Legal Basis and HQP Framework Evolution
The tax treatment historically referred to as the Highly Qualified Persons Rules was introduced under subsidiary legislation issued pursuant to the Income Tax Act (Chapter 123 of the Laws of Malta). Over time, multiple sector-specific professional tax rules emerged alongside the HQP framework, creating fragmentation and interpretative overlap.
LN 20 of 2026 introduced the Tax Treatment of Highly Skilled Individuals Rules, replacing and consolidating the former HQP Rules and related professional tax frameworks into a single, harmonised statutory framework. The objective is to preserve Malta’s attractiveness to senior talent while reinforcing substance, clarity, and international alignment.
Who Qualifies as a Highly Qualified Person
Qualification is determined on a role-based and employment-based assessment, not on nationality or investment. Applicants must be employed in Malta in an eligible office within an approved sector and meet the applicable remuneration threshold.
Eligible offices typically include senior executive, leadership, or specialist positions involving strategic decision-making, regulatory responsibility, or technical oversight. The assessment focuses on the actual functions performed, rather than job title alone.
Eligible Sectors
The framework applies to employment in sectors designated as strategically relevant to Malta’s economy, including:
- Financial services and regulated financial activities
- Gaming and digital gaming operations
- Aviation and aircraft operations
- Maritime activities and shipping services
- Innovation, technology, and creative industries
- Senior family office, treasury, and back-office operations
Eligibility must be maintained throughout the period of application of the tax treatment.
Minimum Annual Remuneration Thresholds
To qualify, the individual must receive annual employment income exceeding the statutory minimum threshold applicable for the relevant year. These thresholds are adjusted periodically, typically in line with cost-of-living mechanisms. The last adjusted minimum remuneration threshold for basis year 2025 under the Highly Qualified Persons Rules was €100,061.
For the new consolidated Rules effective from 1 January 2026, the Legal Notice sets the minimum qualifying employment income at €65,000 (exclusive of the annual value of fringe benefits), with an in-built mechanism providing for an increase of €10,000 every five years from the year following entry into force.
Only income arising from the qualifying employment may benefit from the preferential tax treatment.
Tax Treatment and Benefits
Qualifying individuals benefit from a flat personal income tax rate of 15 % on income derived from the eligible employment.
The preferential rate applies up to a statutory income cap, beyond which income is exempt from Maltese income tax. As at the current framework, the cap is set at €7,000,000 per annum (increased from the previous annual cap of €5,000,000).
Income falling outside the qualifying employment, or exceeding the statutory cap, is subject to the ordinary Maltese income tax rules. No personal allowances, deductions, or reliefs may be claimed against income taxed at the 15 % rate.
Duration of the Tax Treatment
The HQP tax treatment may be granted for a fixed statutory period extending until 2040, subject to continued compliance with the applicable conditions.
Approval is granted for defined periods and may be renewed, provided the individual continues to satisfy the eligibility criteria, remains employed in a qualifying office within an approved sector, and meets the applicable remuneration threshold.
Compliance and Ongoing Obligations
Beneficiaries must remain compliant with Maltese tax law throughout the period of approval. This includes maintaining qualifying employment, meeting remuneration thresholds, filing accurate tax returns, and notifying the authorities of any material changes affecting eligibility.
Failure to satisfy the statutory conditions may result in withdrawal of the tax treatment and reassessment under the ordinary rules.
Interaction with Tax Residence and International Obligations
The HQP framework does not automatically confer Maltese tax residence, nor does it override domestic residence tests or applicable double taxation agreements. Malta remains fully compliant with international transparency standards, including the Common Reporting Standard and exchange of information obligations.
Careful residence and treaty analysis is essential for internationally mobile professionals.
Transition Period for Current HQP Beneficiaries
Individuals who were already benefiting from the former Highly Qualified Persons Rules at the time of the entry into force of LN 20 of 2026 may continue to benefit from the preferential tax treatment, subject to the applicable transitional provisions and continued compliance with the conditions under which approval was originally granted.
Such beneficiaries are not required to reapply under the new framework solely as a result of the legislative change; however, any material change in role, employer, sector, or remuneration may trigger a reassessment of eligibility under the current rules. Existing beneficiaries should therefore review their position to ensure ongoing compliance and to assess the potential impact of future changes within the updated statutory framework.
How Our Tax and Private Client Advisors Can Assist
Our tax and private client lawyers advise internationally mobile professionals and employing entities on eligibility under the HQP framework, the structuring of employment arrangements in line with Maltese tax law, the preparation and submission of applications to the Maltese authorities, ongoing compliance and renewals, and cross-border tax coordination including residence and treaty considerations.
