Seed Investment Scheme (Income Tax) Rules, 2019
By means of Legal Notice 170 of 2019, the Government of Malta has adopted the Seed Investment Scheme (income tax) rules for the purpose of granting tax relief to natural persons residing or operating in Malta investing in start-ups.
The rules shall be applicable to qualifying investors who subscribe to fully paid up equity shares at par in a qualifying company on their own behalf, provided that the investment in qualifying companies reached an established threshold of EUR 5,000,000.
Qualifying investors shall be any natural persons residing in Malta who bear the full risk in respect of their investment. The investment made in a qualifying company shall, in aggregate, not exceed EUR 750,000 per qualifying company.
For the investment to benefit from these rules, the qualifying investor shall hold the investment in the qualifying company for a period of not less than three years and shall not be connected to the qualifying company prior to the subscription of the equity shares.
The rules also provide the criteria, under which investors and companies shall be considered as qualifying and can obtain such status respectively, in order to implement the Seed Investment Scheme; and define the certain conditions precluding such status to be granted.
Furthermore, the rules set the procedure whereby qualifying investors will be able to benefit from a tax credit amounting to 35% of the aggregate value of the investments made by the qualifying investor.
The Seed Investment Scheme (income tax) rules are deemed to have come into force on the 1st January 2019 in respect of investments made as from the basis year 2019 and shall have effect until the 31st day of December 2021.