31.08.2016. Malta Issued New Tax Rules for Aviation Sector

Company News

The Inland Revenue of Malta issued the rules concerning a new reduced flat rate of 15% available for individuals involved in the Maltese aviation industry not domiciled in Malta.

A flat rate became effective on 24 May 2016 and applies to income attributable to assessment 2017. Its aim is to attract qualified professionals to the Maltese aviation sector. The list of qualifying of qualifying job positions may be found in Tax Guidelines on Qualifying Employment in Aviation (Personal Tax) Rules issued by the Inland Revenue Department and contains executive management positions and certain positions of aviation engineers.

Income from a qualifying contract of employment is subject to tax at a flat rate of 15% provided that the income amounts to at least 45,000 euros (USD 50,000) annually. The tax rate applies for a consecutive period of five years for European Economic Area (that is, EU countries as well as Norway, Iceland and Liechtenstein) and Swiss nationals and for a consecutive period of four years for third country nationals.

The four or five year period, as the case may be, commences from the year when an individual first becomes taxable in Malta. In cases where an individual was taxable in Malta but not benefiting from such rate and subsequently becomes eligible to use such rate, he/she can benefit only if the four or five year period has not elapsed. The benefit is then available for the years remaining from the date of eligibility until the said four or five year period from the date of first being subject to tax in Malta elapses.