Income and Other Taxes

Exemption on pension income

The maximum amount of exempt pension income will be increased from €14,318 to €14,968. In addition, couples receiving a pension and opting for a joint computation will continue to be entitled to a further €3,600 tax-free amount in respect of income from other sources.

A new tax-free capping will also be introduced for pensioners born in or after 1962. Such tax-free capping will be linked to the highest pensionable income applicable to those pensioners.

Tax refunds to individuals

The tax refund (which ranges between €60 to €140) paid in the past will once again be distributed with the highest tax refunds given to low income earners. The table below sets out the amounts:

Increase in tax-free pension income for working pensioners

As from 2023, pension income that will not be considered part of the taxable income will increase from 20% to 40% for pensioners who continue working beyond retirement age. 

Further reduction in the tax rate applicable to certain royalty income

The final withholding tax rate of 15%, introduced in 2021 in respect of royalty income derived from the publication of literary works, will be reduced to 7.5%.

Extension to the transfer of intra-group capital allowances

The scheme introduced in 2021 for companies which suffered losses as a result of the pandemic, was extended for a further year. Companies may transfer any unabsorbed capital allowances incurred during 2020 and 2021 to another group company deriving chargeable income during the year of assessment 2023.

Investing in social enterprises

Benefits that are currently available to companies carrying on commercial activities will be extended for certain social enterprises. The first scheme will be the MicroInvest Scheme, where social enterprises will be eligible for a maximum tax credit of €70,000 over three years.

Tax incentives on transfers of family businesses

The reduced stamp duty rate of 1.5% applicable to certain transfers of family businesses to descendants has once again been extended.

Revision of tax residence programmes

A proposal to review the current residency programmes to ensure that these continue to be relevant. 

Incentives to attract long-stay tourists in Gozo

A scheme is being developed by the Gozo Tourism Authority together with tour operators to attract long-stay tourists in Gozo during low season. 

Extension of existing property-related tax measures 

As announced during last year’s budget, tax incentives in relation to the transfer and acquisition of certain properties will continue to apply for the next two years.

Such incentives consist of no income tax and stamp duty charges on the first €750,000 of the value of the property transferred, when such property:

• was constructed more than 20 years ago and is vacant for more than 7 years; or

• is situated in an Urban Conservation Area; or

• is constructed and finished in accordance with guidelines on quality and aesthetics as stipulated by a new Board that will be established in the first quarter of next year. 

The measures aimed at refunding part of the VAT incurred on certain eligible expenses will continue to apply.

The stamp duty reduction scheme applicable to first time buyers, second time buyers and property acquisitions in Gozo will be extended for a further year.

Increase in tax deduction

The annual tax deduction applicable to parents sending their children to sports, cultural or artistic events will be increased from €100 to €300.