One of the general changes made was merely an adaptation to today’s cross-border work relationships and geographically dispersed workforce. In terms of the updated legal notice, where a benefit is deemed to arise by reason of an employment or office, the income represented by the value of that benefit shall be deemed to arise in the jurisdiction where the work is wholly or principally performed. If the benefit is deemed to arise by reason of a directorship in a company it shall be deemed to arise in the jurisdiction where that company is managed and controlled.
Category 1 – Car Benefits
Private Use Value
The taxable benefit of the Private use value of a car is calculated by as follows:
Vehicle Use Value + Maintenance Value + Fuel Value x % of Private
The percentage of private use depends on the value of the car. The higher the value of the car, the higher the percentage use and therefore, the higher the taxable benefit. The percentage of private use was revised from 20% to 0% when the value of the vehicle is less than € 16,310 and it is used for point to point services as approved by the Commissioner. Thus in such situations, no taxable fringe benefit shall be deemed to arise.
The list of vehicles which when used for private purposes do not give rise to a taxable fringe benefit now also includes vans, defined as mechanically propelled road panel vehicle or utility or any other commercial vehicle whose construction is primarily suited for the conveyance of goods with no seating capacity for passengers except for seating adjacent to the driver. In this regard, the rule providing that the annual value of a benefit consisting in the private use of a van is €465 was completely removed.
Category 2 – Use of Property
In determining the cost of immovable property, when property is held by a person under a title of perpetual or temporary emphyteusis the price for the acquisition thereof shall be deemed to be the price or premium, if any, paid or payable in accordance with the deed of emphyteusis, without the requirement to increase the amount by five times the annual ground rent payable, as was previously required under the old rules.
When it comes to the Annual value of the private use of property, where the property is owned by the provider of the benefit or by a related person and where the property is held under a title of emphyteusis, the total taxable value shall be the said value shall be the higher of:
(A) 5% of the market value; and
(B) the total of 5% of the cost of the property and an amount equivalent to the relative annual ground rent.
Category 3 – Other Benefits
With reference to Beneficial loan arrangements, the benchmark rate of interest on a loan set out in the Rules has now been brought down to 6.5%.
When it comes to the Value of free or discounted transfer of property and provision of services, the following provision has been included. When the benefit consists in the transfer of a motor vehicle and the beneficiary had, before the transfer, made private use of that motor vehicle as provided in Category 1 of the Rules, the value determined shall be reduced by the total value of the fringe benefit that was deemed to have been provided to that beneficiary as a result of the private use of that motor vehicle; provided that the value so reduced shall not be less than zero.
The value of share option scheme benefit, now also includes share award schemes. The benefit shall be deemed to be provided on each date that shares are issued or transferred to the beneficiary in terms of the share award scheme in question. The value of the share option scheme benefit shall be the excess, if any, of the price which the shares in question would fetch if sold in the open market on the date when the benefit is provided over the price paid or payable by the beneficiary for those shares. The income represented by the value of the benefit shall be subject to tax at the rate of 15%.
Fringe Benefits which are tax exempt
When it comes to what Fringe Benefits are deemed to be exempt and not subject to tax, the list was expanded further and now includes also the following.
- The costs of traveling between Malta and Gozo for business purposes will now also include the relocation costs and costs of journeys between shifts;
- The costs of traveling between Malta and Gozo now also includes travel by air;
- The costs incurred by and charged in the name of an employee, as evidenced by receipts produced to the employer, or by his employer for the provision of fixed or mobile telephony services, now also includes the cost of a mobile phone or a facsimile machine, used by the employee for the purpose of the business of the employer;
- Health-related costs have also been included as an exempt fringe benefit. Health-related costs mainly refer to:
(i) the cost of a medical examination, test or screening which an employee is required to undergo in order to take a new employment or to take up a new post with the same employer or to gain entry to a superannuation fund;
(ii) the cost of medical care, medicine and other medical treatment provided as a prevention against injury or illness related to an employment as part of a programme available generally to employees exposed to the same work-related health risks;
(iii) the cost of individual or group counseling relating to safe work practices, health, fitness, stress management or drug or alcohol abuse that is given as part of a programme available generally to employees exposed to the same work-related health risks.