The 2022 Budget: How will it affect your business?

The newly announced measures for Malta’s 2022 budget introduce a number of new incentives, as well as grant extensions to existing schemes for businesses.

Here’s a breakdown of the most salient 2022 Budget incentives:

New Business Initiatives

  • Part-time workers’ tax rate will be reduced to 10% tax rate from 15%. 
  • In terms of capital investment, a rental subsidy incentive will be extended to a larger number of businesses, while other incentives will be offered to attract enterprise investment through the Change to Grow and Smart & Sustainable Investment schemes.
  • Companies with unused capital allowances for 2020 or 2021 due to pandemic-induced losses will be eligible for a tax reduction benefit.
  • Malta Enterprise will be working with the Malta Residency Agency to offer the Start-Up Residence Permit to offer a visa package for Non-EU start-up entrepreneurs.

VAT interest

  • Interest on unpaid VAT is set at 7.2% rate, and on exception will only be waived in line with the law.

Stamp duty

  • Anyone passing on a family business to a relative will only pay 1.5% in stamp duty on the transfer, reduced from 5%.

Extension of business schemes

  • The SME Tailored Facility by the Malta Development Bank will be extended to include green and sustainable projects. SMEs will be provided aid when diversifying into more green practices.

Assistance for the arts industry

  • As of 2022, individuals working in the arts, culture and entertainment sectors shall benefit from a income tax rate of 7.5%,  calculated on a 3-year average period.
  • A €1 million guarantee fund will be set up for artistic events so that producers and promoters can recover their costs when unexpected restrictions are introduced.

Tax rebate cheque

  • Following the success of the previous year’s handout, the Government will be once again gifting workers on the lowest incomes with a €140 cheque (previously €95), while those in the top category, earning up to €60,000 will get a refund of €60.

Cost of living allowance increase

  • A €1.75 weekly wage increase will be given as a cost of living adjustment. This also applies to pensioners in full and pro-rata to students.

Want to learn more about how a particular development will be affecting your business? Get in touch today to speak to one of our advisors!

A Simple Guide To Filling Your TA-22 Form

Filing your taxes can be one of the most intimidating aspects of running your own business, whether you’re full-time or part-time self-employed.

For the 2020 tax year, the deadline of submission of the TA-22 form is 30th April 2021.

Not sure about where to start? No need to panic – we’re breaking down each section of the form to help you fill it out.

Part 1: The Basics

The form starts out easy enough! Here you can fill in your basic details.

When filling out this section, keep in mind that:

  • Your address should be the same as the one on your I.D.
  • Type of business refers to the service you offer, e.g. retail, legal services, business consultancy
  • The PE (Permission to Employ) number applies to individuals who employ others within their business. If you work alone, you can leave this field blank.
  • Part-time and full-time self-employed individuals cannot operate a business without being VAT registered. VAT registration is easy, get in touch with our advisors for more information.

Part 2: Profit and Loss

This is the section that often causes the most distress for individuals filling out the TA 22 form.

As a part-time self-employed individual you are due to pay 15% tax on the net profit brought in within that tax year.

This means that you have to take the total turnover of the relevant tax year (in this case it’s 2019), and deduct your 2019 expenses to find your net profit. There are three steps to finding out your net profit:

Step 1: Calculating your gross profit

This step can have two processes, depending on the type of business you run; it is a 1-step process for service businesses or a 2-step process for businesses dealing with stock (e.g. retail, manufacturing, construction).

So, if your business involves buying stock, this is where you take your total turnover and deduct costs related to stock purchasing; this will leave you with your gross profit.

This section can be confusing for service-based businesses that do not incur any expenses related to stock. If you run a service-based business and do not incur expenses related to stock, then all you need to do is put down your annual turnover in box 1, cross out boxes 2-6, and put down your annual turnover as your gross profits in box 7.

Pro tip: When entering your turnover, ensure that the amount is the same as the turnover reported to the VAT department in your VAT return.

