Malta Budget 2027
How will the Budget measures impact my business?
Tax
- Corporate tax rate on undistributed profits will be reduced from 35% to 25% for companies with turnover not exceeding €1m.
VAT
- An extension of the VAT reverse-charge mechanism for the construction industry.
- Introduction of penalties on invoices and VAT receipts issued incorrectly.
Also relevant to businesses
Increase of eco-contribution per night on tourist accommodation, and extension of eco-contribution to cruise liner passengers and Comino visitors.
From 1 January 2027, free public transport and childcare will be limited to Maltese and EU citizens, as well as long-term residents.
Leave entitlements – 10 days paid sports leave for elite athletes (and accompanying technical and medical staff), an additional 10 working days of leave a year for foster parents, and social security contribution credits of up to 2 years for employees who take time off due to domestic violence or mental health issues.
Continued Malta Enterprise incentives for digitalisation, automation, and high value-added investment, together with new measures targeting emerging niches and economic diversification.
- Existing schemes will be renewed across several areas, including housing, EVs, renewable energy, NGOs and sports.
- Work permit application fees for TCNs will increase by €200 to €800. TCNs will also be subject to an annual infrastructural contribution fee of €400.
How will the Budget measures impact me?
Cost of Living Adjustment
- The COLA increase for next year will be €6.41 per week.
Family, pensions, and social security
€10/week increase in pensions for certain retirees, invalidity, widows, and old-age pensioners.
Exempt pension income to increase by €520 per annum to €37,624.
Up to 2 years social security contribution credits for employees who take temporary periods off work due to domestic violence or mental health issues.
Transfer of social security contributions between spouses in certain cases.
Carers' grant to be increased to €7,500 per year.
Adoption grant to be increased by €1,000 to €13,000.
Foster parents to be eligible for an additional 10 working days of leave a year. Elite athletes competing in European or world championships will receive 10 days paid sports leave. This extends to accompanying technical and medical staff.
Travel and transport
From 1 January 2027 public transport and childcare services will continue to be free only for EU citizens, and long-term residents.
Increase in Gozo ferry and fast ferry prices for non-residents.
Eco-contributions on tourist accommodation to be increased to €8 or €10/night, depending on the type of accommodation.
Introduction of eco-contribution for certain cruise liner passengers and Comino visitors of €10 and €5 respectively.
Tax, fiscal, and other incentives
Tax savings for parents will continue as announced in last year's Budget.
A non-taxable Super Bonus of up to €1,000 for all eligible 2025 workers.
Existing schemes will be renewed across several areas, including housing, EVs, renewable energy, NGOs and sports, together with continued Malta Enterprise incentives for digitalisation, automation and high value-added investment and new measures targeting emerging niches and economic diversification.
Labour market
Work permit application fees for TCNs will increase by €200 to €800. TCNs will also be subject to an annual infrastructural contribution fee of €400.
Explore the key measures
Performance of the economy
During the first six months of 2026, Malta's economy registered real growth of 4.4% in GDP (Gross Domestic Product), outperforming the EU average of 1.2%. This compares to real GDP growth of 4.7% in 2025. Economic growth was driven by household consumption, investment, tourism, services, and exports of electronic products.
The economy is forecast to expand by 4.1% in 2026 and 3.8% in 2027. In nominal terms, GDP is projected to increase from €24.7bn in 2025 to €26.3bn in 2026 and €28.1bn in 2027.
On the fiscal front, Government revenue is expected to increase from €9.1bn in 2026 to €10.1bn in 2027, representing an 11% increase. At the same time, recurrent expenditure is projected to rise from €8.4bn to €9.0bn (7.8% increase), while capital expenditure is set to increase, rising from €1.2bn in 2026 to €1.5bn in 2027, i.e. a 24.2% increase. Meanwhile, interest payments on Government debt are also expected to rise from €326m in 2026 to €382m in 2027, representing 1.36% of GDP in that year.
The general Government deficit is projected to remain stable at 2.6% of GDP in both 2026 and 2027, before declining further to 2.2% in 2028 and 1.8% in 2029. Meanwhile, Government debt is expected to remain on a sustainable path. The debt-to-GDP ratio is projected to stand at 46.8% by the end of 2027, easing slightly to 46.4% in 2028 and 45.8% in 2029, remaining comfortably below the EU's 60% threshold.
Inflation stood at 2.4% in September 2026, compared to 3.8% in the euro area, and is forecast to average 2.5% in 2026 and 2.7% in 2027. The Cost of Living Adjustment (COLA) for 2027 has been set at €6.41 per week.
Tourism continues to be a major economic driver, with Malta expected to welcome more than 4.5 million tourists in 2026, who are projected to spend around 28 million nights in the country. Tourist arrivals and overnight stays are expected to increase further in 2027. As from 1 January 2027, the eco-contribution for guests over 18 years staying in collective accommodation will increase significantly from €1.50 to €8 per night, capped at €64 per person, while visitors staying in short-let accommodation will pay €10 per night, capped at €80 per person. The revised rates are expected to generate approximately €182m in revenue.
The Budget also signals an attempt at a potential broader shift in Malta's economic model, with greater emphasis being placed on investment in technology, skills, and innovation, while higher tourism and third-country national levies (TCN) are intended to ensure that economic activity contributes more fairly towards the infrastructure and public services it utilises.
