Help to complete your tax return - Basis year 2018 Year of Assessment 2019 - Commissioner for Revenue
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Help
to complete your
tax return
Basis year 2018
Year of Assessment 2019
1Designed, Set and Printed at the Government Press
2This information booklet has been For further information:
produced by the Office of the
Commissioner for Revenue to help you Taxpayer Service, Servizz.gov Hub,
fill in your basis 2018 Income Tax Return Office of the Commissioner for
in a complete and correct way. Revenue, Block 4 – Floriana
Gozo residents may contact our office at
Your return is to be completed and Enrico Mizzi Street, Victoria.
forwarded so as to reach us by not
later than 30th June, 2019. To view the opening hours please refer to
our website www.cfr.gov.mt
You are to ensure also that all the tax due
for 2018 will be paid by the 30th June, • Freephone 153
2019. Your tax return will be carried free
through the post in Malta by using the • Email: taxpayerservice.cfr@gov.mt
envelope enclosed.
The Office of the Commissioner for
Payment should be made online on Revenue uses the information provided,
https://cfr.gov.mt/onlinepayments or to process the Income Tax return and
through internet banking, quoting the Self-Assessment in accordance with
Payment Reference Number. the Income Tax Acts and subsidiary
legislation. We may check information
provided by you, or information about
Alternatively, payment may be sent by you provided by a third party, with other
cheque payable to the Commissioner for information held by us. We will not
Revenue by using the small envelope disclose information about you to anyone
provided. If payment is being made outside the Office of the Commissioner
in any one of the MaltaPost branches for Revenue unless permitted by law. The
the cheque is to be made payable to Office of the Commissioner for Revenue
MaltaPost plc. treats your personal information in
accordance with the Regulation (EU)
It is important to include/present the 2016/679 (General Data Protection
Payment Slip with the cheque. Regulation) and the Data Protection Act
(Cap 586) to protect your privacy.
If you have an income tax query you can
either visit the Taxpayer Service, Servizz. Any queries may be addressed to
gov Hub in Floriana or Victoria Gozo or The Data Controller, Office of the
phone our Call Centre on Freephone Commissioner for Revenue, Floriana,
153. FRN 1700.
Note: This booklet is a guide only and
has no legal force whatsoever.
3CONTENTS
General Information ____________________________________5
Personal Details_______________________________________ 8
Information on Deduction and Tax Credits_________________12
Emoluments and Business Income_______________________22
boxes 1-8
Investment, Capital Gains and Other Income______________ 26
boxes 9-15
Deductions __________________________________________30
boxes 16-22
Tax Computation ____________________________________ 33
boxes 24-27
Tax Credits __________________________________________42
boxes 28-32
Relief from Double Taxation ___________________________ 42
boxes 33-34
Tax Payment ________________________________________ 44
boxes 35-41
Underpaid or Overpaid Tax ____________________________ 45
boxes 42
Filling of Income Tax Returns ___________________________47
Tax Rates____________________________________________48
4GENERAL INFORMATION
THE SELF-ASSESSMENT SYSTEM must pay any outstanding balance of tax for
basis year 2018 by not later than 30th June,
Enquiries 2019.
Although the Commissioner for Revenue will Tax Refund
be accepting your tax return as declared by
you, he may make those necessary checks If you have overpaid your tax for 2018 and
whenever he deems that circumstances you submitted the income tax return in time
so warrant. If it results that not all the tax we will be refunding your overpayment by
chargeable has been paid, penalties may not later than the end of December, 2019.
have to be imposed. The additional tax and Interest at the rate of 0.54% per month
interest will be charged as from the tax return will start to accrue in your favour from the
date, which is 30th June, 2019. following January. Please note that the
said refund will not be issued unless you
Submission of tax return have submitted all your income tax and VAT
returns, where applicable.
The income tax return is to reach us by
not later than 30th June, 2019. If, for some Adjusting the Tax Statement
reason or another, you have not been
served with a blank tax return form, you are If you think that the tax statement issued
nonetheless obliged to submit your income contains a mistake you may fill in a
tax return and self-assessment by 30th June, Correction Form (Form AF). If you need to
2019. If you do not submit your tax return, add to, or correct, your own self-assessment,
the Commissioner for Revenue will issue a you may fill in an Adjustment Form (Form
tax statement based on estimated amounts. AF1). Both forms may be obtained from our
Taxpayer Service.
When personally submitting the income
tax return by hand you are to deposit this Following the submission of these forms,
form at the Correspondence Management a new tax statement will be issued,
Unit (CMU), Block no. 3. superseding all previous tax statements for
the relative year.
Alternatively, if you have been assisted in
filling this form by our staff it may be left TAX RETURN OF MARRIED COUPLES
at the Customers’ Help Desk at Block 4.
Joint Return
Payment of the tax due
The couple’s income is to be declared in a
30th June, 2019 is the TAX RETURN DATE, joint return, which is to be signed by both
that is, the last day by which you may spouses. However a return signed only by
deliver your tax return. It is also the TAX the responsible spouse is considered as
SETTLEMENT DATE. This means that you having been duly signed.
5It is important to note that for the purpose However the ‘separate tax computation’ may
of this self-assessment the definition not be applied to all sources of income, but
of Married Couple includes couples in a only to income from employment, trade or
Civil Union. pension which is received in view of past
employment. All other income is chargeable
Taxpayers who married during 2018 in the hands of the spouse with the higher
emolument and business income.
The tax return of the responsible spouse
is to include (1) the income of the Directors’ fees are always chargeable in the
responsible spouse for the whole of 2018 hands of the responsible spouse – whether
and (2) the income of the other spouse these are earned by the responsible spouse
from the date of marriage to 31st December or by the other spouse. The fact that a
2018. The ‘Married’ rates or the separate couple opts for a separate computation
tax computation are to be applied thereon. does not mean that two tax returns have to
The tax return of the other spouse is to be submitted. Nor does it mean that two tax
include the income of the other spouse from statements will be issued. The tax statement
1st January 2018 to the date of marriage. will be issued in the name of the responsible
The ‘Single’ rates are to be applied on this spouse, but responsibility regarding the
income. payment of tax lies with both spouses jointly
and severally.
