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!

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!

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!

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.