The so-called Highly Qualified Persons Rules scheme was introduced to enable Malta to more quickly develop certain new areas of its financial services industry, such as pensions administration, in spite of a lack of individuals qualified in these mostly technical areas among the general Maltese population of around 416,000.
Like similar programmes in some other countries, the rules enable qualifying individuals to benefit from a flat personal tax rate of 15% for a consecutive five-year period only, if they are European Economic Area or Swiss nationals. (Those from other countries are entitled to the same benefits, but for four years.)
Some who were already working in Malta at the time the rules were introduced have been able to apply to benefit for the scheme retroactively, to up to two years, as well as going forward for the remaining period.
Without the scheme, such individuals would pay income tax at a progressive rate that is capped at 35%.
‘Not aimed at attracting companies’
Joe Bannister, chairman of the Malta Financial Services Authority, stressed that the scheme was “not designed to attract companies” to relocate to Malta, but rather, people.
“Basically we created the programme to attract talented individuals so that existing companies could expand while Maltese are being trained” in the same skill set, he added. “As you know, in difficult economic times, people are often reluctant to relocate.”
Bannister cites Malta’s rapidly-growing insurance and pensions industries as among the scheme’s beneficiaries, since actuaries typically “take seven years to be trained”.
“There are Maltese being trained to become actuaries, but they are in their fourth or fifth years, while with the introduction of QROPS to Malta [in 2011] we needed actuaries now.”
Details about the Highly Qualified Persons Rules are available on the website of the Malta Inland Revenue Department.