Step 2: Calculating your expenses

The expenses are self-explanatory, but do keep in mind that expenses related to trading activity may include:

  • Stationery and office supplies
  • Depreciation of your car
  • Work travel
  • Advertising and promotion
  • and much more!

This part may seem straightforward, however there are probably a number of incurred expenses that you may not be aware of. Our advisors are available to help you identify tax-deductible expenses and ensure that you are paying the least tax possible while remaining completely compliant.

You’ve probably heard about people saving receipts for tax purposes, and this process is exactly why! It’s at this point that you have to gather all your receipts and sort them according to the above categories to help you calculate your expenses.

Part 3: Signing Off

Once you’ve confirmed that your calculations are correct and accurate, this last section requires your signature and an indication of how you will be submitting your tax payment.

Payment can be done by:

Do you require further assistance with your TA 22 form? Get in touch today and our advisors will ensure you get your payment in time by 30th April 2021!

The 2021 Budget: How will it affect your business?

The newly announced measures for Malta’s 2021 budget introduce a number of new incentives, as well as grant extensions to existing schemes for businesses.

Here’s a breakdown of the most salient 2021 Budget incentives:

Covid-19 Business Support Measures

⁃ The wage supplement has been extended until March 2021 (same form maintained until the end of the year), will then be revised in 2021.

⁃ Another round of €100 vouchers will be available from Jan 2021, in denominations of €10 and €15. Share to be used in retail shops has been increased to €40.

Increase on VAT-exemption threshold

The threshold for VAT exempt businesses will go up to €30,000 from €20,000

Extension of business schemes

Extension and continuation of Malta Enterprise Schemes such as Micro Invest, Business Development and Continuity Scheme, Research & Development 2020 Scheme, the R&D Feasibility Study Scheme and the Business Start Scheme will be extended.

Innovation Projects Scheme to be launched

Malta Enterprise will be launching a scheme to support innovation projects by companies employing less than 50 employees, whereby they can claim up to 50% of their expenditure (with a maximum of €200,000).

Assistance for start-ups & tourism industry

The government will be introducing schemes to help business start-ups, to encourage online business, and to help firms attract new foreign investment.  Assistance will also be given in the tourism sector for marketing.

Extra day of leave

All workers in Malta will now be entitled to an extra day of leave, bringing the total leave time to 28 days per annum.

Grants for agriculture

Government grants will be awarded to farmers and fisherman, equivalent to what they pay in tax on sales at the vegetable and fish markets.  

Extension of tax concession on transfer of business

1.5% tax concession on transfer of business has been extended for another year.

First-time buyers scheme & Property donations

The first time buyers scheme for reduced tax on property value has been extended from €175,000 to €200,000. Taxes on property donations are now tax exempt now on the first €250,000.

New saving bonds

The government is also planning to issue new savings bonds with favourable interest rates, specifically targeting savers aged over 62.

Tax rebate cheque

Following the success of the previous year’s handout, the Government will be once again gifting workers on the lowest incomes with a €95 cheque (previously €68), while those in the top category, earning up to €60,000 will get a refund of €45.

Cost of living allowance increase

A €1.75 weekly wage increase will be given as a cost of living adjustment. This also applies to pensioners in full and pro-rata to students.

Want to learn more about how a particular development will be affecting your business? Get in touch today to speak to one of our advisors!

The 2020 Budget: How will it affect your business?

Now that we know what’s in store for Malta’s 2020 budget, the core question many business owners are wondering is, ‘how will these new proposals and developments affect my business?’

In this blog post we will be reviewing the top new government incentives that will have an impact on your business and how it’s run.

Extra day of leave

All workers in Malta will now be entitled to an extra day of leave, bringing the total leave time to 216 hours per annum.

Tax rebate cheque

Following the success of last year’s handout, the Government will be once again gifting anyone earning under €60,000 with a tax rebate cheque – with the amount being proportionate to the gross income.

Separate tax returns for married couples

Sure to affect business owners and employees alike, married couples will now be able to file tax returns independently.

