In the coming year, Malta is set to see significant changes in its economic landscape, with a range of measures designed to boost economic growth and provide support to various sectors. This article outlines the key points from Malta’s Budget 2024, with a focus on the following areas:
Cost of Living Adjustment (COLA) and Minimum Wage Increase
In 2024, the Cost of Living Adjustment (COLA) will see an increase of €12.81 per week, benefiting a wide spectrum of the population. Student stipends will also be adjusted to align with this increase. Notably, over 95,000 eligible families are expected to benefit from an additional COLA adjustment, resulting in an incremental outlay of €26 million, which will be delivered in two instalments. Pensioners, too, will experience an increase in their weekly COLA, with the specific amount varying among different categories of pensioners.
Additionally, beginning in January 2024, Malta will witness a rise in the minimum wage, going from €192.73 per week to €213.54 per week. This change is part of a gradual plan that is set to continue until 2027, with incremental increases ranging from €12 to €18 per week, in addition to the COLA adjustments.
Selected Sustainability Measures
Malta has made a resolute commitment to achieve climate neutrality by 2050, and to this end, the government is establishing a Climate Action Authority. This new institution is entrusted with spearheading Malta’s endeavours to meet its climate goals. A pivotal element of the government’s strategy is an energy policy designed to not only enhance energy generation capacity but also to reinforce and expand distribution infrastructure. Diversifying the energy mix with an emphasis on renewable sources is a top priority. In the upcoming year, the government plans to issue a call for the allocation of large renewable energy installations exceeding 1MWp.
Furthermore, Malta will introduce hydrogen as a local energy source, marking a significant step towards sustainability. The government is also initiating a consultation process to create fiscal incentives that encourage companies and investors to make sustainable investments.
Immovable Property Transfers
In a bid to support first-time buyers of immovable property, the government is offering grants of up to €10,000. Moreover, for individuals who benefit from schemes administered by the Housing Authority, no tax or duty will be imposed on the first €200,000 of the consideration paid for the transfer of immovable property.
Reduced Rates of Duty for Property Acquisition
Reduced rates of duty for first-time buyers and second-time buyers will be extended for an additional year. However, the reduced rate for acquisitions of residential property in Gozo will only apply to the promise of sale agreements executed before December 31, 2023. Furthermore, no tax or duty will be levied on the first €750,000 of consideration for residential properties situated in an urban conservation area or those that have been vacant for at least seven years. First-time buyers of eligible properties will also benefit from a one-time grant of €15,000, which increases to €40,000 for properties in Gozo.
Capital Allowances Transferable Within the Group
In a continuation of the budget measure from the previous year, companies that incurred unabsorbed capital allowances in 2020 and 2021 due to losses stemming from the Covid-19 pandemic can now request the transfer of these capital allowances to another group company that generated chargeable income during 2021. This provision has been extended to cover the year 2022 as well.
Reduction in Tax Rate for Royalties from Literary Works
The reduced tax rate applicable to royalty income from literary works for authors and co-authors will be reduced from the current 15% to 7.5%.
Personal Tax Measures
The government is renewing benefits for individuals earning less than €60,000 in 2024. Additionally, income tax for pensioners will see several changes, including an increase in the tax-free amount of pension income from 40% to 60%. The reduced tax rate of 7.5% for players, licensed coaches, and athletes, previously applicable, will now be extended to other individuals employed in sports-related activities. Furthermore, the Highly Qualified Persons Rules will be consolidated and updated.
VAT Measures
The current Grant on First Residence scheme, which compensates first-time property owners for the cost of construction, completion, or rehabilitation works, will be modified to align the grant applicable for single persons with that available for couples.
Other Fiscal Measures
Entities making donations to registered voluntary organizations operating for the benefit of social or environmental causes, as well as those aiding animals, will be eligible for a tax credit of up to €500. The reduced stamp duty rate of 1.5% for qualifying inter-generational donations of qualifying businesses will be extended. Furthermore, qualifying family businesses will enjoy higher tax credits for their qualifying investments.
International Tax Measures
Malta has chosen not to introduce an Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), or Qualified Domestic Minimum Top-Up Tax (QDMTT) in 2024. The full imputation system of taxation in Malta remains unchanged. The government has committed to developing tax incentives in the form of grants or Qualified Refundable Tax Credits (QRTCs) that comply with the global minimum tax framework.
Other International Tax Developments
The government plans to launch a consultation concerning tax incentives tailored to Real Estate Investment Trusts (REITs). Efforts are also underway to explore the introduction of a specialized tax depreciation framework and initiatives aimed at attracting banks and financiers to support the aircraft leasing sector. The Malta Financial Services Authority (MFSA) is in the process of implementing regulatory changes, including those related to Notified Professional Funds and Limited Partnerships.
Malta Enterprise Schemes
Enterprises in Gozo and start-ups will continue to benefit from an additional tax credit of 10%, which can be increased to 20% for projects aimed at reducing their carbon footprint. Malta Enterprise administers these measures, offering a maximum tax credit of €40,000 to enterprises that invest in digital projects and initiatives designed to reduce their energy, water consumption, and wastage.
Industry and Regulatory Updates
In 2024, the government is set to focus on the implementation of the national e-sports strategy and strengthen education and training in the development of digital games. The Malta Gaming Authority will concentrate on enhancing the regulatory framework to meet the evolving needs of the gaming industry. The government also aims to design a vision for Malta’s maritime industry over the next two decades and implement a new aviation policy, along with the Air Navigation Act. Furthermore, the regulatory framework under the Family Business Act will be updated to better serve the needs of family businesses without imposing excessive fiscal and regulatory burdens. The government will support family businesses as they internationalize, innovate, and digitalize, and is planning to introduce Family Charters to regulate family businesses. Proposed changes to the wealth management regulatory framework are expected to attract new family offices to Malta.
Grants & Incentives
Several schemes will be extended into 2024, including the Seed Investment Scheme, Startup Finance Scheme, Skills Development Scheme, Rent Subsidy Scheme, Innovate Scheme, Smart and Sustainable Scheme, and Investment Aid for Energy Efficient Projects.
For more detailed information regarding grants, fiscal measures, or any other budget-related inquiries, please do not hesitate to contact us at [email protected]. Our team is ready to provide you with comprehensive assistance and address any questions or concerns you may have regarding Malta’s Budget 2024.