FRINGE BENEFITS ġ S.L.123.55 1
SUBSIDIARY LEGISLATION 123.55
FRINGE BENEFITS RULES
1st January, 2001
LEGAL NOTICE 125 of 2001.
PART A - GENERAL
Title.
Definitions.
Cap. 123.
"associated company" means that is related to another company
to which reference is made in the context in which this term is used
in a way that -
( a ) the two companies form part of the same group; or
( b ) the two companies are owned or controlled directly or
indirectly as to more than 50% by the same persons;
"beneficiary" means a person to whom a benefit is or is deemed
to be provided;
"benefit" means anything that is deemed to be a benefit in terms
of rule 9, 17, 20, 26, 28, 30, 32, 36, 39 or 45;
"controlling position" has the meaning assigned to it in subrule
(2) of this rule;
"director" means -
( a ) any person occupying the position of director of a
company by whatever name he may be called;
( b ) any person carrying out substantially the same
functions in relation to the direction of the company as
those carried out by a director;
( c ) any person in accordance with whose direction or
instructions the directors of a company are accustomed
to act;
"employee" means an individual who performs services under a
contract of employment whether written or not with another person;
"employer" means a person who engages or has engaged another
person to perform services under a contract of employment;
"member of the family" of a person means the spouse, ascendant,
direct descendant or an adoptive child of that person, or the spouse
of such ascendant, descendant or adoptive child or an individual
who ordinarily resides in the same residence as that person,
whether related to him or not;
"officer" means the holder of an office and includes also an
individual who -
2 ġ S.L.123.55 FRINGE BENEFITS
( a ) is a director of a company; or
( b ) holds directly or indirectly more than 5% of the
ordinary share capital or of the voting rights in a
company; or
( c ) is a partner in a partnership;
"partnership" means a civil or commercial partnership
constituted under or in accordance with Maltese law other than a
company;
"property" means any kind of movable or immovable property;
"provider of a benefit" means a person who provides or who is
deemed to provide a benefit.
(2) In these rules a person shall be deemed to be in a
controlling position in a company if -
( a ) he is an individual who holds directly or indirectly
25% or more of the ordinary share capital or the voting
rights in that company or in an associated company; or 
( b ) he is an individual who holds, directly or indirectly,
shares in that company and the shares so held, together
with any shares held directly or indirectly in that
company by a member or members of his family,
amount to or represent an aggregate of more than 50%
of the ordinary share capital or the voting rights in that
company; or
Cap. 343.
( c ) he is an individual who is a director of that company or
of an associated company but is not registered with the
competent authority set up under the Employment and
Training Services Act as a whole time employee with
that company or with an associated company. 
Circumstances in 
which a benefit is 
deemed to be 
provided by reason 
of an employment 
or office.
3. (1) Except where otherwise provided in these rules, a
benefit shall be deemed to be provided by reason of an employment
or office if -
( a ) it is provided by an employer to his employee; or
( b ) it is provided by a company or a partnership to an
individual who holds an office in that company or
partnership; or
( c ) it is provided by a company to an individual who was
an employee or officer of that company as a reward
for, or in recognition of, services rendered to that
company; or
( d ) it is provided by a company on a continuing or regular
basis to an individual who, at the time it was first
provided or at the time that the company decided to
provide it, was an employee or an officer of that
company; or
( e ) it is provided to the holder of an office by a person
who is responsible for the payment of remuneration for
duties performed under the terms of appointment to
that office; or
FRINGE BENEFITS ġ S.L.123.55 3
( f ) it is provided as a reward for services rendered by a
person in the course of the performance of his duties as
employee or officer of another person where that
benefit is provided by a third party.
(2) The presumptions referred to in sub-rule (1)( a ), ( b ), ( d ) and
( e ) may be rebutted by evidence that -
( a ) the benefit is a donation made by an individual on
purely personal considerations; or
( b ) the benefit is provided in settlement or on account of a
debt that is not related to any services rendered in the
course of an employment or office; or
( c ) the benefit is a distribution of profits by a company or
a partnership to a person in his capacity as shareholder
or partner of that company or partnership or represents
drawings made by a partner on account of his share of
profits of the partnership, and is accounted for as such
in the records of that company or partnership.
Benefit provided 
by an associated 
company or to a 
member of the 
family.
4. For the purpose of rule 3 -
( a ) a benefit provided by a company to an individual who
is not an employee or an officer of that company but
who is an employee or an officer of an associated
company shall be deemed to be a benefit provided by
the associated company;
( b ) a benefit provided by a company to an individual who
is not an employee or an officer of that company but
who is a member of the family of an employee or an
officer of that company or of an associated company
shall be deemed to be a benefit provided to the said
officer or employee;
( c ) a benefit provided by an employer, other than a
company, to an individual who is not an employee of
that employer but who is a member of the family of an
employee of that employer shall be deemed to be a
benefit provided to the said employee;
( d ) a benefit provided to an employee by a third party
shall be deemed to be provided by the employer if the
benefit is provided on the employer’s instructions,
whether direct or explicit or otherwise, or through his
intervention.
Value of benefits.
accordance with the provisions of these rules. 
(2) Except where otherwise provided in these rules, when the
value of a benefit is expressed as an annual value that benefit shall
be deemed to have a value of one-twelfth of the annual value for
each whole calendar month during which that benefit is provided
and of one of three hundred and sixty-five of the annual value for
each day of any part of a month during which it is provided.
(3) When the annual value of a benefit is changed by reason of
any event that takes place after the commencement of the provision
4 ġ S.L.123.55 FRINGE BENEFITS
of that benefit then, for the purpose of determining the value of the
benefit for the month during which that event takes place, the
provisions of subrule (2) shall apply as if the benefit provided from
the date when that event takes place were a separate benefit from
that provided prior to that date.
(4) When any provision of these rules produces a negative
value of a benefit that benefit shall be deemed to have no value.
(5) Any value determined in accordance with these rules shall
be rounded up or down to the nearest lira.
