VFA Service Providers now eligible to apply for Tax Residency under HQP Rules in Malta

The MFSA has recently confirmed VFA Service Providers as part of the list of senior positions eligible to apply for Tax Residency under the HQP Rules.

The Highly Qualified Persons Rules (HQP) is a Tax Residence Programme in Malta introduced with the sole aim of attracting highly skilled professionals from around the world to the island.

This scheme was introduced by virtue of L.N. 106 of 2011 and prolonged to these other sectors by the Legal Notice 141 of 2018.

The cryptocurrency-friendly jurisdiction that Malta has created has already attracted major cryptocurrency exchanges in the world who are to set up offices on the island. The stable system and the forward approach that Malta has to offer is creating the ideal setting to attract further investment. Being the first country to have its regulatory framework for Blockchain technology, Malta can be considered at the forefront for embracing this revolutionary innovation. On the 4th July 2019, the Maltese Parliament passed three bills into law, giving any interested investor a clear picture of the legal framework required to set up a legitimate cryptocurrency business in Malta. These are the Malta Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act.

According to the MFSA, Article 2 of the VFA Act states that a “Virtual Financial Asset" or "VFA" means any form of digital medium recordation that is used as a digital medium of exchange, unit of account, or store of value and that is not -

1. electronic money;
2. a financial instrument; or
3. a virtual token.

Applying for a VFA License in Malta requires the applicant to be a legal person established in Malta and act in an ethical manner, conducting themselves with Integrity, Competence, and Solvency, and being regarded as “Fit and Proper”.

If the applicant meets the above-mentioned criteria and is officially instated as a VFA Service Provider in Malta, he/she can then apply for the HQP Rules where they will benefit from a flat tax rate of 15% up to a maximum income of €5M. Any excess on the said sum is exempt from tax.

To be eligible for that, the HQP applicant shall derive employment income subject to income tax in Malta, have an employment contract subject to the laws of Malta, provide sufficient proof to show that s/he is in possession of professional qualifications and has at least five (5) years professional experience, have not benefitted from deductions available to investment services expatriates with respect to relocation costs and other deductions, and provide sufficient evidence to prove that he/she performs activities in an eligible office, amongst others.

For more information and to check your eligibility you are invited to contact our Malta Residency Consultants on [email protected]. With over three decades of experience within the sector, CSB Group offers nothing less than the best professional advice on a number of subjects. Our experts will be sure to advise you on the best course of action regarding your case, supporting you through every step of the process.