Update to the Fringe Benefits Rules

On 19 December 2023, Legal Notice 298 of 2023 was published and brought in certain amendments to the Fringe Benefit Rules, Subsidiary Legislation 123.55 of the Laws of Malta (the ‘FBR’).

Applicable from basis year 2024, the change amends regulation 26 of the FBR which pertains to benefits granted by way of beneficial loan arrangements, typically in the form of reduced or interest-free loans.

In the context of beneficiaries who are in receipt of a loan for the purchase of a house with a reduced rate of interest issued to them by a Maltese bank or licensed financial institution, the taxable benefit in such a case should be calculated by reference to the interest rates prevailing at the end of each month during the twelve (12) month period ending on 30 September of the previous calendar year, as published by the Central Bank of Malta in the statistics database on interest rates and other key financial market rates. This deviates from the rate on the main refinancing operation previously applicable and which continues to be applicable for Year of Assessment 2024.

With respect to beneficiaries who are in receipt of a loan, other than a loan for the purchase of a house, at a reduced rate of interest, the benefit continues to be calculated by reference to the rate on the main refinancing operations as applied by the Central Bank of Malta as prevailing at the end of the previous calendar year.

The annual value of the above benefit continues to be subject to the in-house benefit reduction.