Key macroeconomic developments
Income and other taxes
Summary of measures in income tax
Lower tax on retained profits for small companies
Companies with turnover not exceeding €1m will be eligible for a reduced corporate tax rate of 25%, down from 35%, on profits retained or reinvested in the business.
Profits distributed as dividends will remain subject to the 35% rate.
The new framework will be subject to conditions and limitations to be set out in relevant rules.
Income tax rate reductions for parents with dependant children
As announced last year, the Government will reduce the income tax rates for parents with dependant children. A child is an individual who is not older than 18 years of age or is not older than 23 years of age and is in full-time education.
The new tax brackets for parents will be the following:
| Basis year 2027 - Married couples with one child | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 20,000 | 0% | 0 |
| 20,001 - 30,000 | 15% | 3,000 |
| 30,001 - 60,000 | 25% | 6,000 |
| 60,001+ | 35% | 12,000 |
| Basis year 2028 - Married couples with one child | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 22,500 | 0% | 0 |
| 22,501 - 33,500 | 15% | 3,375 |
| 33,501 - 60,000 | 25% | 6,725 |
| 60,001+ | 35% | 12,725 |
| Basis year 2027 - Married couples with two or more children | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 30,000 | 0% | 0 |
| 30,001 - 41,000 | 15% | 4,500 |
| 41,001 - 60,000 | 25% | 8,600 |
| 60,001+ | 35% | 14,600 |
| Basis year 2028 - Married couples with two or more children | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 37,000 | 0% | 0 |
| 37,001 - 50,000 | 15% | 5,550 |
| 50,001 - 60,000 | 25% | 10,550 |
| 60,001+ | 35% | 16,550 |
| Basis year 2027 - Parent with one child | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 16,000 | 0% | 0 |
| 16,001 - 24,500 | 15% | 2,400 |
| 24,501 - 60,000 | 25% | 4,850 |
| 60,001+ | 35% | 10,850 |
| Basis year 2028 - Parent with one child | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 18,000 | 0% | 0 |
| 18,001 - 28,000 | 15% | 2,700 |
| 28,001 - 60,000 | 25% | 5,500 |
| 60,001+ | 35% | 11,500 |
| Basis year 2027 - Parent with two or more children | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 24,000 | 0% | 0 |
| 24,001 - 33,500 | 15% | 3,600 |
| 33,501 - 60,000 | 25% | 6,950 |
| 60,001+ | 35% | 12,950 |
| Basis year 2028 - Parent with two or more children | ||
Income earned (€) |
Tax rate | Subtract (€) |
| 0 - 30,000 | 0% | 0 |
| 30,001 - 42,000 | 15% | 4,500 |
| 42,001 - 60,000 | 25% | 8,700 |
| 60,001+ | 35% | 14,700 |
Separate Tax Returns
Government will launch a project to reform tax return filing for married couples, making separate returns for each spouse’s own income and tax affairs the general rule. Joint filing will remain available by election, where permitted by law.
Air space transfers - enhanced disclosure and scrutiny
Targeted measures will be introduced for property transactions involving transfer of air space, requiring fuller disclosure of the total agreed consideration and more robust valuation and verification procedures to ensure taxation reflects the transaction’s economic substance. The measures are intended to address arrangements involving intermediaries or developers who are not disclosed in the transfer deed.
Indirect taxes
Increase in eco-contribution
Other measures
A number of measures were announced reflecting the Government’s continued commitment to promote new industries, sustainable transport, improving electricity generation and distribution, whilst addressing some population increase concerns.
Tax-free Super Bonus for workers
A new tax-free Super Bonus will be paid to eligible workers in the first quarter of 2027, based on income earned in 2025. Those earning €12,000 or more will receive a tax-free bonus of €1,000, while lower earners will receive a pro-rata payment. The measure also extends to self-employed individuals, part-time workers and pensioners who continue to work.
Transport and mobility
As of 1 January 2027, free public transport, free childcare and some other benefits will be limited to Maltese nationals, EU residents and Long-Term Residents.
Non-EU driving licences (excluding UK, UAE and Australia) can only be used in Malta for twelve months following arrival, after which a Maltese or EU licence is required.
Annual registration fees for vessels between 10 and 24 metres will rise by between €300 and €2,600. Professional fishermen, vessels under 10 metres and vessels above 24 metres are excluded from this hike.
Economy, business, and investment
The Government will continue to help both businesses and industry, renew existing incentive schemes and launch new incentives focused on new niches, digitalisation, automation, and investment that generates added value.
Energy
Significant investment in electricity distribution, including two new Malta-Gozo submarine cables, the second Sicily interconnector, and a 300MW offshore wind farm. The aim is that 25% of energy will come from renewable sources by 2030, up from 18.8% in 2025.
Labour market
New work permit applications for third country nationals will increase by €200 to €800 per applicant, along with an annual €400 ‘infrastructure’ contribution which will apply to permit renewals and most new applications.
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Social measures
Malta Budget 2027 places significant emphasis on social support, introducing a package of measures valued at more than €121m. The measures are intended to support pensioners, families, carers, persons with disabilities, and lower-to-middle income households through increases in pensions and benefits, additional cost-of-living assistance and targeted support for children and vulnerable individuals.