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Malta: Offshore Legal and Tax Regimes

Taxation of Foreign Employees of Offshore Operations

This section refers to the taxation of foreign employees of the various types of offshore entity; see Domestic Personal Taxation for the general principles of individual taxation in Malta, which also apply to the resident employees of non-resident entities. There is in fact no distinction between the employees of resident or non-resident operations. It is a question of individual status; residents and non-residents are treated differently of course. Most types of compensation and benefit paid to employees are taxable; there are no special privileges or exemptions for expatriate workers, except for the special situations detailed below:

  • expatriates employed in the fund management and insurance sectors are not liable for tax on benefits and allowances of various kinds;
  • expatriate employees of companies licensed to operate in the Freeport zone pay income tax at a top rate of 30% and do not have to make social security contributions; they are also exempt from stamp duty and customs duties;
  • officers and employees of an Offshore Company are exempt from customs duty on their personal belongings imported into Malta for the first six months of their residence;
  • highly qualified expatriate employees working in the financial services or i-gaming industry are subject to a flat tax of 15%.

The 15% flat tax incentive was extended in the 2012 budget to include highly skilled and qualified expatriates who are required for certain industrial sectors; individuals who carry out research or market an invention or technology in Malta; and digital gaming professionals, such as game directors and game designers.

 

 

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