(6) Where the benefit consists in the use of property and more
than one beneficiary makes use of the same property the provider
of that benefit shall determine the annual value of the benefit in
accordance with the other provisions of these rules and he shall
then apportion that value between the beneficiaries in such manner
as to him may appear reasonable in the circumstances or as may be
determined by the Commissioner.
Market price. 6. (1) When the valuation of a benefit includes the
determination of the price, hereinafter referred to as "the market
price", which any property would fetch if sold in the open market
then, subject to the other provisions of this rule, an expert valuation
shall constitute sufficient evidence of that price.
(2) When an expert valuation is made at the request of the
Commissioner, hereinafter referred to as "the Commissioner’s
valuation", and another expert valuation relating to the same
property is made at the request of the provider of the benefit or of
the beneficiary, hereinafter referred to as "the beneficiary’s
valuation", the following provisions  shall apply:
( a ) if the beneficiary’s valuation is produced to the
Commissioner before the Commissioner’s valuation is
made and the market price indicated in the
Commissioner’s valuation does not exceed by more
than 15% that indicated in the beneficiary’s valuation,
the beneficiary’s valuation shall constitute evidence of
that price to the exclusion of the Commissioner’s
valuation;
Cap. 372.
( b ) if the beneficiary’s valuation is produced after the
Commissioner’s valuation has been made, or if the
market price indicated in the Commissioner’s
valuation exceeds by more than 15% that indicated in
the beneficiary’s valuation, the Commissioner’s
valuation shall, subject to the provisions of subrule (3)
hereof, constitute evidence of that price to the
exclusion of the beneficiary’s valuation: provided that
nothing in this sub-paragraph shall prevent the
Commissioner’s valuation from being questioned in an
appeal against a tax assessment made in accordance
with the relevant provisions of the Income Tax
Management Act.
(3) In an appeal filed in the Board of Special Commissioners
an expert valuation exhibited by either party, when confirmed by
the valuer under oath, shall constitute sufficient evidence of the
FRINGE BENEFITS ġ S.L.123.55 5
market price, unless the other party exhibits another expert
valuation, likewise confirmed by the valuer under oath, in which
case the following provisions shall apply:
( a ) when the provisions of subrule (2)( a ) are applicable,
the Board shall decide the matter in accordance with
those provisions;
( b ) in any other case the Board shall appoint an
independent expert valuer to draw up and confirm
under oath a further expert valuation and, subject to
any consideration which the Board may consider
appropriate, decide the matter accordingly.
(4) An expert valuation shall not, merely on the basis of the
foregoing provisions of this rule, constitute evidence of any matter
relevant to the determination of the value of a benefit other than the
market price.
S.L.372.14
(5) When a declaration of the value of a benefit made by the
beneficiary or by the provider of the benefit is supported by an
expert valuation produced to the Commissioner, and the value
declared results to be less than the value that is finally determined
to be the correct value, the declaration shall not, to the extent that it
is so supported, be held to represent an omission for the purposes of
article 56(12) of the Act or an offence for the purposes of Part IX of
the Income Tax Management Act or a default for the purposes of
the Final Settlement System (FSS) Rules:
Provided that the provisions of or prescribed under the
Income Tax Acts relating to the tax (but not additional tax)
chargeable and payable with respect to the benefit, to interest
payable on the late payment of that tax and to the amount of tax
that should be deducted from emoluments and remitted to the
Commissioner by a payer shall apply by reference to the correct
value of the benefit as finally determined.
(6) In this rule "expert valuation" means a written opinion of
the market price as on the date relevant for that purpose in
accordance with the provisions of these rules drawn up by a person
recognised by the Commissioner or by the Board of Special
Commissioners, as the case may be, as competent to express an
expert opinion on that price containing a description of the property
in question and stating briefly the relevant considerations.
Period during 
which a benefit is 
deemed to be 
provided.
7. (1) When a benefit consists in the use of property it shall
be deemed to be first provided -
( a ) if the property is immovable property, on the day on
which that property is first used by the beneficiary;
( b ) in any other case, on the day on which that property is
first made available for the use of the beneficiary,
and, in any case, that benefit shall be deemed to continue to be
provided for as long as that property remains available for the use
of the beneficiary.
(2) When the property is movable property and it is not
available to the beneficiary on account of repairs or some other
6 ġ S.L.123.55 FRINGE BENEFITS
temporary cause for a period that is less than 30 consecutive days,
that property shall be deemed to remain available to the beneficiary
during that period; and when the period of unavailability is 30
consecutive days or more that property shall not be deemed to
available to the beneficiary during that period.
(3) When property is made available to a beneficiary to replace
similar property in a period during which, in accordance with
subrule (2), the latter property is deemed to remain available to that
beneficiary, the value of the benefit for that period shall be
determined by reference to the value of the latter property without
reference to the value of the former property.
(4) Property shall not be deemed to be available to a
beneficiary for any period during which it is exclusively used by or
specifically reserved for the exclusive use of third parties in the
course of the business of the provider of the benefit.
PART B
CATEGORY 1 BENEFITS - BENEFITS RELATING TO MOTOR 
VEHICLES
Definitions of 
terms used in this 
Part.
8. In this Part, unless the context otherwise requires -
"vehicle" means any mechanically propelled vehicle constructed
or adapted as a means of transport for individuals, including a van
and any other vehicle which is constructed or adapted for the
conveyance of goods but which is also suitable as a means of
transport for individuals, but shall not apply to -
( a ) a vehicle with a design weight of more than 3500
kilograms;
( b ) a motor cycle;
( c ) a vehicle specially built or adapted for use by a
severely disabled person and used by such person for
travelling between his home and his workplace;
( d ) such other vehicle as the Commissioner may specify
by order in writing;
"van" means a 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.
Private use of a 
vehicle.
9. (1) The private use by an individual of a vehicle that is
owned or held under a title of lease by another person shall be
deemed to be a benefit provided by the said person to the said
individual.
