The Highly Qualified Persons Rules 2011 (“the Rules”) were enacted by means of Legal Notice 106 published in March 2011, with retrospective effect as of tax basis year starting 1 January 2010. The scheme prescribes a preferential income tax rate to highly qualified professionals who enter employment contracts to occupy eligible offices in Malta.
Assisted Reproductive Technology (ART) – a new niche sector for Malta
The Assisted Reproductive Technology Sector in Malta has expanded in recent years, especially after the introduction of the amendments to the Embryo Protection Act.This measure was introduced in response to the significant need for additional highly qualified medical professionals, especially where local expertise is lacking.
The Embryo Protection Act 2012, chapter 524 of the Laws of Malta is the parent act governing the Fertility Sector. The Bill was passed through Parliament and provides for the protection of human embryos through the establishment of The Embryo Protection Authority, the regulatory Authority responsible for the Assisted Reproductive Technologies (ART) sector.
In an aim to establish more equality and inclusion, these amendments have lifted the ban on embryo freezing and also legalized gametes donation, hence widening access to fertility treatments.
Through this act, children born from gamete donation are granted the right to know their roots upon reaching legal age. Single persons and lesbian couples may also be eligible for IVF treatment, whilst the age limit for women undergoing IVF treatment has been extended from 43 to 48 years.
Malta’s public ART Clinic is composed of a multidisciplinary team.Through Legal Notice 141 of 2018, foreign professionals specialized within the ART sector, may also be eligible for the tax incentives offered by the High Qualified Persons Scheme. The schedule of eligible offices was extended to include anyone employed as an Embryologist, Responsible Person and Lead Quality Manger within a company that is recognized by the Office of the Chief Medical Officer to Government.
Malta Personal Tax Cap for ART Executives
The 15% tax rate will now therefore apply also to professional individuals deriving income from employment with companies that are licensed under the Office of the Chief Medical Officer to the Government and having a minimum income of €86,938, as adjusted annually in line with the Retail Price Index. (as at basis year 2021 this stands at €86,938). The 15% rate will apply to the annual salary received under the qualifying employment contract for a period of five years from the beginning of the contract for EEA and Swiss nationals. In relation to non-EU nationals, the scheme is applicable for four years.
In July 2015, a one-time extension five-year period was afforded to EEA and Swiss nationals who may benefit from these rules for a maximum of ten years. This extension is available for persons who were resident in Malta after 1st January 2008. Applications to benefit from the scheme will be determined by 31st December 2020 for employment commencing not later than 31st December 2021.
Tax exemption of income over €5 million
Income in excess of €5 million is exempt from tax in Malta under the Rules.
Eligible Positions in Assisted Reproductive Technology (ART) Sector
The law lists the following eligible offices. However, the individual’s roles would be deemed eligible even if the contract does not mention the exact eligible job titles as long as they are equivalent to the duties envisaged by and at the discretion of the Chief Medical Officer of the Government of Malta:
- Embryologist
- Responsible Person
- Lead Quality Manager
- Chief Executive Officer
- Chief Risk Officer
- Chief Financial Officer
- Chief Operations Officer
- Chief Technology Officer
Non-Malta Domiciled Status
For eligibility under these rules, applicants must be professional expatriates not domiciled in Malta.
Qualifying Contracts of Employment
The preferential tax rate applies to an individual who satisfies all of the following conditions of employment:
- derives employment income subject to Malta income tax.
- employment contract is subject to the laws of Malta and proves to the satisfaction of the MFSA that the contract is drawn up for exercising genuine and effective work in Malta.
- proves to the satisfaction of MFSA that he is in possession of professional qualifications and has at least five years professional experience.
- has not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions (Article 6, Income Tax Act).
- 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.
- proves to the satisfaction of the MFSA that he performs activities of an eligible office; and
- proves that:
- 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.
- 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.
- he is in possession of a valid travel document.
- 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 HQP Status for Financial Services Executives
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 Highly Qualified Persons rules and how HQP special tax status may apply to you.
