Tax Treatment of Highly Skilled Individuals Rules, 2026 – Key Changes and Practical Impact

February 4, 2026

Malta has introduced a new legislative framework governing the taxation of highly skilled expatriate professionals through Legal Notice 20 of 2026, titled the Tax Treatment of Highly Skilled Individuals Rules, 2026 (the “Rules”). The Rules apply with effect from 1 January 2026 and represent a significant restructuring of Malta’s preferential personal tax regimes for senior international talent.

Rather than continuing to operate multiple parallel schemes linked to specific industries, the legislator has adopted a single, consolidated regime applicable across a broad range of regulated and recognised sectors. The stated objective is to enhance coherence, certainty, and Malta’s long-term competitiveness in attracting highly skilled professionals.

A Single Framework Replacing Multiple Legacy Regimes

The Rules repeal and replace a number of previously standalone tax programmes, including the Highly Qualified Persons Rules and other qualifying employment regimes applicable to sectors such as aviation, maritime, innovation, family offices, and related activities.

By consolidating these arrangements into one legislative instrument, Malta has reduced fragmentation and removed sector-driven inconsistencies that previously affected eligibility criteria, duration, and income thresholds.

Core Tax Treatment

Under the new regime, qualifying employment income derived under a qualifying contract of employment is taxed at a flat rate of 15%. Income subject to this rate is ring-fenced, meaning that no deductions, allowances, credits, or set-offs may be claimed against it.

The preferential rate applies to qualifying income of up to €7,000,000 per annum. Any income exceeding this threshold is taxable in accordance with Malta’s ordinary progressive income tax rates, currently capped at 35%.

Salary Threshold and Indexation Mechanism

Eligibility is subject to a minimum annual basic salary of €65,000, exclusive of fringe benefits. Unlike earlier regimes that relied on ad hoc updates or administrative discretion, the Rules introduce a statutory escalation mechanism, increasing the minimum salary threshold by €10,000 every five years.

This approach provides greater predictability for both employers and individuals while ensuring the regime remains aligned with evolving market conditions.

Duration and Renewability

The benefit applies for an initial five-year period. Subject to continued compliance with the Rules, beneficiaries may apply for two further five-year extensions, allowing for a maximum total benefit period of 15 years.

This clearly defined structure marks a shift towards enhanced long-term certainty when compared to earlier preferential tax regimes.

Eligibility Conditions

To qualify, individuals must satisfy a combination of personal, professional, and administrative criteria, including:

non-domiciled status in Malta;
appointment to an eligible office within a sector regulated or formally recognised by a competent authority (such as financial services, gaming, transport, innovation, healthcare, or advanced technology);
appropriate professional qualifications or a minimum of five years’ comparable professional experience; and
compliance with ancillary requirements relating to accommodation, financial self-sufficiency, valid travel documentation, and private medical insurance coverage.

Transitional Arrangements

Individuals who were already benefiting from one of the repealed regimes as at 31 December 2025 may apply to transition to the new framework, subject to the prescribed conditions and timelines. No new applications under the former regimes are accepted following the introduction of the Rules.

Practical Significance

While the headline 15% tax rate is not new, the structural redesign of the regime introduces several important developments, including:

a significantly higher qualifying income ceiling;
a transparent and legislated salary threshold escalation mechanism;
defined benefit periods with clear renewal options; and
reduced reliance on fragmented, sector-specific legislation.

Taken together, these measures provide improved clarity and predictability for employers and internationally mobile professionals, while reinforcing Malta’s positioning as a stable and competitive jurisdiction for senior talent within the EU.

For further information on the application of the Tax Treatment of Highly Skilled Individuals Rules, 2026, or for assistance in assessing eligibility under the new framework, please contact us here or on [email protected]. Our team can provide tailored guidance based on individual and corporate circumstances.