Responsible Spouse
Single Parents
The couple may choose who of the two
shall be the responsible spouse by filling Unmarried individuals, widows or separated/
the appropriate form which is available divorced persons who maintained a child
from the department’s Taxpayer Service. during the year may compute their tax by
In a joint return the word “Self” refers to the applying the married tax rates instead of
responsible spouse. Therefore, steps 1 to 8 the single rates. This means that they will
in the return must show the emolument and benefit not only from a higher tax threshold
business income of the responsible spouse (€12,700) but also from the application of
in the left hand columns (under “Self”). The more favourable tax bands. In order to qualify
emolument and business income of the for this benefit all the following conditions
other spouse is to be shown in the right have to be satisfied:
hand column (under “Spouse”). The income
and relative deductions of a dependent child • the parent must have maintained a
(i.e. a child who is not required to fill in an child who, during 2018, was not over
income tax return in his own right) are to be 16. However, where the child is over
included with the income of the responsible 16 the parent may still qualify for the
spouse. benefit provided the child was a full-
time student or he was incapacitated
Separate Computation from maintaining himself;
You may apply the single rates of tax if you • the child did not have an income
consider these to be more advantageous to exceeding €3,400;
you.
6• the parent was recognized by the In cases of separation or divorce it is
Director of Social Security as the sole important that the department is notified
beneficiary of the children’s allowance; with the change in addresses of the
respective spouses.
• the parent was not in receipt of financial
assistance from the other parent on Parent Tax Rates
behalf of the child/ren;
• the parents were not living together. These tax bands apply to parents who
maintained under their custody a child, or
If you are a single parent, tick the correct paid maintenance in respect of their child as
tax status on page 1 of the tax return. determined:
Separated/Divorced Couples a) by the Courts of Malta or the Courts of
another country;
Where a couple has separated, both
spouses are required to register separately b) by a public deed of personal separation
as a taxpayer with the Department as from under the authority of the Courts of
the year of separation. This may be effected Malta or the Courts of another country;
by a direct notification to this Department,
specifying the date of separation and c) by a public deed establishing the
referring to any arrangements made between maintenance of the children; or
the spouses with regards to alimony paid to
the other spouse and/or the children. d) by the Courts of Malta in a divorce
judgment or a decree or by the Courts
Each spouse will be responsible for filing his or other authorities of another country.
or her tax return covering income earned
from 1st January to 31st December. Each The Parent Tax Rates apply only where such
individual will be taxed as a single person child was not over 18 years of age (or not
and will be responsible to pay the relative over 23 years if receiving full-time instruction
tax on the income earned. Married rates at a tertiary education establishment) and not
will apply only if the individual qualifies as a gainfully occupied, or if gainfully occupied did
single parent (see above). not earn income in excess of €3,400.
Where income is derived from employment, These rates may be viewed at the back of
separate FS3s of each individual covering this booklet.
the employment period for the year, are to be
attached to the tax return.
7PERSONAL DETAILS
Identity Details Non resident taxpayers
Check the identity details printed on page 1 As a general guideline, a non-resident may
of your tax return and make the appropriate be defined as a foreign employee whose stay
corrections in the space provided. Please in Malta is less than 183 days. However, in
write your telephone number on page 1. cases where such employee can prove by a
In the case of a married couple some of contract of employment that the duration of
the details in this section refer to the other the employment exceeds 6 months in any
spouse as currently recorded at the Office of 12-month period, such employee is taxed
the Commissioner for Revenue. under the residents rates, even though the
period of employment in that particular year
Changes in personal details of assessment is less than 183 days.
It is important to note that changes of
address or changes affecting your marital If you answer ‘Yes’ to question 1 (i.e. you
status taking place during the year, should were resident in Malta) you do not have to
be communicated to the Office of the reply to question 2 and 3 and you may go
Commissioner for Revenue immediately. to the next step straight away. If you answer
‘No’ (i.e. you were not resident in Malta for
Tax Status income tax purposes) then you must answer
question 2 and/or 3 and indicate the period
Your tax status (“single” or “married and
during which you were in Malta during 2018.
living together”) as known to the Office of
If you had multiple stays in Malta during 2018
the Commissioner for Revenue is printed
then attach a list of the relevant dates.
on page 1. If the tax status, as printed, is
correct, you do not have to do anything. If
Provisions regarding the taxability of
your status has changed please indicate this
non residents (E.U and E.E.A Nationals)
by ticking the appropriate box showing your
- Article 56(1)(c) I.T.A
new tax status and the date of the change.
For example, if you are single but you qualify Non resident Individuals from the European
as a single parent in 2018, tick the box Union (E.U) or the European Economic Area
“single parent”. If you are a married person (E.E.A), who earn more than 90% of their
but you became widowed, separated or worldwide income in Malta, shall qualify
divorced during 2018, tick the box “widow” or for the residents tax rates as per proviso in
“separated/divorced”, as appropriate. Enter article 56(1)(c) of the Income Tax Act.
also the date of the change in status.
However, when a non resident individual,
Residency Status who although being a national of the E.U or
the E.E.A does not have 90% of his world
Different rates of tax apply to taxpayers who
wide income derived from Malta, he/she may
are not residents of Malta. Therefore you are
opt to be taxed by using the tax calculation
to indicate your residency status for income
as explained in the following examples:
tax purposes in your tax return.
