Income and other taxes


Income Tax

Tax refund to employees

  • The tax refund paid this year will be granted again to employees earning less than €60,000.

  • The refund will vary between €40 and €68 depending on the level of income and tax status of the employee.

     

Reduction of tax for part-timers

  • A reduction of tax for certain individuals deriving income from part time work.

     

Exemption on pension income

  • Following the introduction of the exemption in respect of pension income as from 1 January 2017, the maximum amount of exempt pension income will be increased to the amounts set out in the table below:

Single Parent Married
€13,434 €13,434 €13,434 (+ €1,000 tax free amount derived from other sources of income)

Fiscal incentives for contributions to private pensions

  • Increase in the tax exemption/tax credit for personal pension plans and voluntary occupational pension plans.

 

Property

  • Discussions relating to the introduction of a lower tax rate applicable to transfers of immovable property where the property was rented out for a period of 7 years at an affordable amount.

 

Deduction for private school fees

  • Parents of children who attend private schools will benefit from an increase of €300 per child in the current tax deduction, as follows:
  2018 2019
Kindergarten €1,300 €1,600
Primary School €1,600 €1,900
Secondary School €2,300 €2,600

 

Exemption for voluntary organisations

  • Voluntary organisations with annual income not exceeding €10,000 will be exempt from income tax, subject to their registration with the Commissioner for Voluntary Organisations.

 

Anti tax avoidance measures and initiatives

Malta signed up to the OECD’s BEPS (Base Erosion Profit Shifting) initiative to assist in the fight against aggressive tax avoidance strategies.

Malta transposed the Anti tax Avoidance Directive (ATAD) and, starting from 1 January 2019, the following measures will be introduced:

  • Interest limitation rules
  • Exit tax rules
  • General anti avoidance rules
  • Controlled Foreign Company (CFC) rules.

Regulations for the transposition of ATAD 2 (which will include provisions on anti-hybrid mismatches) are also being prepared to meet the Directive’s implementation deadlines (1 January 2020 and 1 January 2022).

In this respect, apart from implementing the ATAD, Malta has taken other measures including:

  • implementation of the OECD’s Multilateral Instrument - signed in June 2017;

  • implementation of the EU Mandatory Disclosure Directive (DAC6) - 1 January 2020;

  • engagement in discussions relating to the taxation of the digital economy;

  • implementation of the EU Dispute Resolution Mechanism Directive (DRM) - by 30 June 2019; and

  • introduction of a patent box regime in line with the EU Code of Conduct on Business Taxation and the OECD BEPS standards.

 



Stamp Duty

Extension of “First-Time Buyers” stamp duty exemption scheme

The stamp duty exemption for first-time buyers on the first €150,000 of the value of the property is being extended by a further year.

Refund of stamp duty on the purchase of a new residential home for “Second-Time Buyers” - extension of scheme

Where a person sells his residential property so as to acquire another residential property and such person does not own other properties, he is granted a reduction of stamp duty, by way of refund.

 

Extension of stamp duty reductions for property purchases in Gozo and Urban Conservation Areas

The reduction in stamp duty introduced in previous years in respect of property acquired in Gozo (reduction from 5% to 2%) and property acquired in Urban Conservation Areas (reduction from 5% to 2.5%) is being extended for another year.

Extension of the reduced duty rate on intra-family transfers of business property and securities

The reduction in stamp duty rate to 1.5% has been extended by another year.

 

 


Other measures

Grant on purchases of motorbikes, scooters and pedelec bicycles

The grant on the purchase of motorbikes, scooters and electric assisted bikes will be extended for another year.

Extension of VAT refund on purchases of bicycles and pedelec bicycles

The full VAT refund on the acquisition of bicycles and pedelec bicycles is being extended for another year.

Grant on the purchase of musical instruments

This grant (equivalent to the VAT paid) has been extended to purchases of musical instruments acquired from outside Malta.

Transport

An ex-gratia payment will be given to all persons who registered a new vehicle in 2008.

Increased refund on wedding expenses incurred

The existing grant given to couples on wedding expenses incurred is being increased to a maximum amount of €2,000.

 

 

 


VAT

Reduction of the VAT rate on electronic publications

The 5% reduced VAT rate on certain printed matter is being extended to cover also electronic publications.

 


Customs

Increased security at customs

The Government will be investing in new security equipment at the Malta International Airport and at the Grand Harbour in order to prevent tax evasion, illicit activities, entry of illegal goods and to promote fair competition.

 

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