(2) There shall be deemed to be private use of a vehicle by an
individual in any of the following circumstances:
( a ) if the vehicle is placed at the exclusive disposal of that
individual;
( b ) if the vehicle is regularly available for use by that
individual outside the hours during which he normally
performs his duties as an employee or an officer of the
provider of the benefit;
FRINGE BENEFITS ġ S.L.123.55 7
( c ) if the vehicle is regularly kept overnight or during
weekends under the charge of that individual in any
place which is not the business premises of the
provider of the benefit or within 100 meters thereof;
( d ) if the vehicle is regularly used by that individual for
purposes not directly linked with his employment or
office. 
(3) The provisions of paragraph ( c ), but not of the other
paragraphs, of subrule (2), shall not apply with respect to -
( a ) the use of a vehicle by an employee who is required to
use that vehicle wholly in the performance of his
duties as a messenger or a driver;
( b ) the use of a van by an employee who is required to use
that van wholly in the performance of his duties as an
employee where such duties include the carriage of
heavy tools and material or the delivery of goods to
clients of his employer and where the employee is
normally required to proceed with such work directly
from his home.
(4) Notwithstanding the other provisions of this rule the use of
a vehicle shall not be deemed to be a private use if the
Commissioner determines that it constitutes an official use.
Annual value of 
the private use of a 
vehicle excluding a 
van.
10. The annual value of the benefit referred to in rule 9, except
when it relates to the use of a van, shall be arrived at first by
finding the aggregate of:
- the vehicle use value determined in accordance with
rule 11,
- the maintenance value of the vehicle determined in
accordance with rule 12, and
- the fuel value of the vehicle determined in accordance
with rule 13
and then multiplying the result by -
- the private use percentage determined in accordance
with rule 14.
Vehicle use value.
vehicle is not more than 6 years old and 10% of the vehicle value in
any other case.
(2) A vehicle shall be deemed to be more than 6 years old on
and after the sixth anniversary of the date when it was first
registered for road use, whether in Malta or outside Malta.
Maintenance 
value.
12. (1) The maintenance value of a vehicle is 3% of the
vehicle value if the vehicle value does not exceed Lm12,000 and
5% of the vehicle value in any other case.
(2) The maintenance value of a vehicle shall be deemed to
represent all costs incurred by the provider of the benefit relating to
the use of the vehicle, including the road licence, the driving
licence, insurance cover, repairs and servicing, but excluding fuel
and garaging of the vehicle: provided that the maintenance value of
8 ġ S.L.123.55 FRINGE BENEFITS
a vehicle shall be determined in accordance with subrule (1)
regardless of the cost actually incurred by the provider of the
benefit and even where the said costs are borne fully or partly by
the beneficiary.
Fuel value. 13. (1) Subject to the other provisions of this rule the fuel
value of a vehicle is 3% of the vehicle value if the vehicle value
does not exceed Lm12,000, and 5% of the vehicle value in any
other case.
(2) The fuel value of a vehicle shall be deemed to represent the
costs incurred by the provider of the benefit relating to the fuel
consumed in the use of the vehicle whether such costs are incurred
by way of reimbursement in full or in part to the beneficiary against
the production of receipts or by way of payments to third parties
supplying the fuel.
(3) When the fuel costs are fully borne by the beneficiary and
are not reimbursed, in full or in part, by the provider of the benefit
the fuel value of a vehicle shall be taken at Lm0.
(4) When the provider of the benefit makes payments to the
beneficiary relating to fuel costs other than by way of a
reimbursement against the production of receipts, the fuel value of
a vehicle shall be taken at Lm0 but those payments shall constitute
a separate benefit as provided in rule 17.
Private use 
percentage.
14. (1) Saving the provisions of subrule (2), the private use
percentage of a vehicle shall be determined by reference to the
vehicle value as follows:
(2) The private use percentage of vehicle shall be 20% where,
in any particular case - 
( a ) the vehicle value does not exceed Lm7000; and
( b ) the said vehicle is used wholly or mainly for point to
point services by an employee who is a salesman or a
support person in the performance of his duties or for
such other similar services as may be approved by the
Commissioner; and
( c ) the Commissioner approves in writing the applicability
of this rule to that case.
Vehicle value. 15. (1) For the purposes of rules 10 to 14, the vehicle value
means the aggregate of:
( a ) the price of the vehicle;
( b ) the cost of any accessories that may be fitted in the
vehicle and not included in the price of the vehicle.
(2) In this rule, the price of the vehicle means:
Car value Private use percentage
Not exceeding Lm7,000 30%
Exceeding Lm7,000 but not Lm9,000 40%
Exceeding Lm9,000 but not Lm14,000 50%
Exceeding Lm14,000 but not Lm20,000 55%
Exceeding Lm20,000 60%
FRINGE BENEFITS ġ S.L.123.55 9
( a ) in the case of a vehicle owned by the provider of the
benefit, and subject to the other provisions of this
paragraph, the actual cost of the vehicle as shown in
the invoice for the purchase of that vehicle, including
any taxes and delivery charges, increased by any
special discounts not available generally to purchasers
buying the same type of vehicle from the same
supplier at the same time as that of the purchase of the
vehicle in question;
( b ) in the case of a vehicle, other than a classic vehicle -
(i) that is not owned by the provider of the said
benefit; or 
(ii) that was purchased prior to the 1 January 2001
and its actual cost cannot be properly
established; or
(iii) that is provided out of the provider’s own stock;
or
(iv) that was acquired by the provider second hand,
such price as may be shown for a vehicle of that same
or comparable model in a price list drawn up or
approved by the Commissioner;
( c ) in the case of a classic car, the price which that vehicle
would fetch if sold on the open market on the date
when the benefit is first provided. 
(3) When any accessories are fitted after the commencement of
the benefit, the vehicle value shall be adjusted as from the date they
are fitted.
(4) In this rule a vehicle is a classic vehicle if:
( a ) it is more than 15 years old; and
( b ) its price, determined in accordance with subrule (2)( c ),
is more than Lm10,000; and 
( c ) its original price was less than the price determined in
accordance with subrule (2)( c ).
