Tax Guidelines on Article 6 of the Income Tax Act

On 19 June 2023, the Commissioner for Revenue published guidelines (the ‘Guidelines’) in connection with Article 6 of the Income Tax Act, Chapter 123 of the Laws of Malta (‘ITA’).

By way of background, Article 6 of the ITA is intended for qualifying insurance and investment services expatriates in employment with a duly licenced undertaking (the ‘Qualifying Expatriate').

Eligible expenses

In terms of Article 6 ITA, the following expenses are eligible for a tax exemption in the hands of the Qualifying Expatriate:

• Removal costs in respect of relocation to or from Malta;
• Accommodation expenses incurred in Malta;
• Travel costs in respect of visits to or from Malta by the expatriate and their immediate family;
• Provision of a car in Malta;
• A subvention of not more than €600 per calendar month;
• Medical expenses and medical insurance; and
• School fees of respective children.

The Guidelines set out that it is up to the expatriate to opt to avail of the exemption or otherwise. Whether the expatriate elects to claim the exemption or not, any expenses paid by the employer on behalf of the expatriate, or their immediate family need to be declared in the FS3 of the expatriate as fringe benefits in terms of the Fringe Benefits Rules, Subsidiary Legislation 123.55 of the Laws of Malta.

Compliance process

It has been established, through the Guidelines, that Qualifying Expatriates making a claim are required to submit along with their tax return the return attachment form RA32 and obtain endorsement from their employer.

The Guidelines further clarify that a Qualifying Expatriate may not also benefit from the benefits outlined within the Highly Qualified Persons Rules, Subsidiary Legislation 123.126.