Malta Budget Measures for 2021

A model for economic regeneration

On Monday 19th October 2020, Malta’s Finance Minister, Profs. Edward Scicluna presented the country’s budget for year 2021. The global economic scene is of course entirely different to that seen a year ago, as since then the COVID-19 global pandemic brought the world to a standstill. The Budget provides a number of incentives for the year ahead that promise to drive forward Malta’s economy to regenerate in the post COVID-19 reality.

As expected, the economic slowdown impaired the Maltese economy, with a reduction of 7.4% in GDP expected for this year. However, Malta is expected to bounce back next year, with a growth forecast of between 5% and 6.4% in nominal terms.

In line with our position as corporate and tax advisers, this article highlights only the measures that we believe are more likely to be of interest to our international audience of those currently or considering investing in or relocating personally to Malta.

COVID-19 Emergency measures

The government has already made available support such as wage supplements to the industries most directly impacted by the pandemic, notably hospitality and catering. Vouchers were also distributed to households in Malta to kickstart the economy once partial lockdown measures started to be eased.

COVID 19 Reserve

The Government is allocating additional funds to finance emergency infrastructure for health purposes in order to guarantee continuity of healthcare services. Moreover, medicines shall continue to be provided including new freely offered medicines for chronic illnesses.

Extension of Wage Supplements

The Minister announces that the current wage supplement measures announced in the COVID-19 mini budget earlier this year, shall be extended to March 2021. The measure will be modified so as to provide assistance to those businesses most affected by the pandemic.

Real Estate Investment

First time buyers of immoveable property are already exempted from the payment of stamp duty applicable to the first € 175,000 of the property value, which has now been increased to € 200,000.

The reduced stamp duty and property transfer tax rates announced earlier this year are being extended. These remain applicable in relation to preliminary agreements for the transfer of immovable property entered into until March 2021 and final deeds entered into by the end of December 2021.

Donations of immovable property have so far benefited from an exemption on the first € 200,000 of the property value. This is now being increased to an exemption on the first € 250,000.

Boosting Local Businesses

A second round of vouchers to the value of €100 shall be provided to all Maltese residents at a cost of over € 50 million to the public purse. These are to be used in local hospitality, catering and retail establishments to provide a welcome cash injection.

Family & Society

Apart from the support measures above, this budget provides for the investment in a better future for Malta’s public.

Education

The Finance Minister has pledged to build two new schools, while continuing the ongoing investment program to refurbish current schools with the latest technologies.

Halt to Single Use Plastic

Following an EU directive, as from 1st January 2021 importation of single use plastics into Malta shall be prohibited while by 1st January 2022 the sale of single use plastics shall be halted.

Climate Change

Malta is aiming towards improving Malta’s air and consequently people’s quality of life. Reducing emissions is a key element. The strategy towards low carbon emissions shall be concluded by the end of the current year.

Infrastructure

The Government promised to continue to invest millions of Euros in Malta’s road networks including the creation of safe cycle paths. Works will begin on several large infrastructure projects, such as the Msida Creek Infrastructure Project. Maritime areas of strategic importance will also be improved including the refurbishment of existing breakwaters and pathways.

Industry & Commerce

In the current environment that is sure to see lower tourism figures for Malta, the government has appreciated the need to continue to drive local investment and stimulate foreign direct investment.

Business Hubs

The Government has committed to creating new business hubs around the island. We look forward to learning further details about these and will share information as it becomes available.

E-Commerce

The past few months have seen record levels of e-commerce in Malta. Government programs that support the investment in technology and to help Maltese businesses to switch to online will continue. To this end, there will also be an investment in customer dispute resolution.

Aviation

A new aviation policy shall be pronounced in the next year following changes in the framework of law undertaken in recent times.

Reduced Tax for VAT-exempt Businesses

VAT-exempt businesses currently enjoy a tax-free threshold on the first EUR20,000. This is being raised to EUR30,000.

Foreign Investment Initiatives

For several years now, Malta has offered schemes to assist businesses and attract foreign investment in the form of tax rebates, financial support and industrial space. These will continue to be given prominence to allow businesses and investment in Malta to prosper.

Start-up Support

In recognition of the immense value that new start-ups offer the economy, the Finance Minister has announced that frameworks will be established to attract start-ups to Malta.

Focus on a Green Economy

Malta plans to be carbon neutral by 2050 through the use of innovations in renewable energy resources. The Government has stated its objective to build a workforce based on greener jobs, fostered by innovation in this sphere.

Green Bonds

The Minister announced a strategy towards issuance of green bonds by the Central Bank towards renewable energy and other green projects.

Overall we believe this is a positive budget, without increasing the tax burden in any sector, it provides for economic stimulus while investing in a sound and healthy future for Malta. The opportunities for investment in Malta are plenty and there have never been more favourable conditions to take this step.

How we can help

At Interserv we guide our clients through the formalities of setting up business in Malta, investing in the island or taking up residency in Malta. As entrepreneurs ourselves, we have a business mind set and seek to work with out clients as partners rathe than simply service providers.

We are on hand to assist with tax or legal advice before committing to a decision, company formation and administration, applications for local or EU funding grants to maximise your benefit from Malta.

