Tax applicable to Part time Income – New provisions

1 What does the term ‘Part-Time Work’ mean?
Part time work is specifically defined if the individual is not engaged therein for more than thirty hours in any one week. The individual deriving income from part-time work is resident in Malta during the year immediately preceding the year of assessment and who moreover –
• derives other income from a full time employment registered as such with the Employment and Training Corporation (ETC): or
• was receiving full time instruction at any university, college, other educational establishment, or was serving an apprenticeship with a view to qualifying in a trade or profession
This can be spread over two main categories
1. Part-time employment
2. Part-time self-employment

2 What tax rate is charged?
Article 90A of the Income Tax Act provides for a special flat tax rate of 15% which is applicable on any income from part-time work. This rate is applicable to all part time income subject to the maximum threshold as detailed below.

3 What conditions need to be satisfied so that the 15% flat tax rate is applicable?
This special rate of tax is only applicable if the below criteria is to be satisfied:
For part-time employees
• The tax payer has registered the part-time work with the Employment and Training Corporation (ETC); and
• The tax payer performs such work against remuneration with a company, organisation or enterprise other than that with which is employed on a full-time basis.

For part-time self-employed
• The taxpayer had registered the part-time work with the Employment and Training Corporation (ETC)
• The tax payer does not engage more than two employees (and such employees shall be on a part-time basis)
• Proper books of account are kept and registered for VAT, unless such registration is not required if the individual is exempt from the registration under the Value Added Tax Act; and

4 What must I do to pay the 15% tax?
Part-time employment
Tax is paid under the Final Settlement System (FSS) directly by the employer. The taxpayer should notify his employer by filling in an FS4 and ticking the appropriate box as a part-timer.
Part-time self-employment
Fill in form TA22 which refers to the profit made from January to December and have this filed by 30th June of the following year.

5 What changes occurred as from 1st January 2014?
The current limit for the application of this preferential tax rate is to be extended from the current limit of €7, 000 to €10, 000 for part-time employment and €12, 000 for part-time self-employment respectively.
The part-time regime will also be amended to allow for a part-time self-employed individual to continue to apply the 15% even where such business starts to expand and employing up to two part-time workers.

6 Is there any other part-time income which does not qualify for taxation at the 15% rate?
Yes, here are a few examples:
• remuneration paid by Government to holders of an office, including members on boards or tribunals, and Members of Parliament and Local Councils;
• remuneration paid to pensioners who take up employment with Government or provide services in any capacity to Government, parasternal bodies, corporations or other Government organisations or companies in which the Government has a controlling interest;
• fees and other payments made to members of the Board of Directors of companies or to members on boards of public corporations
• Qualifying part time income which is, however, in excess of the thresholds indicated above.
The above information is being provided as a general guide only and should not be considered as a substitute for professional advice.

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