained and the Department of Education issues a tax credit certificate. The said tax credit may be claimed against the tax liability on chargeable income by either the parents or the student. If the tax credit is not claimed in full, then the balance may be carried forward to the next years. This tax credit was extended to courses of studies commencing up to 31 December 2024.

By virtue of the Get Qualified Scheme, individuals following a course of studies that commences not later than 31 December 2024 and leads to a certification, diploma, degree, or post-graduate degree course may be entitled to benefit from a tax credit to recover part of the costs incurred. The costs relate to fees paid by the individual to the university, institution, or other entity recognised by the Ministry for Education and Employment for the training and educational services leading to the approved qualification or fees for sitting for examinations required to achieve the approved qualification.