Annual value of 
the private use of a 
van.
16. The annual value of a benefit consisting in the private use
of a van is Lm200.
Vehicle allowance.
shall be deemed to be a benefit provided by the former to the latter.
(2) For the purpose of this rule a vehicle allowance paid to an
individual means:
( a ) any payment to that individual relating to the use of
his vehicle whether by way of reimbursement of costs
or otherwise;
( b ) any payment to third parties to cover fuel or other
costs incurred by that individual in the use of his
vehicle;
( c ) any payment to that individual relating to fuel costs
incurred in the use of a vehicle owned or held under a
10 ġ S.L.123.55 FRINGE BENEFITS
title of lease by the provider of the benefit where the
payment is not made by way of reimbursement against
the production of receipts. 
Value of vehicle 
allowance.
18. (1) Subject to the other provisions of this rule the value of
the vehicle allowance referred to in rule 17 is the total amount so
paid.
(2) Where -
( a ) the allowance is paid to an employee in terms of the
provisions of a collective agreement or of his contract
of service with respect to the use of his vehicle for the
purpose of the employer’s business; and
( b ) the beneficiary is not a person in a controlling
position; and
( c ) the employee is not entitled to the private use of
another vehicle owned or held under a title of lease by
the employer,
the value determined in accordance with subrule (1) hereof shall be
reduced by 50% provided that the maximum total reduction that
may be so allowed in any calendar year with respect to any one
beneficiary is Lm500.
(3) When a beneficiary is in receipt of a vehicle allowance
from more than one employer the maximum total reduction of
Lm500 referred to in subrule (2) shall apply with respect to the
aggregate allowances he receives as if they were one allowance.
(4) An employee who receives a vehicle allowance may claim
in his income tax return for a year of assessment a deduction
against the value of the benefit determined in accordance with the
foregoing provisions of this rule with respect to the expenses he
incurred in the year preceding that year of assessment in the use of
the vehicle and a deduction for the wear and tear of that vehicle to
the extent that such expenses and wear and tear relate to the use of
the vehicle for the purpose of his employer’s business and are
allowable in terms of  article 14 and all the other relevant
provisions of the Act, but the maximum deduction that may be so
claimed is the amount by which the total of such expenses and wear
and tear deduction exceeds the amount of the reduction from the
value of the benefit referred to in subrules (2) and (3):
Provided also that such deductions shall only be allowable
if:
( a ) the conditions listed in subrule (2)( a ), ( b ) and ( c ) are
all satisfied; and
( b ) the employee is in possession of documents proving
the said expenses and the purpose for which they were
incurred; and
( c ) the income declared by the employee in his income tax
return includes the value of the benefit computed in
accordance with the foregoing subrules of this rule;
and
( d ) the claim for the deductions is supported by a
FRINGE BENEFITS ġ S.L.123.55 11
computation showing the details relevant to the
determination of the amount due as a deduction in
accordance with this rule.
(5) The vehicle allowance referred to in rule 17 shall be
deemed to have no value if -
( a ) the vehicle allowance consists in a reimbursement of
costs incurred by the employee in the use of his
vehicle for the purposes of his employer’s business;
and
( b ) such reimbursement is made by reference to the
distance actually covered at a rate not exceeding 15
cents per kilometre; and
( c ) the employer has logged the details to which any such
reimbursement refers, including the purpose,
destination and distance of each journey.
PART C
CATEGORY 2 BENEFITS - USE OF PROPERTY
Definitions of 
terms used in this 
Part.
19. For the purposes of this Part:
( a ) the market value of immovable property is the value
which that property would fetch if sold in the open
market free and unencumbered and with vacant
possession at the time that property is or was first used
by the beneficiary increased by the cost of any
additions and improvements made to that property
after that time;
( b ) the cost of immovable property is the price for which
the owner acquired that property increased by the cost
of any construction works, additions and
improvements made to that property after the date of
the acquisition; and for the purpose of this paragraph
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 increased by five times the
annual ground rent payable;
( c ) the market value of movable property is the price
which that property would fetch if sold in the open
market on the first day of the calendar year during
which the benefit in question is provided, taking into
account the value of any accessories, improvements
and additions existing as on that date;
( d ) the cost of movable property is the price for which it
was acquired increased by the cost of any accessories,
improvements and additions incurred after the date of
the acquisition and existing at the time of the provision
of the benefit; and for the purpose of this paragraph
the price for the acquisition of movable property that
was acquired more than six years before any specific
date shall, as from that date, be deemed to be 60% of
12 ġ S.L.123.55 FRINGE BENEFITS
the actual price. 
Private use of 
property.
20. (1) The private use by a person of any property, other than
a vehicle as defined in Part B hereof, that is owned or held under a
title of lease by another person shall be deemed to be a benefit
provided by the latter to the former.
(2) The use of consumable things shall not be treated as a
benefit to which this rule refers but a Category 3 benefit to which
Part D of these rules applies.
Private use of 
property.
21. Subject to the other provisions of this Part there shall be
deemed to be private use of property by an individual -
( a ) when that property is immovable property and he uses
it for his accommodation or private enjoyment or for
any other purpose other than solely as a place for the
performance of his duties as an employee or an officer;
( b ) when that property is movable property and he uses it
wholly or mainly in any manner other than in the
normal course of his duties as an employee or an
officer.
Accommodation 
not constituting 
private use of 
property.
22. Accommodation of an individual in immovable property,
including the use of any furniture situated therein, shall not
constitute a private use -
( a ) where the immovable property is an official residence
allocated by a public authority or by an institution of a
public nature to the occupier in his capacity as the
holder of an office; or
( b ) where the accommodation is provided temporarily on
account of special measures for the personal security
of the beneficiary; or
( c ) where - 
(i) the said immovable property is the employer’s
business premises or premises attached or
adjacent to the employer’s business premises;
and
(ii) the beneficiary is an employee who is not a
person in a controlling position; and 
(iii) the accommodation of the employee in that
particular immovable property is necessary for
the better performance of his duties; and
(iv) the employment is one for which it is customary
for employers carrying on the same business as
the provider of the benefit in question to provide
accommodation for their employees.
