Highly Qualified Person Rules in Malta

Malta Extends Highly Qualified Person Rules to Aviation Industry

The Maltese Commissioner of Inland Revenue has extended the exceptionally favourable personal tax regime – Highly Qualified Persons Rules (“Rules”) to include high ranking officers within an undertaking holding an air operators certificate.   In accordance to such rules, such employees may opt to be taxed at a rate of 15%.  Local source income arising in Malta, would however, be taxable at the normal individual tax rates.

The extension of the Rules to the aviation industry, underscores the importance attributed by the Maltese Government to this young, yet fledging industry.  Originally confined only to industries licensed by the Malta Financial Services Authority – such as insurance and financial services company, the Rules were gradually expanded to include other key industries, most notably the Remote Gaming Regulations (for online gaming companies).  The further expansion to the aviation industry is further testament to the commitment of the Maltese authorities to give added-value to core industries.

The aforesaid personal tax incentives further embellish what is already a favourable fiscal regime for companies operating in the aviation industry.  Under the general fiscal rules, companies incorporated in Malta are deemed to be taxable on a worldwide basis, however, companies that are incorporated outside Malta but which establish their effective management and control in Malta are taxable only on income arising in Malta, and foreign source income remitted to Malta.

Therefore, by using the aforesaid legal and tax rules, it is possible for foreign aviation companies to establish their residence in Malta, and have income generated from the ownership, leasing or operation of the aircraft (or even the aircraft engine), not taxable in Malta, insofar that such income arising from the aforesaid leasing or operations is not remitted to Malta.  Companies engaged in the international transport of passenger or goods arising outside Malta, are eligible to benefit from the aforesaid rule.