Intra-family business share transfers

Originally introduced in 2017, the reduced intra-family transfer duty rate of 1.5% has been extended to last through 2020.

Reduced tax rate of 15% on overtime

Employees will be taxed 15% on the first 100 hours of overtime, provided they are on €20,000 basic salary and do not hold a managerial position.

Cost of living allowance increase

A €3.49 weekly wage increase will be given as a cost of living adjustment. This also applies to pensioners in full and pro-rata to students.

€3.51 per week increase in pensions

A weekly increase of €3.51 will apply to pensioners as of 2020.

Want to learn more about how a particular development will be affecting your business? Get in touch today to speak to one of our advisors!

Malta’s 2019 Budget: What’s in it for you?

Malta’s 2019 Budget

Following the reveal of Malta’s 2019 budget, it’s easy to get lost in all the hoopla that surrounds new proposals and developments – especially when the main question you want the answer to is ‘what’s in it for me?’ In this blog post we will be breaking down 4 new government incentives that will save you money, as well as a number of developments in technology, the property market and general economy.

Equity Sharing Property Scheme for over 40s

This new scheme will facilitate property ownership for anyone over 40 through purchasing property as a joint partner with the Government.

How would this work?

John is a 46-year-old professional and has been renting an apartment for a few years since separating from a previous marriage. With retirement occurring in less than 20 years, John has found it quite difficult to finance the purchase of an apartment through a commercial bank loan, as the loan can only be honoured until his retirement age.

Through the Equity Sharing scheme announced in the 2019 Budget, John would be able to purchase half the property, with the government purchasing the other half. This would result in more affordable monthly repayments. John would then have the option to either buy the other half from the Government or pay rent on the portion of property owned by the Government.

Reduced VAT on musical instruments

VAT rates on musical instruments has been reduced to 5%.

How would this work?

Gabriel is an 18-year-old student with a passion for music. Over the summer he has been saving up to purchase a guitar that costs €999 excluding VAT.

If he had to purchase the guitar before the 2019 reduced VAT measure kicks in, the guitar would cost Gabriel €1,179 (including 18% VAT). With VAT on musical instruments reduced to 5%, the guitar will cost Gabriel €1,049 in 2019, resulting in savings of €130.

Property transfer tax incentives for property owners

The Government will be launching property transfer tax incentives for property owners renting at affordable prices.

How would this work?

Claire has purchased a second apartment for €190,000 with the intention of renting it out for a number of years and eventually selling it off at €230,000, once it increases in value. Given the scenario, she would have to pay property transfer tax of €18,400 (8% of the transfer value) once the transfer is complete.

With the newly proposed property transfer tax, Claire would pay less than the €18,400 in property transfer tax.

Cost of Living Adjustment (COLA)

  • A €2.33 weekly wage increase will be given as a cost of living adjustment. This is also attributable to pensioners in full and pro-rata to students.
  • Minimum wage workers to get €3 a week over-and-above COLA, provided they have been on minimum wage for at least one year

Further to this, the 2019 Budget also promises the following developments:

 
A rent reform white paper will be released to protect both property owners and property occupants through obligatory registration of properties and rental contracts.
This new government entity will focus on marketing Malta as a hub for digital economy and disruptive technologies.
 
The addition of an extra day of leave for full-time workers will bring the total number to 26 days of leave per year.
The government will be carrying out 45 actions over the next three years to strengthen the fight against money laundering.

Do you have any questions about the 2019 budget? Just drop us a line and one of our team members will get back to you as soon as possible!

Malta: The entrepreneur’s paradise

You’ve probably already heard a little (or a lot) about this small island with a very big personality. If you haven’t, then even the quickest of Google searches will tell you exactly why it’s such an attractive place to be: three hundred or so days of golden sunshine, endless waves of blue sea, vivid cerulean skies and a quintessentially-mediterranean lifestyle that helps you get through the working week feeling laid-back and ready for an ice-cold cocktail.

