Taxation of Foreign Companies Expatriate Employees
The main principles on which the Maltese tax net is based are the following:
- income arising worldwide to persons who are ordinarily resident and domiciled in Malta is taxable in Malta, and
- income arising in Malta to any person is taxable in Malta.
In the case of employment income, such income is considered as arising in the state where the employment is actually exercised. This position is held by all competent tax authorities and commentators (eg the OECD) and is also the Inland Revenue's position.
This means that, for example, in the case of Malta-based expatriate employees of foreign companies, the income relative to their employment in Malta is fully taxable in Malta. Double tax treaties do of course normally provide for a limitation to this where employees are present in Malta for short periods only, generally not exceeding 6 months.
In particular cases, reference should of course also be made to the relevant legislation, that is the Income Tax Acts and Double Tax Treaties.