8Example 1 using the resident rates. In this example the
An E.U national being a non resident single tax amounts to €11,095;
taxpayer has an income chargeable to tax Step 3. Divide the income chargeable
in Malta of €8,000, whilst his world-wide to tax in Malta by the World-wide income
income is €10,000. €49,200/€60,000 = 0.82;
Step 4. Multiply the result from Step 3 (0.82)
In this case although this individual does not by the result in Step 2 (€11,095) = €9,098;
have 90% of his world wide income derived
Step 5. Choose the lesser amount of Step 1
from Malta, he may use the following option:
(€16,380 – using the Non resident tax rates)
or Step 4 (€9,098);
Step 1. Calculate the tax on the Income
chargeable to tax in Malta (€8,000) by Step 6. Transfer the amount chosen in Step
using the non-resident rates. In this case the 5 to section 26 on page 3 of the tax return.
amount of tax is €1,960;
EXAMPLE 3
Step 2. Calculate the tax that would result by
charging the world-wide income (€10,000) An E.E.A national being a non resident single
using the resident rates. In this example the taxpayer has an income chargeable to tax
tax amounts to €135; in Malta of €8,000, whilst his world-wide
Step 3. Divide the income chargeable to tax income is €200,000.
in Malta by the World-wide income. Step 1. Calculate the tax on the Income
€8,000/€10,000 = 0.8; chargeable to tax in Malta (€8,000) by
using the non-resident rates. In this case the
Step 4. Multiply the result from Step 3 (0.8)
amount of tax is €1,960;
by the result in Step 2 (€135) = €108;
Step 2. Calculate the tax that would result by
Step 5. Choose the lesser amount of Step 1
charging the world-wide income (€200,000)
(€1,960 – using the Non resident tax rates)
using the resident rates. In this example the
or Step 4 (€108);
tax amounts to €61,275;
Step 6. Transfer the amount chosen in Step
Step 3. Divide the income chargeable
5 to box 26 on page 3 of the tax return.
to tax in Malta by the World-wide income
€8,000/€200,000 = 0.04;
EXAMPLE 2
Step 4. Multiply the result from Step 3 (0.04)
A non resident couple, whereby both by the result in Step 2 (€61,275) = €2,451;
spouses are nationals of a country within the Step 5. Choose the lesser amount of Step 1
E.E.A, has an aggregate income chargeable (€1,960 – using the Non resident tax rates)
to tax in Malta of €49,200. The spouses’ or Step 4 (€2,451);
aggregated total world-wide income amounts
to €60,000. Step 6. Transfer the amount chosen in Step
5 to section 26 on page 3 of the tax return.
Step 1. Calculate the tax on the Income
chargeable to tax in Malta (€49,200) by If you are in doubt regarding your residency
using the non-resident rates. In this case the status for income tax purposes you may
amount of tax is €16,380; phone our Call Centre on 153 or visit the
Step 2. Calculate the tax that would result by Taxpayer Service at Block 4, Floriana or
charging the world-wide income (€60,000) our offices at Victoria, Gozo to clarify your
9residency status before submitting your tax The Residence Programme, Global
return. Residence Programme, Malta
Retirement Programme; and the
Expatriates
Residents Scheme Regulations;
This section is to be filled in by expatriates
only. Such individuals are to tick the • derives income arising outside Malta
appropriate box or boxes. amounting to not less than €35,000 and
which was not received in Malta or its
Amendments regarding the taxability of equivalent in another currency – in the
expatriate persons. case of a married couple, one would
have to look at the income derived by
Remittance basis of taxation both spouses.
The remittance basis of taxation will no
In computing the minimum tax, account
longer apply to an individual who is a long-
shall be taken of any Maltese income tax
term resident, or who holds a permanent
paid, whether by withholding or otherwise,
residence certificate or permanent residence
excluding tax paid on capital gains.
card, in respect of any income derived by
such individual in the year of being granted Should the income, excluding capital gains,
such long-term resident status or the right of chargeable to tax in the hands of the resident
permanent residence and in subsequent non-domiciled person result in a Maltese tax
years. liability amounting to less than the minimum
tax, the person shall be deemed to have
(The terms “long-term resident”, “permanent received additional income arising outside
residence certificate” and “permanent Malta such that the total tax liability on the
residence card” have the meaning assigned total income would amount to the minimum
to them respectively in the Status of Long- tax of €5,000.
Term Residents (Third Country Nationals)
Example
Regulations and the Free Movement of
European Union Nationals and their Family A married person who is an ordinary resident
Members Order). This applies from the year but not domiciled in Malta, had in 2018
of assessment 2019. income arising from outside Malta amounting
to €40,000, which was not remitted to Malta.
Persons who are ordinary residents but
not domiciled in Malta When filling the self-assessment this person
If you have marked “YES’ to question Q4 on declares a chargeable income amounting to
page 1 of the Tax Return, with effect from Y/A €28,000 arising in Malta. This is inserted in
2019 an individual who is *ordinarily resident Box 25 of the Tax Return.
but not domiciled in Malta will be subject to a
minimum tax of €5,000 annually in Malta if The tax on €28,000 using the Married tax
the said individual: rates amounts to €2,975. This amount is
inserted in section 26 of the Tax Return.
• is not taxable in Malta in accordance
with a scheme establishing a minimum However, since the income arising outside
amount of tax in Malta, including Malta exceeds €35,000 the minimum tax
___
*Kindly refer to our website for technical Guidelines on payable of €5,000 applies. Therefore the
the terms used amount of €5,000 is to be inserted in Box 27.
10From this amount of €5,000, one may deduct in the space provided.
any tax payments made as shown in below
example with the exception of the Final General Basis of Taxation
Tax on Propery Transfer paid: If you are domiciled and ordinarily resident
in Malta you should declare all your 2018
FSS Tax Payments €400 Box 35 income (including that of your spouse and
Tax at Source on local dependent children) from whatever source. If
dividends €50 Box 38 you are either not domiciled or not ordinarily
15% tax on part-time resident in Malta you should declare all
self-employment income accruing to you in Malta or derived
(TA 22 Form) €0 Box 40 from Malta (including that of your spouse and
15% tax on rental income dependent children), as well as any income
(TA 24 form) €120 Box 40 which was remitted to Malta during 2018.