Accommodation 
not constituting a 
benefit by reason 
of an employment 
or office.
23. Notwithstanding the other provisions of these rules, the
accommodation of an individual in immovable property belonging
to a company during any financial year of that company, including
the use of any furniture situated therein, shall not be deemed to
constitute a benefit provided by that company to that individual or
to a member of his family by  reason of an employment or office if
all the following conditions are satisfied -
FRINGE BENEFITS ġ S.L.123.55 13
( a ) during that year the company does not carry on a trade
or business and does not own any property whatsoever
other than -
(i) the immovable property in question;
(ii) any other immovable property which is occupied
by an individual as long as all the conditions of
this rule are satisfied with respect to that
accommodation;
(iii) cash and bank deposits;
( b ) during that year the company does not have any
liabilities other than by way of long term loans from a
bank or a financial institution or from an individual
who is directly or indirectly a shareholder in that
company;
( c ) where the company has any liability referred to in
paragraph ( b ) that liability is not secured in any
manner by an associated company and the creditor is
not a debtor of an associated company;
( d ) the company does not, for the year of assessment to
which that financial year refers, claim any group relief
or any deduction with respect to losses incurred in a
trade, business, profession or vocation brought
forward from any previous year;
( e ) the accommodation is provided to a person who is
directly or indirectly a shareholder of that company or
to members of his family who is, or all of whom are,
not employees of the company and not in receipt of
any form of remuneration whatsoever from that
company.
Annual value of 
the private use of 
property.
24. (1) Subject to the other provisions of this rule, the annual
value of the benefit referred to in rule 20 shall be determined as
follows:
( a ) where the property is owned by the provider of the
benefit or by a related person, the said value shall be
5%, in the case of immovable property or 12%, in the
case of movable property, of the higher of the market
value and the cost of the property;
( b ) where the property is leased to the provider of the
benefit and is owned by a person who is not a related
person the said value shall be the rent payable for the
year in question: provided that when the property is
sublet to the provider of the benefit by a related person
the said value shall be the amount of the rent payable
for the year in question to a non-related person.
(2) For the purpose of subrule (1) a related person means:
( a ) in relation to a company:
(i) an associated company; or
(ii) a person who holds, directly or indirectly, shares
in that company;
14 ġ S.L.123.55 FRINGE BENEFITS
( b ) in relation to a partnership:
(i) a company or a partnership that is owned or
controlled, directly or indirectly, as to more than
50% by the partners of that partnership; or
(ii) a person who owns, directly or indirectly, an
interest in that partnership;
( c ) in relation to an individual:
(i) a member of his family; or
(ii) a company or a partnership in which he, directly
or indirectly,  holds a share or owns an interest.
(3) When the provider of the benefit incurs or reimburses
expenses connected with the private use of property including, but
not limited to, expenses -
( a ) for the maintenance, repair, upkeep, licences or
insurance of the property;
( b ) for the settlement of bills for services, facilities or
amenities provided in the property;
( c ) representing a share of common expenses or fees
charged in connection with a bloc of properties of
which that property forms part,
the value of the benefit shall, for any month in which any such
expenses are incurred or reimbursed, be increased by the amount of
the said expenses.
(4) Notwithstanding the foregoing provisions of this rule,
when the benefit referred to in rule 20 consists of accommodation
in a hotel or a guest-house, the said value shall be the amount
chargeable by that hotel or guest-house for a year at the rate
charged to guests therein for similar accommodation.
(5) Where the beneficiary pays, during any calendar year, rent
for the private use of property, the annual value of the benefit for
that year shall be reduced by the amount of the rent so paid in that
year.
PART D
CATEGORY 3 BENEFITS - OTHER BENEFITS
Definition of "in-
house benefit 
reduction".
25. In this Part D, unless the context otherwise requires "in-
house benefit reduction" with respect to the value of a benefit
referred to in this Part means the lower of Lm300 and the value of
that benefit before the said reduction: 
Provided that the total in-house benefit reduction with
respect to all benefits that qualify therefor provided by a person or
persons to the same beneficiary during any year shall be the lower
of Lm300 and the total value of the said benefits before the said
reduction:
Provided further that the in-house benefit reduction with
respect to the value of a benefit provided to a person in a
controlling position shall be Lm0.
FRINGE BENEFITS ġ S.L.123.55 15
Beneficial loan 
arrangements.
26. (1) The grant by a person to another person of a loan at
beneficial terms shall be deemed to be a benefit provided by the
former to the latter.
(2) For the purpose of this rule -
( a ) "loan" includes any advance or credit and any amount
shown in the records of a person as owed by another
person;
( b ) a loan shall be deemed to have been granted at
beneficial terms if no interest is payable by the
beneficiary or if the interest so payable is less than the
benchmark rate;
( c ) the benchmark rate of interest on a loan is such rate as
may be determined by the Commissioner from time to
time and the Commissioner may, for such purpose,
determine different rates for loans granted in different
circumstances:
Provided that -
(i) for the period 1st January 2001 to 31st
December 2005 the benchmark rate of interest
on a loan granted by a bank set up or licensed
under Maltese law or by a financial institution
authorised to lend money to the general public
under Maltese law to an employee of such bank
or financial institution shall be 4.5% per annum;
(ii) unless and until a different rate is determined by
the Commissioner the benchmark rate of interest
on any other loan shall be 8.5% per annum.
Annual value of 
beneficial loan 
arrangements.
27. The annual value of the benefit referred to in rule 26 is the
interest that would be payable on the loan for the year in question if
it were chargeable at the benchmark rate reduced by the interest
paid on that loan by the beneficiary during that year:
Provided that in the case of a loan to which paragraph (i) of
the proviso to rule 26(2)( c ) applies, the annual value shall be
reduced by the in-house benefit reduction.
Free or discounted 
meals.
