Second HR Network Series for 2019 showcases tax tools

SalariesInMalta held its second Series, entitled 'Tax Efficient Employee Benefits' providing a fully-booked audience, with valuable taxation and final tools for their everyday work

SalariesInMalta held its 2nd HR Network Series for 2019, entitled “Tax Efficient Employee Benefits” at Xara Lodge, Rabat, sponsored by talexio.com and Zenith TII Ltd. Presenters and speakers at the event provided the fully-booked audience with valuable and useful taxation and final tools for their everyday work.

The 2nd HR Network Series for 2019, held by SalariesInMalta was held at Xara Lodge, Rabat, sponsored by talexio.com and Zenith TIL Ltd. 

Sara Pavia, Business Development Manager at Mapfre MSV Life, mentioned how life insurance products could help to cover the employees, adding they may be used to also cover the business, keeping in mind that losing an important employee could hurt operations. Pavia underscored that insurance may be used as an investment vehicle; as an employee benefit or for business purposes.

The insurance professional also mentioned the three pillars of pension in Malta, which are: government pension, contributions made through the workplace to make up for the income gap, related to salary after retirement, and voluntary pension to reach one's personal retirement lifestyle objectives. 

The first pillar might be insufficient for maintaining a comfortable lifestyle after retirement, she noted, therefore the other two are a crucial way of mitigating the expected gaps. Furthermore, with the tax benefits available to both employers and employees, voluntary workplace pensions may be a great way of offering employee benefits in a tax-efficient way, and support the employer's corporate social responsibility.

Rebecca Diacono, associate at Fenech & Fenech Advocates said that employers should encourage their employees to think about saving up for their retirement days. She emphasised the difference between resident and domiciled, and not resident and domiciled employees, underpinning how the Maltese tax system treats them differently.

Diacono also discussed the current situation of the so-called 'golden handshake' in Malta, which is typically a severance package paid to an employee. The Income Tax Act does not cater for special provisions on the tax treatment of golden handshakes and neither has the Office of the Commissioner for Revenue published any official guidance in this regard.

In determining whether a golden handshake is taxable or not, one must establish whether it is categorised as capital or income. There is no one-size fits all approach to deciding whether a particular golden handshake is taxable or not and each case should be assessed in its own light, she added. There are different scenarios, and therefore, it is highly suggested for employers to consult.

Last but not least, Giljan Aquilina, Business Tax Compliance Senior and Charmaine Tanti, Supervising Associate - Talent from EY, discussed how fringe benefits might be taxable in the hands of the employees and tax-deductible by the employer or otherwise. They clarified the different categories as follows: Category One — benefits relating to motor vehicles —, Category Two — benefits relating to the use of a property —, and Category Three — other benefits.

The EY professionals also talked about how people returning to employment. either as an employee or self-employed, may benefit from a tax credit, provided a number of conditions are satisfied.

The upcoming sessions of the HRNS for this year are scheduled for July and October, carrying the topics of 'HR Led Change' and 'How to Deal with a Multicultural Work Environment', respectively.

For more information email: [email protected] or call on 2122 8772.

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