All that sounds fabulous – but what exactly does Malta have to offer entrepreneurs? The EU country has undoubtedly become home to some of the brightest minds in business, gaming, hospitality, technology and beyond. While the island lifestyle is tempting in itself, it’s not the only reason why business-minded people from all over the world have made Malta their home. Thanks to the island’s top thriving industries like gaming, financial services and tourism, the economy is positively booming and the local market is rife with opportunity. With its flexible and comprehensive legislative and regulatory framework, Malta is indeed emerging as one of the fastest growing business and start-up hubs for financial and corporate services in Europe.

The question is this: what should you do if you’re an entrepreneur looking to bring your business to Malta?

Invest in Malta

Standing at the very forefront of European economy, Malta is a great place to set up your business, whether you’re already established or a start-up about to launch into success. Among its many positive qualities, Malta offers an advantageous tax system which makes setting up shop a lot more straightforward and cost-effective.

Oh, and let’s not forget the fact that Malta is quickly becoming a hub for cryptocurrency, with the expert team at NM Group ready to educate and guide you every step of the way. If investing in cryptocurrency is something you’re interested in, you can talk to one of our awesome advisors.

Make the big bucks

We’ve already touched on how the cost of setting up and running a company in Malta is quite low compared to other European jurisdictions. More specifically, the island operates on a system of tax refunds that lowers the effective tax rate to a fantastic 5% – currently the lowest in the EU!

Prominent companies from the tech, gaming and corporate sectors (to name just a few) have flocked to Malta to make the most of these financial benefits – and the sunshine, of course. Strategically located in the middle of the med, the country boast prime real estate and a well-connected airport, a highly-educated, English speaking workforce and an exceptional communications structure, making it the perfect place to run a successful business.

In short: Malta helps you get more bang for your buck.

Bring the family along

One of the biggest challenges of any entrepreneurial endeavour comes with a little thing called relocation. When it comes to moving your business (and your life) to this slice of the mediterranean, NM Group can help you with all things related to citizenship and residency. From visa applications and Maltese citizenship to company redomiciliation and residence and work permits, you can trust this expert team guide you through it all.

Malta’s Citizenship and Residency Programme has loads of benefits to offer, including:

  • Schengen Residence status for 1 year prior to issue of passport
  • Malta is a EU member state
  • 160 visa-free destinations (including the US and UK)
  • Maltese passport issued within 1 year
  • Clear rules for eligibility

And if that isn’t enough to have you booking tickets already, there’s the fact that you can bring your family along too! The island is hailed as the perfect place for families, with low crime rates, good private and state schools, and a healthy mediterranean lifestyle to boot.

Save on tax

Malta’s unique tax refund system allows non-resident shareholders of companies registered in the country to benefit from an effective tax rate of 5%, or maybe even be tax exempt! Malta offers by far one of the lowest tax rates within the EU, legally and fully compliant with EU and international regulations.

Throughout the financial year, your Malta trading company will trade, issue invoices and generate a profit. Corporate tax has to be paid on that profit at 35% (Malta’s corporate tax rate).

Once the tax is paid, the non-resident shareholders will receive a dividend from the trading company and can claim back a refund equal to 6/7ths of the tax paid by the company. The end result is an effective tax rate of 5%.

Incorporate your company

Any entrepreneur worth their salt will tell you that company incorporation can be a bit of a headache. That’s precisely where an expert service like NM Corporate comes in – our team is your go-to for advice on anything from which bank to open accounts with and processing annual returns right up to helping you register under the Malta Tax Refund System.

NM Group offers the perfect mix of services to help you start running your business from Malta – get in touch today to learn more.

What does Malta’s 2018 budget mean for your business?

Malta’s 2018 Budget

This week saw Finance Minister Edward Scicluna reveal Malta’s 2018 budget.

Here are just a few highlights of what this budget means for you, your business, and your staff.

Cost of Living Adjustment (COLA)

A €1.75 weekly wage increase will be given as a cost of living adjustment. This is also attributable to pensioners in full and pro-rata to students.

