Malta Personal Tax Scheme for Aviation Executives

Reduced tax rate for income from qualifying employment in the Maltese aviation sector

Dr. Jean-Philippe Chetcuti co-authored with Magdalena Velkovska | 14 Jan 2022

Malta Personal Tax Scheme for Aviation Executives

The Highly Qualified Persons Rules 2011 (“the Rules”) enacted by means of Legal Notice 106 published in March 2011 but with retrospective effect as of tax basis year starting 1 January 2010, prescribe a preferential income tax bracket to a number of highly qualified professionals.

Malta is firmly establishing itself in the aviation sector and these rules should help the jurisdiction to sustain the growth that it is achieving so far thanks to its finely tuned balance of business friendliness and regulatory rigour.

Highly Qualified Aviation Executives

The objective of these new personal tax rules is the creation of a scheme to attract highly qualified persons to Malta and have now been extended to “eligible offices” with companies licensed and/or recognised by the Malta Civil Aviation (Air Operators Certicates) Act.

Malta recently introduced an attractive 15% flat rate of tax for individuals working in the aviation sector who can meet a number of requirements specified in the relevant legal notice. This measure was introduced in response to the growth which the Maltese aviation sector, which has seen rapid growth in the registration of aircraft in the Maltese Aircraft Register over the last few years.

Malta Taxation of Aviation Executives

New Personal Tax Band at 15%

The 15% tax rate will now, therefore, apply also to individuals drawing income from employment with companies holding an Air Operators' Certificate issued in terms of Article 4 of the Malta Civil Aviation (Air Operators' Certificates) Act and having a minimum income of Euro75,000, 

Aviation Employment Income Over €5m

Income in excess of five million Euro is exempt from tax in Malta under the Rules.

Aviation Tax Scheme Eligibility Rules

Eligible Top Management Positions at Aviation Companies

A number of qualifying Aviation specific roles have been introduced into the legislation, namely:

  • Aviation Accountable Manager
  • Aviation Continuing Airworthiness Inspector
  • Aviation Operations Inspector
  • Aviation Ground Operations Manager
  • Aviation Training Manager
  • Chief Executive Officer;
  • Chief Financial Officer;
  • Chief Commercial Officer
  • Chief Operations Officer;
  • Chief Risk Officer (including Fraud and Investigations Officer);
  • Chief Technology Officer;
  • Head of Investor Relations;
  • Head of Marketing (including Head of Distribution Channels);
  • Head of Research and Development; (including Search Engine Optimisation and Systems Architecture)
  • Senior Analyst (including Structuring Professional);

Non-Malta Domiciled Status

For eligibility under these rules, applicants must not be domiciled in Malta.

Qualifying Aviation Contracts of Employment

The preferential tax rate applies to an individual who satisfies all of the following conditions of employment:

  1. derives employment income subject to Malta income tax;
  2. the employment contract is subject to the laws of Malta and proves to the satisfaction of Transport Malta that the contract is drawn up for exercising genuine and effective work in Malta;
  3. proves to the satisfaction of Transport Malta that he is in possession of professional qualifications and has at least five years professional experience;
  4. has not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions (Article 6, Income Tax Act);
  5. fully discloses for tax purposes and declares emoluments received in respect of income from a qualifying contract of employment and all income received from a person related to his employer paying out income from a qualifying contract as chargeable to tax in Malta;
  6. proves to the satisfaction of the Transport Malta that he performs activities of an eligible office; and
  7. proves that:
  8. he is in receipt of stable and regular resources which are sufficient to maintain himself and the members of his family without recourse to the social assistance system in Malta;
  9. he resides in accommodation regarded as normal for a comparable family in Malta and which meets the general health and safety standards in force in Malta;
  10. he is in possession of a valid travel document;
  11. he is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself and the members of his family.

Exclusions from the Aviation Personal Tax Rules

Important exclusions apply and candidates are encouraged to seek professional advice to avoid punitive rules applicable in case an ineligible applicant obtains benefits under this personal tax scheme.

Our Personal Tax Practice

Led by Dr Jean-Philippe Chetcuti, Dr Priscilla Mifsud Parker, and Magdalena Velkovska, our Malta personal tax lawyers have extensive experience advising private clients, high net worth individuals, senior corporate executives, investors and entrepreneurs on personal tax matters.  Contact us for more information about the Malta Highligh Qualified Persons rules and how HQP special tax status may apply to you.

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