Malta, a strategic hub within the European Union, continues to attract highly skilled professionals from around the world.
On June 19th, the Commissioner for Revenue unveiled new guidelines under Article 6 of the Income Tax Act, aimed at providing compelling tax benefits to “investment services and insurance expatriates.”
The goal is to bolster these sectors, which have experienced substantial growth since Malta’s EU accession in 2004, by enticing top-tier talent to contribute their expertise.
Who Qualifies?
For those looking to make a significant impact in Malta’s investment services or insurance sectors, the criteria are well-defined.
An ‘Investment Services Expatriate’ is someone employed by or providing services to a company holding an investment services license or recognized by the relevant competent authority.
This includes activities like management, administration, safekeeping, and investment advice to collective investment schemes.
Similarly, an ‘Insurance Expatriate’ works for an entity authorized under the Insurance Business Act, an insurance manager under the Insurance Distribution Act, or engaged in the business of insurance broking.
To be eligible, these expatriates must not be ordinarily resident or domiciled in Malta, nor have resided there for a minimum of three years preceding their employment or service provision in Malta.
The Generous Benefits
Qualifying Investment Services or Insurance Expatriates will enjoy a range of exemptions, which makes this opportunity even more attractive.
The tax benefits cover personal expenses paid by the employing company, such as removal costs, accommodation expenses in Malta, travel costs for the expatriate and immediate family, provision of a car in Malta, medical expenses, medical insurance, and school fees for children.
These benefits, which are typically taxed as fringe benefits, are exempt from taxation for a remarkable period of ten years, starting from the first taxable year in Malta.
Additionally, these expatriates will be treated as not resident in Malta for specific income tax purposes, leading to exemptions on various types of income, including interest, royalties, profits from transfers of units in collective investment schemes, shares, securities, and more. These benefits remain in effect throughout the duration of the individual’s employment as an Investment Services or Insurance Expatriate.
It’s essential to note that individuals who qualify for these tax benefits cannot simultaneously benefit from Malta’s Highly Qualified Persons Rules. The two registration options are mutually exclusive.
Malta’s progressive tax benefits for Investment Services and Insurance Expatriates paint an attractive landscape for skilled professionals seeking a dynamic and rewarding career within these thriving sectors.
The generous exemptions, combined with Malta’s strategic position in the EU, make this opportunity a compelling proposition for those looking to make a significant impact while enjoying a supportive environment
If you have any queries regarding this article on Malta’s new tax benefits for expatriates or Malta tax in general, then please get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
As remote work becomes the new norm in many industries, employers face a maze of tax obligations when their employees operate from Canada.
Whether intentional or a result of Covid-19 travel restrictions, these arrangements can spark a range of tax issues for non-Canadian employers.
In this blog, we shed light on some key considerations and obligations that employers must navigate when their employees work remotely in Canada.
Having an employee in Canada triggers payroll tax obligations for the employer.
These include deductions for income tax, Canada Pension Plan (CPP) contributions, employment insurance (EI) premiums, and any applicable provincial payroll taxes.
While resident and non-resident employers share similar obligations, non-resident employers without a presence in Canada may not be required to withhold CPP contributions.
Similarly, they may not withhold EI premiums if they are payable under the employment insurance laws of the employee’s home country.
However, when CPP contributions and/or EI premiums are due, the employer becomes liable for these on its own account.
Under a non-resident employer certificate regime, certified employers resident in a treaty country may be exempt from deducting and remitting Canadian income tax on remuneration paid to qualified non-resident employees.
To qualify, employees must be residents of a country with which Canada has a tax treaty, and they must be exempt from Canadian income tax on the remuneration due to the treaty.
Additionally, the employees must not be present in Canada for 90 or more days in any 12-month period, or not in Canada for 45 or more days in the calendar year that includes the payment time.
While this certification offers relief, employers should ensure ongoing reporting and compliance to maintain eligibility.
For employers without non-resident certification or non-qualifying employees, a Regulation 102 waiver may be sought if the remuneration is exempt from Canadian income tax due to a tax treaty.
Having an employee in Canada may expose the employer to the risk of being considered to be “carrying on business” in Canada.
A non-resident carrying on business in Canada is generally liable for tax on profits from such activities, subject to any treaty exemptions.
Certain activities of the employee, such as soliciting orders or offering sales in Canada, may cause the employer to be deemed to be carrying on business in the country.
Employers entitled to treaty benefits are exempt from Canadian income tax on business profits if they do not have a permanent establishment (PE) in Canada.
However, certain scenarios, like employees having the authority to conclude contracts, may trigger PE status and tax obligations.
When employees provide services in Canada, the employer’s customer may need to deduct and remit 15% of the payment for those services to the CRA unless a waiver is obtained.
Employers can apply for waivers to reduce or eliminate withholding taxes, depending on treaty provisions and income projections.
Value-added taxes (GST/HST) apply on the supply of goods and services in Canada, requiring non-resident employers to register and comply with the GST/HST regime if they make taxable supplies in the country.
In sum, remote work arrangements in Canada can create complex tax implications for non-Canadian employers.
Understanding and fulfilling these obligations is essential to avoid potential pitfalls and ensure compliance with Canadian tax laws.
Seeking professional advice can illuminate the path forward and help employers navigate the tax terrain with confidence.
If you have any queries about this or other Canadian tax matters then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
Earlier in the month, in the Pre-Budget Report (“PBR”), the Bermudan Government announced a proposal that will represent significant changes to the current employment tax regime.
It is a fair observation to say that some of the proposals were quite eye-catching.
Firstly, an increase is proposed to the employer portion of payroll tax for exempted companies. Here, the rate will increase from the current 10.25% to 10.75%.
The result of this is that it means that Bermuda’s exempted companies are now required to pay payroll tax at a higher rate than local companies.
In addition, the PBR proposes a change to the employee portion of payroll tax. The result here is that it means a greater proportion of the overall tax burden will fall on the shoulders of higher earners.
The Government had made election pledges in 2020 in this area. Firstly, it seeks to make good its promise to eliminate the employee portion of payroll tax for those earning below $48,000 a year. At present, this is 1.5%.
This is accompanied by an increase in the rates for all other income brackets. These are set out below.
| Income bracket | Current rates | Proposed Rates |
| $0 – $48,000 | 1.50% | 0% |
| $48,001 – $96,000 | 9% | 10% |
| $96,001 – $235,000 | 9% | 11.50% |
| > $235,001 | 9.50% | 13% |
The PBR also includes a proposal to increase the cap on annual taxable remuneration.
At the moment, the cap is set at $900,000. However, the proposal suggests raising this to $1,000,000.
The measures set out above would result in high-earners shouldering a greater proportion of the tax burden.
In addition, there is likely to be a sizeable increase in the payroll tax bill for exempt companies.
In terms of next steps, the PBR will be open for consultation until 13 January 2023. A Budget will follow this – perhaps as early as February.
So, watch this space!
If you have any queries about this article on the Bermuda PBR, Bermuda employment taxes or Bermudan tax matters in general then please do not hesitate to contact us.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.