Taxation

Malta Announces 7.5% Tax Rate for Income from Sports Activities

The Minister of Finance of Malta issued a notice in the official gazette on 28^th June 2024, introducing the Income from Sport Activities Rules, 2024, effective from the assessment year 2025. These rules establish a flat tax rate of 7.5% on the gross income earned from sports activity employment.

 This tax is final, and there are no provisions for set-offs or refunds. These rules are issued under Articles 56(26) and 96 of the Income Tax Act and apply to Qualifying Individuals who provide specified services related to sports activities recognized by Sports Malta and primarily conducted in Malta.

To Whom Does this Rule Apply?

The rules apply to services provided in the course of or directly related to sports activities, whether on a full-time or part-time basis, by qualified individuals in the following roles, and alternatively, these individuals can be treated under the standards of individual income tax rules. Below is the list of the individual roles: 

• Registered player or Athlete
• License coach
• Licensed match official Match analyst
• Team managers or sporting directors
• Sport Administration
• Team Doctor
• Team Physiotherapist

How is Personal Income Taxation Structured for Individuals in Malta?

Malta taxes individuals who are both domiciled and ordinarily resident in Malta on their worldwide income. Ordinarily, residents not domiciled in Malta are taxed only on income earned in Malta and on foreign income remitted to Malta. They are not taxed on income arising outside Malta that is not received in Malta or on capital gains arising outside Malta, regardless of whether these gains are received in Malta.

However, individuals married to someone ordinarily resident and domiciled in Malta are taxed worldwide, not just on a source and remittance basis. Non-resident individuals are taxed only on income and chargeable gains arising in Malta. Tax is levied on income earned during the calendar year and is assessed in the year of assessment.

Implication of Malta’s New 7.5% Tax Rate on Sports Income

Malta’s introduction of a 7.5% flat tax rate on income from sports activities is a strategic move designed to position the country as a premier destination for sports professionals and related industries or registered companies in Malta. Below is a detailed analysis of the anticipated impact and implications of these new tax regulations:

1. Attract International Sports Professionals

The 7.5% tax rate provides a significant incentive for international sports professionals, including athletes, coaches and sports staff. Unlike higher tax rates in other countries, Malta’s flat rate is highly attractive and gathers talent worldwide.

2. Enhanced Sports Infrastructure

With increased international talent, Malta is likely to see improvements in its sports infrastructure and facilities. This could include better training centres, state-of-the-art equipment, and enhanced sports programs. The presence of high-profile athletes and professionals might also encourage investment in sports-related ventures and projects.

3. Growth in Sports Tourism

The arrival of international sports professionals can boost tourism in Malta. Major sporting events, training camps, and competitions hosted in Malta will attract visitors, further benefiting the local economy through increased spending on accommodation, dining, and entertainment.

4. Increased Investment

The favourable tax environment is expected to attract local and international investors to Malta’s sports sector. This could result in new investments in sports teams, leagues, and facilities, contributing to the industry’s overall growth.

5. Development of Local Talent

With more international professionals in the country, local athletes and sports enthusiasts will have the opportunity to train and compete alongside some of the best in the field. This exposure can significantly improve the standards of local sports and help develop home-growing talent.

6. Economic Diversification

By fostering growth in the sports sector, Malta is diversifying its economy. This move helps reduce dependency on traditional industries and create a more resilient economic structure that can withstand fluctuations in other sectors.

Conclusion

In conclusion, Malta’s introduction of a 7.5% flat tax rate on income from sports activities is a forward-thinking move promising numerous benefits to the country’s sports industry and economy. By attracting international talent, boosting local development, and creating economic opportunities, Malta is set to enhance its standing as a leading sports destination.

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