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The Qualifying Employment in Creativity & Innovation Rules were brought into force through Subsidiary Legislation 123.141 in 2013, under the auspices of the Malta Income Tax Act.
Qualifying Employment in Innovation and Creativity Rules
This taxation scheme was mainly devised to attract to Malta individuals working within knowledge-based industries such as iGaming, engineering, technology and product development in order to address the skills gap present in Malta’s labour market.
Under the Qualifying Employment in Innovation and Creativity (Personal Tax) Rules (the “Rules”), expatriates holding an eligible office under a qualifying contract of employment directly engaged in carrying out of duties or management of research, development, design, analytical or innovation activities, may opt to benefit from a reduced flat rate of tax of 15% on their employment income derived in respect of work or duties carried out in Malta.
Malta Enterprise has issued specific guidelines on what is considered to be an eligible office.
Eligibility for the programme
Other than meeting all the relevant criteria, an individual must be employed and carrying out one of the following roles:
- Industrial Research and Experimental Development, holding a postgraduate degree in sciences or engineering that is relevant to the particular role,
- Product Development and Product/Process Innovation, holding a postgraduate degree in design, creativity, art, product development, sciences or engineering or having been engaged in a comparable role for at least three years,
- Senior Management Role, reporting directly to the Board of Directors of the specific company and also subject to certain qualifications.
Main Amendments by Legal Notice 282 of 2019
The duration of the qualifying period of applicability of these Rules, once an assessment has been made and an individual is confirmed as a beneficiary to these Rules, has also been revised.
Legal Notice 282 of 2019 has now amended the qualifying period to a consecutive period of up to four (4) years, and by application, the benefit would be able to be extended to a qualifying period not exceeding five (5) consecutive years, subject to approval by Malta Enterprise.
Malta Enterprise has now also adopted a monitoring system once an individual becomes a beneficiary of these Rules. On an annual basis, the beneficiary will be requested to provide Malta Enterprise updated documentation, as may be required, to ensure that a beneficiary still maintains the minimum requirements adopted by the Rules.
Also, beneficiaries can now change their employment, and should such change be subject to continued adherence to the Rules, that is, the beneficiary enters into a new contract of employment which is also considered to be an eligible office, the beneficiary shall continue to benefit from these Rules subject to the period between the termination of the initial eligible office contract of employment and the commencement of the other is not more than thirty (30) days.
Another noteworthy change relates to the right for a beneficiary to acquire immovable property situated in Malta. Prior to the issuance of the legal notice, a beneficiary had the option to either lease or purchase immovable property in Malta. Through the legal notice, rights acquired under these Rules shall be withdrawn if a beneficiary directly or indirectly acquires immovable property. Thus beneficiaries must opt to lease immovable property in Malta whilst under the auspices of these Rules, however, individuals may later opt to purchase immovable property once the qualifying period for their respective years of assessment is over.
Lastly, the legal notice advises that determinations of applications, by Malta Enterprise, under these Rules will be for a period until the 31st of December 2025.
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