On Monday 19th October 2020, Malta’s Finance Minister, Profs. Edward Scicluna presented the country’s budget for year 2021. The global economic scene is of course entirely different to that seen a year ago, as since then the COVID-19 global pandemic brought the world to a standstill. The Budget provides a number of incentives for the year ahead that promise to drive forward Malta’s economy to regenerate in the post COVID-19 reality.

As expected, the economic slowdown impaired the Maltese economy, with a reduction of 7.4% in GDP expected for this year. However, Malta is expected to bounce back next year, with a growth forecast of between 5% and 6.4% in nominal terms.

In line with our position as corporate and tax advisers, this article highlights only the measures that we believe are more likely to be of interest to our international audience of those currently or considering investing in or relocating personally to Malta.

COVID-19 Emergency measures

The government has already made available support such as wage supplements to the industries most directly impacted by the pandemic, notably hospitality and catering. Vouchers were also distributed to households in Malta to kickstart the economy once partial lockdown measures started to be eased.

COVID 19 Reserve

The Government is allocating additional funds to finance emergency infrastructure for health purposes in order to guarantee continuity of healthcare services. Moreover, medicines shall continue to be provided including new freely offered medicines for chronic illnesses.

Extension of Wage Supplements

The Minister announces that the current wage supplement measures announced in the COVID-19 mini budget earlier this year, shall be extended to March 2021. The measure will be modified so as to provide assistance to those businesses most affected by the pandemic.

Real Estate Investment

First time buyers of immoveable property are already exempted from the payment of stamp duty applicable to the first € 175,000 of the property value, which has now been increased to € 200,000.

The reduced stamp duty and property transfer tax rates announced earlier this year are being extended. These remain applicable in relation to preliminary agreements for the transfer of immovable property entered into until March 2021 and final deeds entered into by the end of December 2021.

Donations of immovable property have so far benefited from an exemption on the first € 200,000 of the property value. This is now being increased to an exemption on the first € 250,000.

Boosting Local Businesses

A second round of vouchers to the value of €100 shall be provided to all Maltese residents at a cost of over € 50 million to the public purse. These are to be used in local hospitality, catering and retail establishments to provide a welcome cash injection.

Family & Society

Apart from the support measures above, this budget provides for the investment in a better future for Malta’s public.

Education

The Finance Minister has pledged to build two new schools, while continuing the ongoing investment program to refurbish current schools with the latest technologies.

Halt to Single Use Plastic

Following an EU directive, as from 1st January 2021 importation of single use plastics into Malta shall be prohibited while by 1st January 2022 the sale of single use plastics shall be halted.

Climate Change

Malta is aiming towards improving Malta’s air and consequently people’s quality of life. Reducing emissions is a key element. The strategy towards low carbon emissions shall be concluded by the end of the current year.

Infrastructure

The Government promised to continue to invest millions of Euros in Malta’s road networks including the creation of safe cycle paths. Works will begin on several large infrastructure projects, such as the Msida Creek Infrastructure Project. Maritime areas of strategic importance will also be improved including the refurbishment of existing breakwaters and pathways.

Industry & Commerce

In the current environment that is sure to see lower tourism figures for Malta, the government has appreciated the need to continue to drive local investment and stimulate foreign direct investment.

Business Hubs

The Government has committed to creating new business hubs around the island. We look forward to learning further details about these and will share information as it becomes available.

E-Commerce

The past few months have seen record levels of e-commerce in Malta. Government programs that support the investment in technology and to help Maltese businesses to switch to online will continue. To this end, there will also be an investment in customer dispute resolution.

Aviation

A new aviation policy shall be pronounced in the next year following changes in the framework of law undertaken in recent times.

Reduced Tax for VAT-exempt Businesses

VAT-exempt businesses currently enjoy a tax-free threshold on the first EUR20,000. This is being raised to EUR30,000.

Foreign Investment Initiatives

For several years now, Malta has offered schemes to assist businesses and attract foreign investment in the form of tax rebates, financial support and industrial space. These will continue to be given prominence to allow businesses and investment in Malta to prosper.

Start-up Support

In recognition of the immense value that new start-ups offer the economy, the Finance Minister has announced that frameworks will be established to attract start-ups to Malta.

Focus on a Green Economy

Malta plans to be carbon neutral by 2050 through the use of innovations in renewable energy resources. The Government has stated its objective to build a workforce based on greener jobs, fostered by innovation in this sphere.

Green Bonds

The Minister announced a strategy towards issuance of green bonds by the Central Bank towards renewable energy and other green projects.

Overall we believe this is a positive budget, without increasing the tax burden in any sector, it provides for economic stimulus while investing in a sound and healthy future for Malta. The opportunities for investment in Malta are plenty and there have never been more favourable conditions to take this step.

How we can help

At Interserv we guide our clients through the formalities of setting up business in Malta, investing in the island or taking up residency in Malta. As entrepreneurs ourselves, we have a business mind set and seek to work with out clients as partners rathe than simply service providers.

We are on hand to assist with tax or legal advice before committing to a decision, company formation and administration, applications for local or EU funding grants to maximise your benefit from Malta.

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