Personal income tax: Upcoming deadlines

A number of personal income tax deadlines are due on 30 April, which qualifying individuals are required to comply with. We are setting out below the salient obligations and deadlines on qualifying taxpayers under the various schemes.

Qualifying employment schemes

Individuals qualifying as eligible for a reduced rate of income tax from qualifying employment in terms of the relevant schemes administered by various competent authorities, such as the Highly Qualified Persons Rules or the Qualifying Employment In Aviation (Personal Tax) Rules, amongst others, are reminded of their annual obligation to obtain certain prescribed income tax return attachments duly endorsed by the relevant competent authority.

Such attachments are required in order to avail of the reduced rate of income tax on qualifying employment income and the deadline typically imposed by the relevant competent authority for submission of the said attachments for endorsement is 30 April 2024, with respect to YA2024 income tax return. Failure to comply may negate the benefits of the respective scheme for YA2024.

Income from part-time self-employment and employment

Qualifying individuals deriving income from part-time self-employment may benefit from a flat rate of income tax of 10% on the first €12,000 of chargeable income, i.e., profit. Income tax is calculated on the taxable profit rather than on turnover (i.e. revenue less expenses wholly and exclusively incurred in the production of the income).

Similarly, qualifying individuals having a part-time employment, who may have not elected and instructed their employer to have the eligible part-time income earned during the 2023 taxable year to be taxed at the reduced rate of 10%, may still opt to benefit from the flat rate of tax of 10% on the first €10,000 of income arising from their part-time employment.

With respect to the year of assessment 2024 (with reference to part-time activities carried on during 2023), the self-employed and employed individuals opting for this tax treatment are required to prepare and submit the prescribed respective return, to the Commissioner for Tax and Customs, and settle the tax payment due, by no later than the 30 April 2024.

Rental income from letting of tenements

Taxpayers who derived rental income in the course of 2023 may opt to be taxed on the gross income, without the possibility to claim any deductions, at a flat rate of 15%, by filing the prescribed return, together with payment by 30 April 2024.

Furthermore, as previously set out in our tax alert on Private Residential Leases, persons who derived rental income from a long private residential lease of at least two years duly registered as such, are eligible for a tax rebate. This rebate may be claimed through the prescribed return.

The option to be taxed at a flat rate of 15% may be availed of both in case of commercial and residential rents, and is open to both individual and corporate taxpayers, whether resident in Malta or otherwise. Nonetheless, a taxpayer may still opt to declare the rental income in the annual personal income tax return, subject to the progressive rates of income tax, and avail of certain deductions. It is to be noted that all respective income from the rental of tenements derived by a taxpayer should be declared in the same manner.

Provisional tax and social security contributions

Individual taxpayers who may be requested to pay provisional tax by the Commissioner for Tax and Customs are expected to settle the first payment by the 30 April 2024.

Beneficiaries in terms of the High Net Worth Individuals Rules, the Malta Retirement Programme Rules, the Residence Programme Rules, the Global Residence Programme Rules and the United Nations (‘UN’) Pensions Programme Rules are required to settle the minimum amount of tax payable in terms of the respective rules, also by 30 April 2024.

Self-employed and self-occupied individuals need also settle their first payment of Class 2 Social Security Contributions with respect to year 2024, by 30 April 2024. Payments are to be made to the Commissioner for Tax and Customs.

Income from artistic activities

In terms of Legal Notice 8 of 2024, Income from Artistic Activity Rules (the ‘Rules’), income chargeable to tax in terms of article 4(1)(a) of the Income Tax Act (Chapter 123 of the Laws of Malta) and derived from eligible artistic activities conducted on a self-employed basis for an artistic purpose, is in principle eligible for a reduced flat rate of income tax of 7.5%.

The reduced rate of income tax is applicable only on the first €50,000 of income for year of assessment 2024, and subject to having duly applied with Arts Council Malta, the administrators of this scheme. A list of eligible artistic activities has been published by Arts Council Malta, and compliance requires:

• i) Application by the individual with Arts Council Malta through the prescribed form to seek approval to apply the reduced rate of income tax. The deadline for this application is 15 April 2024; and
• ii) Approved applicants are required to prepare and submit the prescribed return, to the Commissioner for Tax and Customs, and settle the tax payment due, by no later than 30 April 2024.
  

Individual income tax return

The default income tax return deadline for individuals, for the basis period 1 January 2023 to 31 December 2023 is 30 June 2024. Individual taxpayers who may be requested, or are required, to file an income tax return are required to do so, and settle any income tax due, by such date.