28. (1) Subject to the provisions of subrule (2), the provision
by a person of a free meal or a meal at a discounted price to another
person shall be deemed to be a benefit provided by the former to
the latter.
(2) The provision of a meal shall not be treated as the
provision of a benefit when it is provided -
( a ) by an employer which is a hotel or a catering or similar
establishment in an area of a restaurant or a dining
room designated as being reserved solely for the use of
the staff or in any area at a time when meals are not
normally served to the public; or
( b ) by any other employer in a canteen where meals are
served to the staff generally. 
Value of free or 
discounted meals.
29. The value of the benefit referred to in rule 28 is the cost of
the meal incurred by the provider of the benefit reduced by the
16 ġ S.L.123.55 FRINGE BENEFITS
price, if any, paid by the beneficiary:
Provided that when the said benefit is provided by a hotel
or a catering or similar establishment to its employee, the said
value shall be reduced by the in-house benefit reduction.
Free or discounted 
airline or sea 
transport tickets.
30. The provision of an airline or sea transport ticket or fare by
a person to another person at no consideration or at a discounted
consideration shall be deemed to be a benefit provided by the
former to the latter.
Value of free or 
discounted airline 
or sea transport 
tickets.
31. (1) Subject to the provisions of subrule (2) hereof, the
value of the benefit referred to in rule 30 shall be the excess, if any,
of the price at which the ticket or fare in question is normally sold
to the public over the price paid by the beneficiary for that ticket or
fare.
(2) When the ticket or fare is provided by a company that
operates an airline or a shipping line or by an associated company,
the value of the benefit referred to in rule 30 shall be the actual cost
incurred by that company in providing that benefit or 20% of the
price at which an economy fare ticket or fare for the same
destination is normally sold to the public, whichever is the higher,
reduced by the in-house benefit reduction.
Free or discounted 
transfer of property 
and provision of 
services.
32 . (1) The transfer of the ownership of any property, other
than a transfer that falls within the scope of any other provision of
these rules, by a person to another person at no consideration or at a
consideration which is less than the value of that property, shall be
deemed to be a benefit provided by the former to the latter.
(2) The provision of a service, other than a service that falls
within the scope of any other provision of these rules, by a person
to another person at no consideration or at a consideration which is
less than the value of that service shall be deemed to be a benefit
provided by the former to the latter. 
(3) When a person issues a voucher, coupon or other token that
gives the right to another person to acquire any property or service
at no consideration or at a consideration which is less than the
value of that property or service and that voucher, coupon or other
token is used for the acquisition of any such property or service, the
former shall be deemed to provide a benefit to the latter consisting
of the transfer of the ownership of property or the provision of a
service to which subrule (1) or (2), as the case may be, applies:
Provided that the Commissioner may direct that the issue
and use of vouchers, coupons or tokens under any particular
scheme shall not be deemed to be a benefit provided by reason of
an employment or office if he is satisfied that the employer does
not supply the property or services in question and does not bear
any part of the cost therefor and that the scheme does not otherwise
have the nature of a reward for services rendered by the employees.
(4) The use by a person of consumable things belonging to
another person at no consideration or at a consideration which is
less than their value shall be deemed to be a benefit consisting in
the transfer of the ownership of those things to which subrule (1)
applies.
FRINGE BENEFITS ġ S.L.123.55 17
Value of free or 
discounted transfer 
of property and 
provision of 
services.
33. (1) The value of a benefit referred to in rule 32 is the
excess, if any, of the value of the property or service over the
consideration paid by the beneficiary:
Provided that where a benefit provided by an employer
consists in the transfer of in-house property or the provision of an
in-house service the said value shall be reduced by the in-house
benefit reduction:
Provided moreover that when in-house property or an in-
house service is provided to an employee on a working day and
consumed or availed of by the employee on the employer’s
business premises the benefit shall have no value.
Value and cost of 
property and 
services.
34. (1) For the purposes of rules 32 and 33 -
( a ) "in-house property" means movable property, other
than a vehicle as defined in Part B of these rules,
manufactured, produced, processed or otherwise
treated or acquired for resale by the employer as part
of his own business;
( b ) "in-house service" means a service, other than a
service that constitutes a benefit referred to in Part B
or Part C of these rules, provided by an employer as
part of his own business;
( c ) the value of in-house property or an in-house service
shall be deemed to be the selling price normally
charged by the provider of the benefit for that or a
similar property or service, reduced by any discounts
available generally to purchasers buying the same type
of property or service from the same supplier at the
same time as that of the transfer of that property or the
provision of the service in question, and  increased by
any costs incurred by the provider of the benefit in
transferring that property or providing that service;
( d ) the value of any other property or service is the higher
of its market value and its cost, increased, in any case,
by any costs incurred by the provider of the benefit in
transferring that property or providing that service;
( e ) the consideration paid by the beneficiary is the price
paid by him for the acquisition of the property or
service in question and when the beneficiary acquires
immovable property under an emphyteutical grant, the
consideration shall be deemed to be the premium, if
any, paid or payable in accordance with the deed of
emphyteusis increased by twenty times the annual
ground rent in the case of a perpetual emphyteusis and
by such lower amount as fairly represents the value of
the grant in the case of a temporary emphyteusis.
(2) The meaning of the term "employer" as used in subrule
(1)( a ) and ( b ) shall be construed without reference to the deeming
provisions of rule 4( a ).
(3) For the purposes of subrule (1)( d ) -
( a ) the market value of property is the price which the
18 ġ S.L.123.55 FRINGE BENEFITS
property would fetch if sold in the open market on the
date when the benefit is provided, taking into account
the condition of that property on that date and all other
relevant factors;
( b ) the cost of property is the price paid by the provider of
the benefit for the acquisition thereof increased by the
cost of any additions, improvements or accessories
incurred after the acquisition thereof existing at the
time of the provision of the benefit:
Provided that -
(i) the price paid for the acquisition of movable
property that was acquired more than 6 years
before any specific date shall, as from that date,
be deemed to be 60% of the actual price;
(ii) the price paid for the acquisition of immovable
property under an emphyteutical grant shall be
deemed to be the premium, if any, paid or
payable in accordance with the deed of
emphyteusis increased by twenty times the
annual ground rent in the case of a perpetual
grant and by such lower amount as fairly
represents the value of the grant in the case of a
temporary grant.