Tax withheld at source
on investment income €70 Box 40 Disregard or round up the cents
Other tax payments €0 Box 40
When you fill in your tax return enter the
Total tax paid €640 amounts in euro, leaving out the cents. This
is done as follows:
In the above example the amount of tax due
of €4,360 (€5,000 - €640) which is to be When determining the CHARGEABLE
inserted in Box 42a. Any Double Tax Relief INCOME disregard any fraction of a euro,
may also be deducted. even if this is 99 cents – in respect of any
source of income. For example, if you
Tax Return Language Choice received a salary of €11,155.65 you are to
enter €11,155 in box 1. If you received three
If you require this tax return in the Maltese
interest amounts of €210.84, €48.34 and
language you may contact the Office of the
€24.68, first you should add them all up. This
Commissioner for Revenue.
amounts to €283.86. At this point you are to
disregard the cents (86c) and enter €283 in
Declaration
box 9b.
The declaration on page 1 is to be signed
and dated. The return will not be considered When you are determining any DEDUCTION
complete unless properly signed. The return of a AGAINST INCOME you are to round up to
married couple is to be signed by both spouses. one euro. For example, if you need to effect a
If it is signed by the responsible spouse only, it deduction of €60.45 from rental income, you
will be deemed to have been signed by both. are to enter €61 in box 16b. Any fraction of a
euro even if it does not exceed 50c – is to be
OTHER INFORMATION rounded up to a euro.
Tax Advice
When you are computing the TAX DUE
If you are attaching with the tax return the that is from section 26 onwards, the rules
original written advice of a tax professional change slightly. Here, you are to disregard
in terms of the Income Tax Act, you are any fraction of a euro being equal to or less
required to tick the box adjacent to the item than fifty cents, and round up to one euro any
and supply the name of the tax professional fraction of a euro exceeding fifty cents.
11INFORMATION ON DEDUCTIONS
AND TAX CREDITS
Tax credit for persons returning to taken in a single year, the balance
employment may be carried forward to the
following year. In this case one
1. Tax credit up to a maximum of €2000 may fill in an RA7 form, which may
for a person, who has not attained be obtained from the Taxpayer
the statutory retirement age and who Service at Block No. 4, or
returns to employment on or after the
1st January, 2008 after having been b) Tax credit up to a maximum of
absent from any gainful occupation €5000. If the tax due on your
for at least five years immediately employment or self-employment
preceding the date of the said return income is more than €2,000,
to employment and whose name you may avail yourself up to a
was not during the said time on the maximum of €5,000 tax credit.
unemployment register (Parts 1 and 2) In order to opt for this type of tax
as established by Jobsplus and who credit one needs to fill in an RA9,
has never been, prior to the date of the also obtainable from Taxpayer
said return to employment, in receipt of Service. If option b) is taken, a
a pension in view of past employment married couple must calculate
and who, moreover, had previously their tax by using the separate or
been in employment for at least twenty- the Parent computation rates.
four consecutive months. This tax credit
has to be claimed on Form RA4. In case of difficulty please contact our
Call Centre on 153.
2. a woman who has a child or children
who is or are under sixteen years of age Workplace accessibility deduction
and returns to employment on or after
the 1st January, 2008 after having been If, as an employer, you have incurred an
absent from any gainful occupation expense to increase the accessibility to
for at least five years immediately the workplace to any of your employees
preceding the date of the said return; or suffering from a disability, you may be
allowed a special deduction against your
3. a woman who has a child or children income. The qualifying expense may not
born on or after the 1st January, 2007 exceed €20,000. If such deduction cannot
and continues in employment, or be fully set off against your income in
returns to employment on or after the the year of entitlement, it may be carried
1st January, 2007, may benefit from the forward to subsequent years. Qualifying
folowing tax credits: expenditure includes expenditure of a
capital nature (e.g. installation of a lift)
a) Maximum of €2000 tax credit. and expenditure incurred in the training of
If this amount of tax credit is not employees having a disability. An approval
12has to be issued by the National Commission may approve a tax credit of €50,000 for the
Persons with Disability following an duration of this incentive. All the relevant
application. information regarding this scheme may
be found on the Malta Enterprise website
To claim this deduction you are required to at maltaenterprise.com.mt. Any tax credit
file an RA12 form. The resultant expense claim with respect to this incentive is to be
computed in this form should be included in made on the appropriate RA 15 form. As
the Profit and Loss account accompanying from 1st January 2016 this scheme has
your tax return. been extended so as to entitle self-employed
women or businesses which are majority
Childcare facilities at the workplace controlled by women to a tax credit of up to
€50,000.
If, as an employer, you have incurred
expenditure to provide childcare services Highly Qualified Persons Incentive
for the children of your employees you are
entitled to a deduction equivalent to the Expatriates in receipt of income payable
expense up to a maximum of €20,000. in terms of a “qualifying contract of
Where the deduction cannot be fully set off employment” in respect of activities carried
against your income in the year of entitlement, out in Malta, may opt to be subject to tax on
it may be carried forward to subsequent such income at a flat rate of 15%, provided
years. The expenditure must be of a capital that the income amounts to at least €84,016,
nature and consist of (a) the construction adjusted annually in line with the Retail Price
or conversion of a childcare facility (b) the Index. The 15% flat rate is imposed up to
acquisition of childcare equipment for use a maximum income of €5,000,000 and the
in a childcare facility at the workplace. The excess is exempt from tax.
claim is to be made on the RA 13 form which
you may download from our website. The In order for a beneficiary to qualify for the
resultant expense computed in this form reduced rate of tax he must be engaged in
should then be included in the Profit and an employment activity which constitutes an
Loss account. ‘eligible office’. An ‘eligible office’ consists
of a specified senior employment position
Deduction of donations to the University with companies licensed and/or recognised
Research, Innovation & Development by the Malta Financial Services Authority
Trust (MFSA), the Lotteries and Gaming Authority
and the Authority for Transport.
See Section 20 for more details about this
deduction. The eligible offices may be found in L/N 106
of 2011, L/N 428 of 2011 and 306 of 2012.
