Malta’s preferential tax treatment for expatriate talent was historically governed by the Highly Qualified Persons (HQP) Rules, a sector-specific regime designed to attract senior and specialised professionals in regulated industries. Over time, similar incentives were introduced through separate legislative instruments for these sectors.
- Highly Qualified Persons Rules
- Qualifying Employment in Innovation and Creativity (Personal Tax) Rules
- Qualifying Employment in Aviation (Personal Tax) Rules
- Qualifying Employment in Maritime Activities and the Servicing of Offshore Oil and Gas Industry Activities (Personal Tax) Rules
- Senior Employees of Family Offices, Back Offices, and Treasury Management Operations Tax Rule
With effect from 1 January 2026, these fragmented regimes have been replaced by the Tax Treatment of Highly Skilled Individuals Rules (LN 20 of 2026). The new framework preserves the core policy objective of attracting high-value human capital while consolidating all prior regimes into a single, harmonised legislative instrument.
Tax Rate and Maximum Taxable Income
Under the HQP Rules, qualifying employment income was taxed at a flat rate of 15%, capped at €5 million per annum, with income exceeding that threshold exempt from Maltese tax.
The Highly Skilled Individuals Rules retain the 15% flat tax rate but increase the cap to €7 million per annum. Income exceeding €7 million is no longer exempt and is instead taxed at the standard progressive rate (up to 35%).
Minimum Annual Remuneration Threshold
The HQP Rules imposed a minimum income threshold which was adjusted annually in line with inflation, resulting in figures that varied year-to-year.
The new regime introduces a clear baseline threshold of €65,000, with automatic increases of €10,000 every five years, directly set in the legislation.
Eligible Roles and Industry Coverage
Previously, eligibility under the HQP Rules was restricted to employment in specific regulated sectors, with “eligible offices” listed separately for each industry being the Malta Financial Services Authority, Malta Gaming Authority, Transport Malta, Malta Enterprise and the Office of the Chief Medical Officer.
The new rules retain the concept of “eligible offices” but merge all previously covered sectors and roles into one consolidated framework, applying a uniform approach across industries.
Personal Eligibility Conditions
Both the old and new regimes apply only to individuals who are not domiciled in Malta and are employed under a qualifying contract with an eligible employer.
However, while the HQP Rules largely relied on the seniority and nature of the role to demonstrate “high qualification,” the new rules formalise eligibility requirements, explicitly requiring:
- Relevant professional qualifications; or
- A minimum of five years’ comparable professional experience
In addition, conditions relating to adequate accommodation, private medical insurance, valid travel documentation, and stable financial resources, which were previously assessed administratively, are now clearly set out in the legislation.
Duration of the Tax Benefit
Under the HQP Rules, the duration of the benefit varied over time and by nationality, typically providing an initial benefit period of four or five years, with limited extension options and an overall sunset date for new determinations.
The new rules standardise this approach by granting:
- An initial 5-year benefit period
- Up to two additional 5-year extensions
- Benefits shall not apply beyond 31 December 2040
Interaction with Other Tax Reliefs
Under both the old and new regimes, the preferential 15% rate applies in lieu of normal personal tax computation. Beneficiaries cannot claim deductions, reliefs, credits, or personal allowances against income taxed at the special rate.
Transitional Arrangements
The HQP Rules and other legacy regimes have been replaced. The new legislation includes transitional provisions allowing existing beneficiaries to apply to transition into the new regime, subject to meeting the updated conditions and re-approval by the competent authorities.
Practical Impact and Strategic Consideration
For employers, the move to a single regime simplifies workforce planning, reduces interpretative risk, and allows consistent treatment of senior hires across sectors.
For employees, the new rules offer:
- A potentially longer benefit period
- Higher preferential income coverage
- Greater certainty, albeit with stricter formal eligibility requirements
Conclusion
The introduction of the Highly Skilled Individuals Rules represents a positive step in consolidating Malta’s various special tax regimes for highly skilled expatriates into a single, harmonised framework. This unified approach, with clearly defined eligibility criteria and consistent conditions, is expected to enhance transparency, certainty, and administrative efficiency.
Prospective beneficiaries are advised to carefully review the updated eligibility requirements and ensure that all necessary documentation is prepared to meet application deadlines.
Our assistance is available should you wish to evaluate the applicability of these new rules to your circumstances and to ensure their proper implementation.