Value of transfer of 
immovable 
property for capital 
gains purposes.
35. (1) When a benefit referred to in rule 32 consists in the
transfer of immovable property, the gains or profits derived by the
provider of the benefit shall be determined in accordance with the
relevant provisions of the Act without reference to the value of the
benefit.
(2) When the beneficiary of a benefit referred to in subrule (1)
transfers the immovable property, the cost of acquisition of that
property by the beneficiary for the purposes of determining the
gains or profits derived from such transfer shall be deemed to be
the price actually paid by the beneficiary for the acquisition of that
property increased by the value of the said benefit.
Share option 
scheme benefit.
36. (1) When a company grants an option to its employees or
to the employees of an associated company to acquire shares, that
option shall not be deemed to constitute a benefit but the exercise
by an employee of such an option shall be deemed to be a benefit
provided by the employer company to that employee.
(2) The benefit referred to in subrule (1) shall be deemed to be
provided on each date that shares are issued or transferred to the
beneficiary as a result of the exercise of that option.
Value of share 
option scheme 
benefit.
37. The value of the benefit referred to in rule 36 is the excess,
if any, of the price which the shares in question would fetch if sold
in the open market on the date of the exercise of the option over the
option price of the same shares. 
FRINGE BENEFITS ġ S.L.123.55 19
 Gains on the 
assignment or 
reduction of option 
or on the transfer 
of shares acquired 
under a share 
option scheme.
38. (1) When a share option is assigned to or renounced in
favour of any person, any gain thereby realised shall constitute a
capital gain for the purpose of article 5 of the Act.
(2) Any gain realised from the transfer of shares acquired
through the exercise of an option under a share option scheme shall
constitute a capital gain for the purposes of article 5 of the Act, and
in determining such gain the cost of the acquisition of the shares
shall be deemed to be the price which those shares would have
fetched if sold in the open market on the date of the exercise of the
option.
 Payment or 
reimbursement of 
expenses incurred 
for private 
purposes.
39. (1) Subject to the provisions of subrule (2), when a person
pays or reimburses, in full or in part, expenses incurred for the
benefit or in the interest of another person and where such expenses
are not included in the value of any other benefit referred to in any
of the foregoing rules, the former shall be deemed to provide a
benefit to the latter.
(2) The payment or reimbursement of expenses to which any
of the following paragraphs refers and that are incurred on or after
1st January, 2001 shall not be deemed to constitute a benefit
provided by reason of an employment or office:
( a ) expenses to which no other provision of these rules
applies necessarily incurred in the production of the
beneficiary’s income in his capacity as an employee or
the holder of an office;
( b ) expenses incurred by an employee on the instructions
and in the exclusive interest of his employer where
such expenses are reimbursed by the employer against
the production of receipts;
( c ) the costs of travel for a business purpose;
( d ) the costs of travelling between Malta and Gozo for a
business purpose;
( e ) the cost of business related training;
( f ) subscriptions in respect of an employee’s membership
in a professional body recognised as such by the
Commissioner where that employee is employed in his
capacity as a member of the relative profession or
where that membership is a condition required by the
employer in terms of the contract of employment of
the beneficiary;
( g ) the cost for providing insurance for business purposes;
( h ) the cost incurred by an employer in providing
organised transport for his employees;
( i ) a present given to an employee to mark a festive
season or similar events provided it is not made in cash
and provided also that the total value of any such gifts
granted  to any one employee during a calendar year
does not exceed Lm50 or such other higher amount as
may be approved by the Commissioner;
( j ) the cost of providing insurance against expenses for
20 ġ S.L.123.55 FRINGE BENEFITS
medical treatment or an insurance policy under which
a benefit is payable only in the event of the death or
injury of the insured while in service under a scheme
available generally to employees: provided that this
paragraph shall also apply where the beneficiary is an
officer of the company as long as the benefit is
available to such a beneficiary under the same
conditions and within the same or similar parameters
as it is available generally to employees;
( k ) 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, including the cost of a
telephone set,  used by the employee for the purpose of
the business of the employer;
( l ) costs incurred in the provision of the use of a computer
and related equipment and software belonging to or
held under a title of lease by the employer and used by
an employee for the purpose of the business of the
employer;
( m ) costs incurred in the provision to an employee of
internet services, as evidenced by receipts produced to
the employer, used by the employee for the purpose of
the business of the employer;
( n ) the cost of the provision for the benefit of employees
of recreational or child-minding facilities in the
employer’s premises or in premises available for that
purpose to the employer;
( o ) long service awards granted to an employee in
recognition of 15 years’ or more service to the extent
that the relative cost does not exceed Lm50 per year of
service and provided no similar award has been
granted to the same beneficiary within the previous 10
years;
( p ) an award granted to an employee who is not a director
under a suggestion scheme or a scheme for the
promotion of safety at work organised for all
employees or all employees within a specified grade or
grades on equal terms, provided that the scheme is
outside the scope of the employees’ normal duties and
the award is of a reasonable amount;
( q ) the cost of providing to employees uniforms and safety
clothing which they are under an obligation to wear in
terms of their contract of employment or of any law;
( r ) any such other payment in kind or cost or
reimbursement as may be approved by the
Commissioner for the purpose of this rule.
Business travel. 40. (1) For the purposes of rule 39(2)( c ) -
( a ) "costs of travel" means the cost of a journey to a
destination outside Malta and back, including related
FRINGE BENEFITS ġ S.L.123.55 21
insurance, the costs of transport, accommodation and
meals, incurred by a person outside Malta and a
reasonable subsistence allowance;
( b ) "business purpose" includes marketing a business or
concluding business transactions or attending business
seminars and business meetings or such other purposes
as may be approved by the Commissioner for the
purpose of this paragraph;
( c ) when the purpose of travel outside Malta is not wholly
a business purpose no part of the travel costs shall be
treated as costs of travel for a business purpose:
provided that any private element which is negligible
or which is purely incidental to the business purpose of
the travel shall be disregarded.