MicroInvest tax credits for micro
enterprises and the Self-employed An application must be made to the MFSA
on form RA17 which is downloadable from
This incentive is open to all micro enterprises the CFR and MFSA website. The completed
including self-employed individuals that at form is to be attached to the income tax
point of application satisfy all criteria set up return and filed by the 30th June 2019.
by the Malta Enterprise. Malta Enterprise
13Qualifying Employment in Innovation and For the scope of this scheme the RA18 form,
Creativity L.N 106/2013 which may be obtained from the department,
is to be filled in and submitted with the tax
This Scheme apply to income from return.
emoluments which must be payable under
a qualifying contract of employment, and Repatriation of Persons established in a
received in respect of work or duties carried Field of Excellence
out in Malta by a person who is not domiciled
in Malta. An individual would be deemed to be eligible
for the scheme if he is established in a field of
Qualifying contract of employment consists excellence and returns to Malta as ordinarily
in income subject to tax under article 4 (1) (b) resident. Such individual must have been
of the ITA subject to a minimum of €45,000 ordinarily resident in Malta for at least twenty
and the employment is in a role directly years after which he spent ten consecutive
engaged in the development of innovative years in which he was not resident in Malta
and creative digital products as approved by prior to his return to Malta. The term “field of
Malta Enterprise (ME). Anti-abuse provisions excellence” refers to an area of professional
are also provided for. competence in the manufacturing and
research and development sectors.
The beneficiary must be in possession of
professional qualifications recognised by the Work carried out in Malta by an eligible
Malta Qualification Recognition Information individual under a contract of employment
Centre or has relevant experience to shall be taxed at the reduced rate
the eligible office as approved by Malta contemplated in Art 56 (25) that is at 15
Enterprise. %.The Rules provide that the remuneration
must be at an annual minimum of €75,000
An eligible person qualifies to be taxed under and the eligible person must prove his
article 56(21) of the ITA at the rate of 15%. professional competence to Malta Enterprise
Where the option is exercised, the income Corporation.
that is charged to tax at the said rate shall
be deemed to constitute the first part of that The option available under article 56 (25) of
individual’s total income. the Act may not be exercised in respect of
any year of assessment preceding year of
The option applies for a consecutive period assessment 2013 and the option shall apply
of 3 years commencing from the year for a consecutive period of 5 years.
preceding the first year of assessment in
which that person is first liable to tax under A qualifying individual who wants to benefit
the provisions of the Act. This condition from the scheme must submit with his
applies for both EEA/Swiss and third country income tax return a declaration signed by
nationals. him and endorsed by Malta Enterprise. The
income tax return must be filed by not later
The Rules (L.N 106/2013) provide a schedule than the relative tax return date.
with a list of designations which qualify under
these rules subject to the approval of the Deduction (Apprentices and Work
competent authority (ME). Placements) L.N. 179 of 2014
14Where an employer provides a work elapse of the said two years
placement, a deduction equivalent to €600 is
available against the employer’s chargeable • A deduction equivalent to 50% of the
income for each work placement. In the case expense incurred in providing training
of apprenticeship, the deduction is of €1,200. to a qualifying employee of up to a
maximum of €400 shall be allowed
The deduction is allowable in case where against the chargeable income of the
the work placement or apprenticeship is for employer;
a continuous duration of at least 6 months.
Where the deduction available cannot be Provided that all the deductions available
wholly set-off against the chargeable income cannot be wholly set-off against the
for a particular year, the deduction can chargeable income, the deduction can be
be carried forward and set-off against the carried forward and can be set-off against
income for subsequent years. the income for subsequent years.
The employer cannot benefit from the said Spouse returning to work – Exemption of
deduction, if assistance has already been tax
provided by the government or a government
entity on the same expenditure. A married couple may opt to be taxed under
expenditure. the married tax rates without taxing the
spouse’s employment income (other than
Deduction (Mature Workers) L.N. 180 of income derived from the holding of an office
2014 of director), provided that:
Where an employer provides employment • the spouse has been absent from any
to an individual aged between 45 and 65 gainful occupation for at least 5 years;
years old and whose name appears on and whose name was not during the
the unemployment register for at least the said time on the unemployment register
preceeding 6 months: (Parts 1 & 2) as established by JobPlus;
• The employer may benefit from a • the spouse is over 40 years of age, and
deduction equivalent to €5,800 per
annum which shall be allowed against • the spouse’s income does not exceed
the chargeable income of the said €9,700
employer;
This incentive applies for a period of
• Provided that, where the employee is five consecutive years of assessment
not employed for a full year during the commencing from the basis year in which the
year of assessment, the deduction spouse started work. One has to fill in the RA
is allowable pro rata. The two years 19 form in order to apply for this incentive.
deduction commence on the first day of
employment, and, provided the employee Personal Retirement Scheme tax credit
remains in the relative employment, the
qualifying person will benefit from a This tax incentive is aimed at encouraging
deduction equivalent to €11,600 at the Maltese residents to start saving for their
15pension by investing in private products Any qualifying investor may benefit from a
offered by local banks, life insurance tax credit equivalent to a sum amounting to
companies and other financial institutions. thirty-five per cent (35%) of the aggregate
It provides for a tax credit with respect to value of the investments made by such
contributions paid to personal retirement investor in one or more qualifying companies,
schemes or premium payments in relation to so however that the total tax credit
a policy of insurance. applicable to any such investor shall not
exceed two hundred and fifty thousand euro
The amount of the tax credit is equivalent to (€250,000) per annum. Such tax credit
the lower of: shall be set off against the tax due by the
qualifying investor in respect of any income
15% of the aggregate of any contributions or gains brought to charge to tax in the year
made or premiums paid by a person during of assessment immediately following the
the year in respect of membership in any basis year during which the investment is
personal retirement schemes as defined in made.
the Special Funds (Regulation) Act or any
Act substituting the said Act, or a policy of Any part of the tax credit that is not absorbed
insurance held with a company authorised in the year of assessment referred to may
to carry on long term business under the be carried forward by the qualifying investor
Insurance Business Act; and and set off against tax due for any subsequent
year of assessment until it is fully absorbed.