Income Tax

Income Tax Benefits

Individuals whose income is less than €60,000 per annum, will receive a one-time tax refund ranging between €40 and €68, depending on the level of income as shown below:

Single Computation
Income (€) Refund Amount (€)
0 – 15,000 60
15,001 – 30,000 50
30,001 – 59,999 40

 

Married Computation
Income (€) Refund Amount (€)
0 – 20,000 68
20,001 – 40,000 56
40,001 – 59,999 44

 

Parent Computation
Income (€) Refund Amount (€)
0 – 15,000 64
15,001 – 30,000 52
30,001 – 59,999 40

 

MicroInvest Tax Credits

MicroInvest is being extended to undertakings which employ less than 50 full-time employees (currently 30). In addition, the tax credit capping is expected to rise from €30,000 to €50,000 for undertakings based in Malta and from €50,000 to €70,000 for undertakings based in Gozo and for undertakings with women holding the majority of shares or self-employed women.

Tax Evasion

Fines payable by companies or individuals which have been found guilty of tax evasion shall be increased. Moreover, more resources shall be allocated to Joint Employment Task Force to combat tax evasion.

Employment Measures

Increase in Minimum Wage

Minimum wage earners will receive an increase of €3 per week from the second year of employment and an additional €3 per week from the third year of employment. Such employees will also be entitled to the increase in COLA.

Additional one day leave

An extra day of vacation leave shall be granted to all employees.

Value Added Tax (VAT)

VAT Exemption

The VAT exemption threshold below which a taxable person registered under Article 11 does not need to charge VAT has increased from the current €14,000 to €20,000.

VAT Grouping

The Government is proposing the introduction of VAT Grouping for sectors such as financial services and gaming. Through VAT grouping, entities which are legally independent, have a permanent establishment in Malta and engage in related economic and administrative activities, can register as a single entity. This would mean that supplies between group members will fall out of the scope of VAT.

Reduced VAT Rate on certain means of Transport

The VAT rate for hiring bicycles will be reduced to 7% and the VAT refund scheme on motorcycles, scooters and pedelec bicycles will be extended.

VAT Refund on Car Registration Tax

During 2018, VAT will be refunded to those who registered their vehicle in 2007.

Offset of Payments

A new system will be introduced which will allow the offset of payments due to/from Government. This will be applicable for companies that offer services to Government.

Property Measures

First-Time Buyers Scheme

The tax scheme for first-time buyers resulting in no duty due on the first €150,000 will be extended for another year.

Second-Time Buyers Scheme

Individuals who sell their first residential home, being their sole owned immovable property, and acquire another shall benefit from a refund of a maximum of €3,000 of the duty on documents paid on the acquisition of their second home. This refund shall increase up to a maximum of €5,000 in the case of disabled persons and their parents.

White Paper on Property Rental

A white paper to reform the rental market shall be published in the coming months. This white paper will necessitate the public registration of all rental contracts and that rent increases are regulated through conditions in the contracts made. This will be done to protect the rights of both the lessor and the landlord.

Social Measures

  • The maximum ‘in-work benefit’ applicable to parents where only one parent is employed, will increase from €350 to €450 per child per year depending on the annual income of the family.
  • The €300 annual grant for persons over the age of 75 who still live in their personal home, will continue to apply next year.
  • In order to incentivise the use of environmentally friendly vehicles, an exemption from registration tax for electric/hybrid vehicles will be introduced. No road licence shall be paid on such vehicles during the first five years from registration.

Pensions

  • All pensions, both contributory and non-contributory are set to increase by €2 per week.
  • As of 2018, individuals aged 61 or over who are in receipt of a pension and who are still in employment, and thus paying contributions, shall be entitled to have their pension recalculated at the age of 65 to include the contributions paid between the age of 61 to 65. Such an entitlement shall be available to pensioners who have not paid their complete social security contributions during their employment.
  • Self-employed and part-time pensioners who have not reached the age of 65 shall be entitled to pay their social security contributions at the rate of 15% on the net income on a pro-rate basis.