Malta’s Tax Treatment of Highly Skilled Individuals Rules, 2026

The Tax Treatment of Highly Skilled Individuals Rules, 2026 (L.N. 20 of 2026), issued under the Income Tax Act (Cap. 123), introduce a consolidated framework for the taxation of highly skilled professionals in Malta. Effective from 1 January 2026, the Rules streamline and replace several existing preferential regimes, including the Highly Qualified Persons Rules and other sector-specific personal tax incentives.

The reform represents a shift from multiple parallel regimes to a single harmonised framework.

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Tax Features

The regime continues to offer a preferential flat tax rate of 15% on qualifying employment income derived from an eligible office, subject to a maximum cap of €7,000,000 in emoluments. Any income exceeding this cap is taxed at ordinary progressive rates.

As under the previous rules:

• The 15% rate applies without the possibility of claiming deductions, credits, reductions or set-offs, except for deductions permitted under Article 23 of the Income Tax Management Act.
• The regime is limited to employment income taxable under Article 4(1)(b) of the Income Tax Act.
• The preferential rate applies only where the income is fully and correctly declared.

A significant change introduced by the 2026 Rules is the harmonisation of the minimum income requirement.

The framework now establishes:

• A uniform minimum annual income of €65,000, exclusive of fringe benefits.
• An automatic increase of €10,000 every five years, introducing a built-in indexation mechanism absent from the previous regimes.

Transitional measures apply to individuals who previously qualified under rules with lower income thresholds, ensuring a phased adjustment to the new minimum levels.

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Eligible Offices and Roles

The 2026 Rules expand and reorganise the scope of eligible offices. The regime applies to employees holding senior or specialised positions with companies regulated or licensed by:

• The Malta Financial Services Authority
• The Malta Gaming Authority
• Transport Malta
• The Office of the Chief Medical Officer
• Malta Enterprise

Employees must occupy senior or specialised roles within such regulated or licensed entities. Typical eligible positions include C-level offices, senior management roles, and specialised technical functions, particularly in STEM, innovation-driven industries, and medical fields.

This formulation consolidates executive and technical expertise within a single framework, while ensuring eligibility remains tied to regulated or strategically significant sectors of the Maltese economy.

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Eligibility

The Rules formalise and strengthen the conditions applicable to beneficiaries.

An individual must:

• Be employed in an eligible office.
• Possess the requisite professional qualifications, generally evidenced by a post-secondary qualification of at least three years’ duration or, where permitted, five years of comparable professional experience.
• Perform genuine and effective work in Malta.

Additional requirements include proof of stable and regular financial resources, suitable accommodation in Malta, possession of private medical insurance, a valid travel document, and non-domiciled status in Malta. The beneficiary must also fully disclose income received from related parties where such income is substantively connected to the qualifying employment.

The 2026 Rules reinforce anti-abuse safeguards by specifically addressing artificial arrangements and collusive structures between employer and employee designed to secure access to the preferential rate where the substance of the arrangement would not otherwise qualify.

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Procedural Framework

From a procedural perspective, a formal determination of eligibility must be obtained from the relevant competent authority, which must issue its decision within ninety days of receiving a complete application. The reduced rate may only be exercised following such determination and applies no earlier than the year of assessment 2027.

Applications may be submitted between 1 January 2026 and 31 December 2035, and no applications may be accepted after 31 December 2036.

The benefit applies for:

• An initial period of five years.
• Two further five-year extensions, subject to continued compliance.

However, a definitive sunset clause provides that no benefits may apply to income earned after 31 December 2040.

Transitional measures govern individuals who, as of 31 December 2025, qualified under the existing sectoral rules. Such individuals may transition into the new regime upon application, subject to specified deadlines.

Nevertheless:

• No new determinations may be issued under the outgoing rules after 31 December 2025.
• No further benefits may be availed of under those rules after the year of assessment 2030.