€150.
In order to qualify for this tax credit one has
In the case of a married couple resident in to fill in the RA20 form
Malta, each of the spouses may claim the
credit (irrespective of whether they have used The relevant tax credit may be deducted in
the parent, single or married computation). Box 30 of the tax return.
The credit will only be available in respect of
income tax chargeable for the year in which For further information regarding this Scheme
the contribution was made or the premium one may contact Mimcol or visit their website
paid and cannot be carried forward if not - mimcol.com.mt.
utilized. The income against which the tax
credit is granted is considered to be the first POYC tax credit on service of home
part of the income. delivery of medicine
This tax credit may be claimed in box 30 of Pharmacies that provide the service of home
the tax return. deliveries of medicine as part of the extension
of the POYC scheme may qualify for a tax
Seed Investment Scheme credit equivalent to 100% of the cost incurred
by each pharmacy outlet participating in this
The purpose of this Scheme is to grant POYC extension. This tax credit is capped at
tax relief to natural persons resident in €14,000.
or operating in Malta investing in start-up
businesses. The tax credit available is in respect of
16expenditure on motor vehicles and labour or institution for the admission and
additionally required for home delivery of attendance to the course and for sitting for
the medicines. The tax credit also covers the examinations required to achieve the
expenditure on equipment, as was the case relevant qualification.
in the previous deduction.
The following documentation must be
No tax credit can be claimed for any submitted with the tax return for the first
expenditure incurred after the 31st December year of assessment in which the tax credit
2020. is claimed:
In order to qualify for this tax credit one a. A declaration that the individual claiming
has to fill in the RA22 form.The relevant tax the tax credits has not been entitled from
credit may be deducted in Box 30 of the tax any source to any reimbursement or
return. compensation for the costs on which the
tax credit has been claimed;
Deductions and Tax Credits (Relevant
Qualifications for Industry) Rules, 2018, - b. A copy of the certificate issued by
RA10 Form the university or institution providing
the course, confirming the successful
These Rules replace the rules with the same completion of the course; and
title which were previously administered by
Malta Enterprise but which have now fallen c. A copy of the tax credit certificate
under the remit of the Education Ministry. issued by the Department of Education
They provide for a tax credit of up to 70% confirming that the qualification obtained
of the study costs paid by a student for a is a relevant qualification.
certification, degree or post-graduate degree
as approved by the Ministry for Education. No tax credit certificates may be issued
in respect of a course of studies that
The tax credit, which will be effective as from commences after 31st December 2020 and
1st January 2018, will be deducted against in respect of applications submitted to the
the student’s tax liability on his chargeable Ministry after 2 years from the day on which
income for the year of assessment the relevant qualification is obtained.
commencing in the year following that in
which the relevant qualification is obtained. To this effect the relevant RA 10 form is
Any tax credits which are not absorbed to be filled in and attached with the tax
may be carried forward to be allowed as a return.
tax credit for the subsequent ten years of
assessment. The tax credit may be deducted in Box 30 of
the tax return.
A new measure is that the beneficiary of the
tax credits may be either the student or his / Employment in Aviation – L.N 177/2016
her parents.
This initiative provides for a beneficial tax
The study costs include the fees paid by rate of 15% for non-domiciled individuals
the student or parent/s to the university employed in the aviation sector.
17The minimum amount of income which shall basis year 2018 are as follows:
be chargeable to tax at this beneficial rate
is €45,000 (exclusive of the annual value For individuals using the single tax rates the
of any fringe benefits) and shall consist of threshold is €13,200;
emoluments from an eligible office. The 15%
shall apply without the possibility to claim any For individuals using the married tax rates
relief, deduction, reduction, credit or set off the threshold is €13,200 and are allowed
of any kind. a further tax rebate on any additional other
income up to €1,000;
For EEA and Swiss nationals, this option,
shall apply for a consecutive period of five In the case of individuals using the parent
years commencing from the first year of tax rates the threshold amounts to €13,200.
assessment in which that person is first liable More information is available in section 3 and
to tax under the provisions of The Income 26A of this booklet.
Tax Act, whilst for third-country nationals, this
option shall apply for a consecutive period of Voluntary Occupational Pension Scheme
four years.
This pension scheme came into effect as
An application for a formal determination from 1 January 2017 as per Legal Notice 228
relating to eligibility under these rules shall of 2017.
be made on such form as the Authority for
Transport in Malta may require. The tax benefits for the employee are as
follows:
The Schedule to the Legal Notice 177/2016
provides a list of eligible employments and • An annual tax credit available to
offices. employees who voluntarily make
additional contributions into the
For the scope of this scheme the RA21 form, employer’s scheme, amounting
which may be obtained from the department, to the lower of 15% of the amount
is to be filled in and submitted with the tax contributed during a year and €150
return. per annum;
Tax Rebate on pensions • Non-taxation for the employee
under the Fringe Benefits Rules in
Income earned by individuals on or after 1st respect of contributions made by the
January 2018 derived from social security employer for the employee’s benefit.
pension, treasury pension and from any
other local or foreign pension is allowed a tax Any unutilized tax credits cannot be carried
rebate in accordance with the established forward by the employee to be set off against
thresholds mentioned below. This benefit any income tax due by the said employee in
applies to individuals who were at least 61 subsequent years of assessment. However,
year of age in the year when such pension the tax credits may be set off against the tax
was received. due on the employee’s total income and is
not limited to the tax due on the employment
The qualifying pension income thresholds for income.
18All contributions are to be reported on the the costs incurred on such expenditure in
Payee Statement of Earnings (FS3) in terms any year which may be claimed against
of the Final Settlement System (FSS) rules. that person’s chargeable income, up to a
The relevant tax credit may be deducted in maximum of €90,000 in any year.
Box 30 of the tax return.