(2) In this rule "reasonable subsistence allowance" means an
allowance calculated to compensate the employee for the increased
cost of living while abroad to the extent that such cost of living is
not compensated by the payment or reimbursement of the other
costs referred to in subrule (1)( a ).
Travel between 
Malta and Gozo.
41. For the purpose of rule 39(2)( d ) -
( a ) "costs of travelling between Malta and Gozo" means
the cost of a journey by sea to one of the said islands
and back by an employee who  normally resides in the
other island, including the cost of the transport of a
vehicle on such journey and the cost of one meal for
each such journey; and where the visit to that island
lasts more than one day the term includes also the cost
of transport within that island, accommodation and
meals;
( b ) "business purpose" has the meaning assigned to it in
paragraph ( b ), as subject to paragraph ( c ) of subrule
(1) of rule 40. 
Business related 
training.
  42. For the purpose of rule 39(2)( e ) -
( a ) "business related training" means a training course
undertaken by an employee that leads to the
acquisition of knowledge or skills which are necessary
for the performance of the duties under the relative
employment or to an increased effectiveness in the
performance of the employee’s present or prospective
duties, but that does not necessarily lead to any formal
qualification; and
( b ) the costs of business related training are:
(i) the course and examination fees;
(ii) the cost of essential books and course material;
(iii) when the course is conducted in a place away
from the employee’s usual place of work,  the
additional expenses incurred in travelling to and
from that place;
(iv) if the course is held outside Malta the costs
specified in rule 40(1)( a ).
22 ġ S.L.123.55 FRINGE BENEFITS
Insurance for 
business purposes.
43. For the purposes of rule 39(2)( g ) "insurance for business
purposes" means:
( a ) indemnity cover against any liability for which an
officer of a company may be personally liable in terms
of any law by reason of  his office; or
( b ) insurance over the life of an individual or over
property belonging to him where such insurance is
required in connection with the provision of security
for a loan or other liability directly related to the
business of the employer of that individual or of the
company or partnership of which he is an officer.
Organised 
transport.
44. For the purposes of paragraph of rule 39(2)( h ) "organised
transport" means transport in a vehicle with a seating capacity of 10
or more persons from defined pick-up points to the place of work
and back, available generally to employees or to a category of
employees.
Other benefits. 45. (1) Except as otherwise expressly provided in these rules
any payment in cash, whether by way of reimbursement, bonus,
gratuity, allowance or otherwise, by a person to another person
shall, unless accounted for as wages or salaries, be deemed to be a
benefit provided by the former to the latter and its value shall be
the amount so paid. 
(2) Except as otherwise expressly provided in these rules any
thing, right, privilege, perquisite or perk, other than cash, given
under any title and in any manner whatsoever by a person to
another person shall be deemed to constitute a benefit provided by
the former to the latter and the value of such benefit shall be the
market value of that thing, right, privilege, perquisite or perk.
(3) Notwithstanding the other provisions of these rules where
the Commissioner is of the opinion that the value of any benefit is
negligible he may, by a notice in writing, direct that it shall be
treated as if it were not a benefit.
PART E - MISCELLANEOUS
Right to claim 
deductions.
46. (1) Except as expressly provided in these rules or in or
under the Income Tax Acts nothing contained in these rules shall be
construed as granting or denying a right to any person to claim a
deduction from his income with respect to the provision of any
benefit or any payment in cash or in kind  to any other person and
the right to any such deduction shall be regulated by the relevant
provisions of the Income Tax Acts and the rules prescribed under
those Acts without reference to these rules.
(2) Except as expressly provided in these rules the value of
any benefit determined in accordance with the provisions thereof
shall be deemed to be net of all deductions that could otherwise be
claimed by the beneficiary and no further deductions may be
claimed in respect thereof.
Guidelines. 47. (1) Any guidelines, explanations or instructions relating to
benefits to which these rules refer contained in a publication or
circular published by or under the authority of the Commissioner
and distributed or made available to employers or to taxpayers in
FRINGE BENEFITS ġ S.L.123.55 23
general, shall be read and construed as one with these rules and
shall have the same effect as these rules to the extent that they are
not in conflict with any rules prescribed, or guidelines,
explanations or instructions published at a later date and to the
extent that -
( a ) they give a definition of any term or an interpretation
of any provision contained in these rules;
( b ) they determine the manner in which any provision of
these rules is to be applied; 
( c ) they determine any matter which in accordance with
these rules may be determined by or is subject to the
approval or the discretion of the Commissioner.
(2) The provisions of subrule (1) are without prejudice to any
power of the Commissioner to determine any matter in the manner
provided in any other rule.
Records and 
returns.
48. (1) Every employer and every company and partnership
that provides any property or the use of any property, or makes any
payment in cash or in kind to any employee or an officer shall keep
proper and sufficient records to enable the determination of the
extent to which such payment is, or is not, to be treated as a benefit
provided by reason of an employment or office and the
categorisation, valuation and tax treatment of any such benefit in
terms of these rules, and shall deliver to the Commissioner such
statements, information and returns as may be required for the said
purposes on such date or dates as may be specified by the
Commissioner or as may be prescribed. 
(2) The records, statements, information and returns referred
to in subrule (1) shall include:
( a ) any records and statements expressly specified in any
of the foregoing provisions of these rules;
( b ) such other records, statements, information and returns
as may be directed by the Commissioner from time to
time or as may be prescribed.
(3) All records referred to in this rule and all supporting
documents shall be produced or made available for inspection by
the Commissioner whenever so requested by the Commissioner and
shall be kept for a period of not less than 6 years.
(4) The provisions of this rule are without prejudice to any
obligations imposed on any person to keep records or to furnish
records, statements, information and returns in accordance with any
provision of or prescribed under the Income Tax Acts.
