Income tax for individuals: Upcoming deadlines

As the 30 April deadline for a number of Malta individual income tax compliance obligations draws near, we are setting out below the salient obligations and deadlines on taxpayers under the various schemes.

Income from part-time self-employment and employment

As from basis year 2022, 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 profits. Income tax is calculated on the profit rather than on turnover (i.e. revenue less expenses that were wholly and exclusively incurred in the production of the income).

Similarly, 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 year 2022 taxed at part-time 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.

This is applicable to individuals who are (i) in full time employment or (ii) pensioners or (iii) full time students/apprentices, and may be extended to the spouse in certain instances. The part-time employment must be registered as such with Jobsplus and for VAT purposes, where required. Furthermore, the self-employment activity must not engage more than two employees, themselves also on a part-time basis.

With respect to the year of assessment 2023 (with reference to part-time activities carried on during 2022), the self-employed and employed individuals opting for this tax treatment are required to prepare and submit the TA22 form or TA23 form respectively, to the Commissioner for Revenue, and settle the tax payment due, by no later than 30 April 2023.

Rental income from letting of tenements

Taxpayers who derived rental income in the course of 2022 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 TA24 form, together with payment by 30 April 2023.

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 aforementioned TA24 form.

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 not. 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 Revenue are expected to settle the first payment by 30 April 2023.

The first settlement of provisional tax equals 20% of the provisional tax benchmark, which is established on the tax charge with respect to year of assessment 2022, basis year 2021. Subsequent provisional tax payments would be requested in August and December 2023, and requested amount is set at 30% and 50% of the provisional tax benchmark respectively.

Beneficiaries in terms of the 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 2023.

Self-employed and self-occupied individuals need also settle their first payment of Class 2 Social Security Contributions with respect to year 2023, by 30 April 2023. Payments are to be made to the Commissioner for Revenue.

Class 2 social security contributions falling due on 30 April 2023, are calculated on the basis of net income for the preceding taxable year i.e. 2022, and number of contributions paid are based on the number of Mondays. The second and third instalment of social security contributions for the year would be due in August and December accordingly.

Individual income tax return

The default income tax return deadline for individuals, for the basis period 1 January 2022 to 31 December 2022 is 30 June 2023. 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.

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