1. Relevant Legislation
Tax on part-time income in Malta is governed by the following legal provisions:
- Article 90A of the Income Tax Act (ITA) – Tax on part-time work
- Subsidiary Legislation 123.39 – Part-time Work Rules
2. Tax Rate
Individuals earning income from part-time work may be eligible for a flat tax rate of 10%.
3. Eligible Persons
The part-time work rules apply to individuals who are residents of Malta in the year preceding the assessment year and who:
- Studied full-time at a university, college, or similar institution;
- Were apprentices qualifying in a trade or profession;
- Had full-time employment registered with Jobsplus;
- Received a pension taxable in Malta.
3.1 Anti-Abuse Clause
Part-time income will not qualify for the 10% rate if derived from:
- A group of companies controlled and beneficially owned more than 50% by the same shareholders.
- Government entities, including the University of Malta, MCAST, Local Councils, and Ministries.
4. Ineligible Part-Time Income
The following sources of income do not qualify for the reduced tax on part-time income:
- Remuneration paid by the Government to holders of public office, board members, or tribunal members.
- Fees paid to Board of Directors of companies and public corporations.
5. Employment and Self-Employment
Part-time taxation applies to both employment and self-employment, subject to income limits:
- Employment Income Cap – €10,000
- Self-Employment Income Cap – €12,000
Any income exceeding these thresholds will be taxed at progressive rates under Article 56(1) ITA.
6. Option to Apply the Part-Time Rule
Individuals may choose to apply the 10% withholding tax, in which case the income need not be declared in their tax return. However, they can also opt to declare all income under standard tax rates.
If an individual expects their total income (full-time, part-time, and other sources) to remain below the taxable threshold, they may notify the authorities via Form FS4 to opt out of the 10% tax deduction.
7. Married Couples
Either or both spouses may apply the 10% withholding tax if one meets the eligibility criteria. However, the reduced rate does not apply if income is derived from:
- A spouse, adoptive child, or close relatives (ascendants, descendants, siblings, or their spouses);
- A company in which the individual or their relatives hold shares.
8. Part-Time Self-Employment
To qualify for the 10% tax rate, a self-employed individual must:
- Register the part-time work with Jobsplus.
- Employ no more than two part-time employees.
- Maintain proper books of accounts.
- Work for an entity different from their full-time employer.
- Register for VAT, unless exempt without credit.
9. Part-Time Employment
To qualify for the 10% tax rate, an employed individual must:
- Register the part-time work with Jobsplus.
- Work for an employer different from their full-time employer.
- Work no more than 30 hours per week.
10. Submission of Return
The 10% tax on part-time self-employment income must be paid by April 30th of the following year, covering income earned from January to December. This must be accompanied by a TA22 form, detailing taxable net profits.
11. Other Compliance Requirements
If an individual fails to pay the required tax by April 30th, and receives a written notice of an inquiry from the Commissioner for Revenue, all part-time income will be taxed at progressive rates, rather than the 10% rate.
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