Amendments were made to the Qualifying Employment in Aviation (Personal Tax) Rules (S.L. 123.168) by means of Legal Notice 120 of 2020 (hereinafter ‘Legal Notice’) which was published on the 2nd of April 2020. Such amendments shall be applicable retrospectively as from the 1st of January 2020.

The Aviation sector plays a significant role in the local economic development. Under the Qualifying Employment in Aviation (Personal Tax) Rules, which have come into force specifically under the auspices of the Maltese Income Tax Act, expatriates holding an eligible employment and office under a qualifying contract of employment in the aviation industry in Malta may opt to benefit from a reduced flat rate of 15% on their employment income derived in respect of work or duties carried out in Malta.

Prior to the amendments brought about by this Legal Notice, there seemed to be a somewhat distinction between EEA/Swiss Nationals and Third-country Nationals. Such tax rate applied for a consecutive period of five years (commencing from the first year of assessment) for EEA and Swiss nationals. Whereas with respect to third-country nationals, such tax rate applied for a period of four consecutive years. Moreover, by virtue of this Legal Notice, the said tax rate regulated by article 56(21) of the Income Tax Act shall apply for a consecutive period of five years, irrelevant of whether the beneficiary is an EEA/Swiss National or a Third-country National.

The Claw back of benefits provided for in Article 6 of the Qualifying Employment in Aviation (Personal Tax) Rules, have been further amended with respect to the duration of a one-time extension. Prior to the enactment of this Legal Notice, EEA & Swiss Nationals were eligible for a one-time extension of five years whereas third-country nationals were eligible for a one-time extension of four years. The latter periods would tally with the qualifying period. Furthermore, by virtue of this Legal Notice, all beneficiaries in terms of the Qualifying Employment in Aviation (Personal Tax) Rules, are eligible to a one-time extension of five years, irrelevant of whether such beneficiary is an EEA/Swiss National or a Third-country National.

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