An employee engaged by a ship management company may now enjoy beneficial tax rates on employment income.

These measures, together with Malta’s revised tonnage tax law addressing ship management companies offering technical and/or crew management services, further enforce Malta’s attempts to attract ship managers to establish themselves in Malta.

The relevant legislation introducing these new rules is found in the “Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules” (Legal Notice 140 of 2018).

The Rules apply to EEA and Swiss nationals as well as to third country nationals.

The Rules introduced a flat tax rate of 15% on the employment income of persons employed in certain positions as listed in the Schedule to the Rules. Qualifying positions include that of a chief executive officer, technical manager, crewing manager, designated person ashore and technical superintendent, amongst others.

These posts are to be held with undertakings in possession of a Document of Compliance (DOC) and/or a Seafarer Recruitment and Placement Services Licence – therefore, essentially, with technical and/or crew managers. Additionally, eligible employment on board vessels is also acceptable subject to certain operational criteria of the vessel on which the employment is carried out.

Employees wishing to avail themselves of the advantageous tax rate must receive an income of not less than €65,000 per annum exclusive of the annual value of any fringe benefits. No further tax will be charged on income from a qualifying contract of employment in excess of €5,000,000 per annum.

In addition to the above, persons wishing to benefit must satisfy a number of other conditions and requirements as set out in the Rules. For instance, qualifying employees are to generally perform their duties in Malta, must not be domiciled in Malta, are to reside in Malta and are to be in possession of sickness insurance in respect of all risks normally covered for Maltese nationals for themselves and the members of their family.

The Rules are applicable for a maximum period of ten years for EEA & Swiss nationals and nine years for third country nationals.