Attracting Global Talent | A Closer Look at Article 6 of the Income Tax Act

Who can benefit under Article 6 of the ITA?

This article is specifically targeted to ‘Investment Services Expatriates’ and ‘Insurance Expatriates’ as defined by the Income Tax Act (ITA). 

In particular, an Investment Services Expatriate is regarded as an individual employed or providing services to a company that is an investment services company (i.e. holding the relevant investment services licence) or a company recognised by the relevant competent authority. The activities of the individual should solely comprise of the provision of management, administration or safekeeping services or investment advice to collective investment schemes. 

Furthermore, an Insurance Expatriate generally refers to an individual who is employed or is providing services to an insurance company, an insurance manager or a company carrying on the business of insurance broking (all as defined and authorised under the relevant Maltese legislation). 

In addition, an Investment Services Expatriate or an Insurance Expatriate will be eligible to benefit from the tax status granted under Article 6 if the following two conditions are satisfied:

• The individual must not be ordinarily resident and domiciled in Malta
• The individual must not have been resident in Malta for a minimum period of three years immediately preceding the year in which he commences employment or starts providing services to an investment services or insurance company. The individual must also have been engaged on a full-time basis in a similar position outside Malta during the preceding three years.

What are the Tax Benefits provided under Article 6 of the ITA? 

An individual meeting the eligibility criteria of Article 6, may avail of an exemption from tax on the following personal expenses paid on his behalf or on behalf of his immediate family by the employing investments services company or insurance company:

• 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 his immediate family,
• Provision of a car,
• A subvention of not more than €600 per calendar month,
• Medical expenses and medical insurance,
• School fees of respective children.

In general, the above-mentioned expenses paid on behalf of an employee (or immediate family of the employee) by an employer would generally be considered as fringe benefits, which are subject to tax in accordance with Malta’s Fringe Benefit Rules. However, through the tax status afforded by Article 6, an eligible expatriate may benefit from an exemption from tax on such a benefits provided by the employer. The exemption can be availed of for a period of ten years commencing in the first year in which the expatriate is liable to tax in Malta. 

In addition to the above, Article 6 provides a further benefit to eligible individuals whereby certain passive income earned, such as interest income, royalties or gains on transfers of certain investments would also be exempt from tax in Malta. 

How we can help you!

Interested in knowing more about the opportunities Malta’s investment services and insurance sectors have to offer? Reach out to our team of professionals at Grant Thornton which is prepared to provide you with all the necessary guidance and support.