The tax treatment of employment income : a local and international perspective

Abstract

This thesis aims to give a detailed analysis of the tax treatment of employment income both from a Maltese and international perspective, in order to help employees and employers better understand their taxation position at law. In Chapter 1, the author provides a general understanding of what constitutes employment income by first analysing what amounts to an employment relationship, with reference to Maltese and European employment legislation. Then, the author analyses what constitutes income since there is no definition of the term “employment income” under Maltese legislation. In Chapter 2, the author explores the tax treatment of employment income earned by an employee performing employment in Malta. This is illustrated by an analysis of the grounds upon which an employment income is subject to Maltese income tax, the various forms of employment income, the current tax rates and the methods employed to deduct tax from emoluments. Chapter 3 deals with the tax treatment of income from international employment. It dwells on the difficulties that migrant workers face in respect of different taxation regimes and the consequence of international double taxation. The author analyses double taxation treaty provisions modelled on the OECD Model dealing with the taxation of employment income; namely Articles 15 to 19, together with an insight into the OECD Commentary as updated along the years. Finally, Chapter 4 concludes with suggestions that contribute to the undefined terms “employment income” and “ordinary resident” under Maltese legislation and recommendations in the area of income from international employment in respect of frontier workers, road and rail transport workers, visiting professors and student trainees.