Reduced Malta Taxation for Internet Gaming 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 already is a leading jurisdiction in the internet gambling industry and these rules should help the jurisdiction to sustain the growth that it has managed to achieve so far thanks to its finely tuned balance of business friendliness and regulatory rigour.

Attracting Highly Qualified Gaming Talent

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 Lotteries and Gaming Authority (LGA).

Malta recently introduced an attractive 15% flat rate of tax for individuals working in the financial services 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 financial services sector, which has seen rapid growth in the context of hedge funds, FOREX businesses, captives and other areas, has registered over the last few years. This measure is now being extended to cover the country's well-established internet gambling industry.

Malta Taxation of Gaming Executives

New Personal Tax Band at 15%

The 15% tax rate will now, therefore, apply also to individuals drawing income from employment with companies that are licensed with the Lotteries and Gaming Authority and having a minimum income of Euro 75,000, as adjusted annually in line with the Retail Price Index. (as at basis year 2019 this stands at €84,991)

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 1^st January 2008. Applications to benefit from the scheme will be determined by 31^st December 2020 for employment commencing not later than 31^st December 2021. 

Gaming Employment Income Over Euro 5 m

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

Gaming Tax Scheme Eligibility Rules

Eligible Top Management Positions at Gaming Companies

A number of qualifying i-Gaming specific roles have been introduced into the legislation, namely:

• Chief Executive Officer;
• Chief Financial Officer;
• Chief Commercial Officer
• Chief Operations Officer;
• Chief Risk Officer (including Fraud and Investigations Officer);
• Chief Technology Officer;
• Portfolio Manager;
• Head of Investor Relations;
• Head of Marketing (including Head of Distribution Channels);
• Senior Analyst (including Structuring Professional);
• Senior Trader/Trader;
• Odds Compiler Specialist.

Non-Malta Domiciled Status

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

Qualifying iGaming 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. employment contract is subject to the laws of Malta and proves to the satisfaction of the Lotteries and Gaming Authority that the contract is drawn up for exercising genuine and effective work in Malta;
3. proves to the satisfaction of the Lotteries and Gaming Authority that he is in possession of professional qualifications and has at least five years professional experience;
4. has not benefited 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 Lotteries and Gaming Authority that he performs activities of an eligible office; and
7. 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

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.