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Tax Incentive Renewal - Qualifying Employment in Innovation and Creativity (Personal Tax)

Dr Josef Cachia and Dr John Caruana  -  11/December/2019

The development of knowledge-based industries warrants the formulation of incentives in order to attract non-residents to come working in Malta. With this scope in mind, the Government has recently renewed the ‘Qualifying Employment in Innovation and Creativity’ tax incentive through Legal Notice 282 of 2019. Such incentive represents yet another measure by which Maltese tax policy is used to address Malta’s economic needs, specifically those required in the local labour market. While in substance, the Scheme has remained the same, some significant changes have been introduced.

For whom is this incentive directed?

This incentive is directed towards all individuals who are employed in a role directly engaged in the carrying out or management of research, development, design, analytical or innovation activities.

Which benefit exists?

An individual who qualifies for such scheme shall be subject to solely a 15% tax rate over his employment income.

Which conditions does an individual need to satisfy in order to apply for this tax incentive?

A number of different conditions have to be satisfied; an individual must amongst other criteria:

  • derive employment income of a minimum of €52,000 and be subject to paying income tax on such income in Malta;

 

  • have an employment contract subject to the laws of Malta whose objective has to be of exercising genuine and effective work in Malta

 

  • be in possession of a relevant qualification or relevant experience.

 

  • have not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions

 

  • be in receipt of stable and regular resources which are sufficient to maintain oneself and the family members without recourse to the social assistance system in Malta

 

  • reside in an accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta

 

  • be in possession of a valid travel document;

 

  • be in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family

 

  • not be domiciled in Malta

 

If during the tax incentive’s period of application, the beneficiary enters into a new contract of employment, shall the tax incentive be automatically terminated?

No; if the beneficiary continues to satisfy the abovementioned conditions, the tax incentive shall continue to apply if the individual enters into a new contract of employment which is also considered to be an eligible office. Notably, there must be no more than 30 days between the termination of one contract of employment and the commencement of the other contract of employment.

Are you interested?

Should you be interested in this Scheme, please do not hesitate to contact us. At KSi Malta, we pride ourselves on having a team of experienced professionals who is always willing to help.
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