In order to benefit from this deduction, no
The tax benefits for the employer are as other deduction may be claimed in respect
follows: of the same expenditure and where the
qualifying person benefits from any form of
• An annual tax credit available to the assistance in relation to the said expenditure
employer amounting to the lower of 15% by the Government or from any other entity,
of the amount of contributions paid and the amount of such benefit or assistance is
€150 for each employee in respect of subtracted from the expenditure on which the
whom the contributions are paid; deduction under these rules may be claimed.
The same qualifying person may not claim
• Tax deductibility for the employer in a deduction for more than one qualifying
respect of the contributions paid, up to project in any year. The deduction provided
a maximum of €2,000 per employee per for by these rules shall only be allowed on
annum. completion of the project. In order to claim
this deduction, one has to fill the RA27.
In order for the employer to claim this tax
benefit the RA23 form is to be filled in and Deduction for transportation cost of
attached with his tax return. employees
Deduction for Embellishment Projects A person carrying on a trade, business,
profession or vocation as set out in sub article
This initiative provides for a deduction 4(1)(a) of the Income Tax Act, may claim a
for income tax purposes in respect of deduction against his income equivalent to
expenditure incurred by a person carrying on 150% of his employee transportation costs
a trade or business in respect of a qualifying incurred during the year. The transportation
project. costs for the purpose of this initiative
means the cost incurred for transportation
The expenditure has to be incurred on or after of employees to and from the place of work
1st January 2018 and a qualifying project is using means of transport capable of carrying
defined as an embellishment or other project more than eight persons.
useful to the local community that has been
approved as such in writing by the Local The deduction claimed is to be the lower of:
Council and the Directorate responsible
for Local Councils. Such a project must i) €25,000 of the employee transportation
be wholly a community asset on which the costs incurred in the year 2018; or
qualifying person retains no proprietary rights ii) €300 per employee whose transportation
and for which the said qualifying person is costs have been incurred in 2018.
not remunerated in any way.
The deduction offered under these rules may
The deduction is equivalent to 120% of only be availed of if the benefiting person:
19(a) maintains proper records of the For more information regarding the scheme
employee transportation costs in respect one may visit the Malta Enterprise website
of which the deduction is claimed; www.maltaenterprise.com.
(b) claims the deduction in the income tax
return relative to the basis year in which The tax credit may be claimed by filling the
the employee transportation costs were RA26 which is to be attached and submitted
incurred; with the tax return. One may find this form in
(c) submits with the income tax return the ‘Downloads’ section of the department’s
a declaration by a Certified Public website www.cfr.gov.mt. This tax credit is to
Accountant confirming that claimant has be inserted in box 30 of the tax return.
correctly computed the said costs.
Tax credit (Construction Waste Recycling)
In order to claim this deduction the relevant Rules
RA 25 form is to be completed and attached
with the tax return. A tax credit will be granted to persons who
have a permit authorised by the Environment
Tax Credits for Research, Development and Resources Authority (ERA) for taking in
and Innovation – Malta Enterprise their quarries construction and demolition
material.
For more information on tax credits falling
under this initiative please visit the Malta Such persons may during the years 2017 to
Enterprise website www.maltaenterprise. 2019 claim a tax credit equivalent to 25%
com. of the gross fees received by them for the
provision of the above-mentioned services,
In order to claim the relative tax credit the RA provided that their fees do not exceed €5.50
24 form has to be filled and submitted with per tonne.
the tax return.
The tax credit shall not exceed the tax
Tax credit in terms of the Business chargeable on the income derived by the
Development and Continuity Scheme authorised person during the year in which
the claim for the tax credit is made.
The Business Development & Continuity
Scheme is intended to facilitate value added To claim this tax credit, one is to fill in the
projects that are expected to contribute RA28 form which may be downloaded from
to the regional development of Malta and the department’s website www.cfr.gov.mt.
to support existing undertakings sustain The tax credit is to be claimed in box 30 of
operations during restructuring. The Scheme the tax return.
may support various activities such as the
initial development phase on undertakings Qualifying Employment in Maritime
establishing an operational base in Malta, Activities and the Servicing of Offshore
expansion projects, consolidation of Oil and Gas Industry Activities.
activities and the re-organisation of activities.
Supported initiatives should lead to the This scheme allows senior employees in
development of new business or to ensuring defined eligible positions engaged within the
the continuity of current operations. maritime and oil and gas industry to benefit
20from a flat rate of 15% tax on employment 7. not benefit under any alternative incentives
income derived in respect of work or duties available in Malta;
carried out in Malta.
8. has signed a Qualifying Contract of
The applicant must be in line with the Employment.
following conditions:
This option is available for EEA and Swiss
1. be employed to fill an eligible and be in nationals, for a consecutive period of five
possession of professional qualifications or years commencing from the first year of
acceptable professional experience; assessment in which that person is first liable
to tax under these rules, and with respect
2. be entitled to remuneration of at least to third-country nationals for a consecutive
€65,000 (exclusive of the annual value of period of four years. Provided that, one
any fringe benefits) in terms of a contract of shall be eligible upon application for a one-
employment; time extension of five years or four years
respectively. Applications are to be submitted
3. resides in accommodation regarded as to the Authority for Transport in Malta.
normal for a comparable family in Malta;
To claim this option one has to fill in the RA29
4. not be domiciled in Malta; form which may be found on the department’s
website www.cfr.gov.mt.
5. be in possession of a valid travel document;
6. be in possession of adequate health
insurance;
21EMOLUMENT AND BUSINESS INCOME
On page 2 of your tax return you are required in your return – unless you need to claim back
to include all your emolument and business some of the tax so paid. In this case, include
income. If your tax status is single you must the part time gross income in box 1 and claim
declare your income under the “Self” column. the tax already deducted in box 35. If tax
If your tax status is married and living on part-time income is going to be claimed
together, you must declare the income of the back, FS3s in respect of each source are to
responsible spouse under the “Self” column be attached to page 3. Any part-time income
and the income of the other spouse under over €10,000 is to be included in box 1.
the “Spouse” column. If your tax status is
single parent you must declare your income Reduced income tax rates for police
under the “Self” column. officers
The box numbers, found from this page Income received for extra duties carried out
onwards, correspond to the numbers of by police officers will be taxed separately
the sections in the tax return. at the rate of 15% and should not therefore
be included in the income tax return unless
1. Employment or Office the individual needs to claim back the tax so
paid.
