By virtue of Legal Notice 1 of 2017 the Qualifying Employment in Aviation (Personal Tax) Rules have been amended to the extent that the qualifying periods for which aviation experts may be eligible to opt for the 15% reduced tax rate have been extended. In accordance with these amendments, nationals of the European Economic Area and Switzerland are now eligible to a one-time extension of five (5) years to their qualifying period, while third country nationals are eligible for a one-time extension of four (4) years to their qualifying period. This one-time extension is provided for upon application and is subject to the continued adherence to the provisions and minimum qualifications of the Rules.

By way of general background in terms of the Qualifying Employment in Aviation (Personal Tax) Rules expatriates employed as a highly qualified persons in the aviation industry (for example Aviation Flight Operations Managers, Aviation Training Managers or Chief Executive Officers) may opt to benefit from a reduced flat rate of tax of 15% on their employment income derived in respect of work or duties carried out in Malta subject to the following conditions pertinent to the employee:

expatriates employed as a highly qualified persons in the aviation industry may opt to benefit from a reduced flat rate of tax of 15% on their employment income

1. derives employment income subject to income tax in Malta;
2. has an employment contract subject to the laws of Malta and proves to the satisfaction of the Competent Authority that the contract is drawn up for exercising genuine and effective work in Malta;
3. proves to the satisfaction of the Competent Authority that s/he is in possession of professional qualifications and has at least five years’ professional experience;
4. 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/her employer paying out income from a qualifying contract as chargeable to tax in Malta;
5. proves to the satisfaction of the Competent Authority that s/he performs activities of an eligible office; and
6. proves that:

• s/he is in receipt of stable and regular resources which are sufficient to maintain himself/ herself and the members of his/ her family without recourse to the social assistance system in Malta;
• s/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;
• s/he is in possession of a valid travel document;
• s/he is in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for himself/ herself and the members of his/ her family.

An application for a formal determination relating to eligibility under the Highly Qualified Persons Rules must be made to The Chairman, Authority for Transport in Malta.

The benefit is exercised for each year of assessment by means of a declaration made on the form RA 17 signed by the beneficiary and endorsed by the Authority for Transport in Malta. This form is to be attached to the income tax return and filed with the Inland Revenue Department by the tax return date.

The above-mentioned incentives are very significant for Malta particularly given the need for increased qualified persons in the industry and the considerable year on year growth of the Malta aviation sector. Accordingly, the incentives and said extension thereof are designed to encourage foreign experts to work in Malta, facilitating the sharing of specialised know-how and the training of other Maltese workers in the aviation industry.