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.