In this section you are to include the gross
income received during the year from Special tax rate of 7.5% on income derived
employment or office. This includes: salary from sport
or wages; bonuses; overtime; directors’ fees;
fringe benefits; and other payments and A professional football or waterpolo
allowances, including commissions. player, registered with the Malta Football
Association or the Aquatic Sports Association
For each separate source of income from respectively, who earned income taxed at the
employment or office enter the PE number of special rate of 7.5% should not include this
the payer. FS3s are to be attached to page 3 income in the tax return unless the individual
of your return. needs to claim back the tax so paid. In
this case, one should include the football/
If you or your spouse received director’s fees, waterpolo income in box 1 and claim the tax
these are to be included in box 1 under the already deducted in box 35.
column SELF. You may not opt for a separate
computation in respect of such fees. As from 1st January 2016 this special tax
rate has been extended to coaches and
Part-time employment professional sportsmen.
Part-time employment income up to a Other information
maximum of €10,000 which qualifies under
the part-time rules and on which tax at 15% Arrears of salary received in 2018 are taxable
has already been paid are not to be included in 2018, and are to be included in box 1. If
22you are a lotto receiver, do not declare your 2. Trade, Business, Profession or
income in section 1 but in section 2. Although Vocation
you may have been given an FS3, this
income is not derived from an emolument but For each source of trade, business,
from a trade or business. profession or vocation you must provide
the VAT number and the net profit earned
Individuals taxable at the “single” rates during 2018. In the case that such business
on income from full-time or part-time does not need VAT registration, mark the
employment. - DEDUCTION (INCOME box N/A (not applicable). If this income
FROM EMPLOYMENT) RULES was derived from a trade or business
carried out in partnership, tick the appropriate
It is important to note that individuals taxable box.
at the “single” rates who in 2018 received
only employment income, whether full-time
In the case of a loss indicate the loss in
or part-time, which are in total below the
brackets.
threshold of €9,700 will be not taxed.
This means that an individual receiving A signed Profit and Loss Account is to be
income from a full-time employment and a attached to page 3 of the tax return. You may
part-time employment, or receiving income use the enclosed specimen Profit and Loss
from two or more part-time employments, statement for this purpose.
remains not taxable as long as the total of
such incomes does not exceed the threshold If the trade or business is carried out in
of €9700. partnership, include the following details
in your Profit and Loss account: (1) the
In order to ensure that such income is not partnership number (2) the name of each
taxed, the individual concerned would partner (3) the ID card number of each
need to declare all of it in the tax return for partner.
the relative year, irrespective of whether
the source was a full-time or a part-time Please note that special legislation is in
employment. If any tax had been deducted place, providing for cross-checking between
at source through FSS, this will be then be the VAT and the Office of the Commissioner
credited and will be available for refund. for Revenue as regards sales and purchases.
Therefore, if for example your total
Trading losses brought forward from previous
employment income during 2018 amounted
years should not be declared in this section
to €9,400, you are to enter this amount in
box 1a and deduct €300 (€9,400 - €9,100) but in box 21 on page 3 of the return.
in box 6.
Part-time self-employed 15% threshold
Exemption from tax of Students’ Stipends
It is important to note that the Net Profit
Please note that students’ stipends are threshold for part-time self-employment,
exempt from income tax and therefore are stands at €12,000. Any profit amounts in
not to be included in the tax return. excess of €12,000 are to be declared in the
tax return.
23Sale of Agricultural Produce FSS tax deductions made from local pension
payments are to be claimed in box 35.
If during the year you had income from the
sale of agricultural produce please refer to It is important to note that although
the leaflet issued with the RA1 form to help pensions are being allowed a tax rebate,
you fill in this part correctly. they still need to be declared in this
section.
Income from Student Hosting
This tax rebate applies to individuals who
If you are registered with the Malta Tourism are in receipt of income from any pension
Authority as a host family and you received including social security pensions, treasury
payments from a registered language school pensions as well as other local and foreign
you should fill in the RA6 form (copies pensions, and who were at least 61 years
available from the Department’s Taxpayer of age in the year when such pension was
Service). The RA6 form together with the received.
statement/s provided by the language
school/s showing the total payments made Tax rebates cannot give rise to any refunds
for the year are to be attached to page 3 of of tax nor can these be carried forward if not
the income tax return. fully utilized.
3. Pensions and Social Security Bene- For practical examples as to how these tax
fits (Applicable to local and foreign credits are applied please refer to page 38
pensions) of this booklet.
One is to Include the PE number (or other 4. Overseas Employment
reference number) of the pension provider
and the gross income received from each In this step you must declare the gross
local and overseas pension. You should amount of emoluments received under
have an FS3 or similar statement for every a contract of employment requiring the
amount of pension income included in this performance of work or of duties mainly
step. Attach these statements to page 3 but outside Malta. Insert the PE number of your
pensioners in receipt of a Social Security employer in the box provided. The following
pension should not attach a Social Security information in respect of each source of
pension statement with their income tax overseas employment must be provided on a
return. separate statement and attached to page 3:
Certain Social Security benefits, e.g. • Country where the duties were
Unemployment Benefit or Sickness Benefit performed;
are taxable and are also to be declared in • Employer’s name and PE number;
box 3. • Duration of contract; and
• the amount of gross income (in euro).
War pensions and certain allowances/
benefits payable under the Social Security If you satisfy the conditions for overseas
Act which are exempt from income tax need employment and you (or your spouse, if
not be declared. married) wish to have this income taxed
24You can also read
