Finance Minister, Edward Scicluna, announced the Malta Budget for 2020 on October 14th. He discussed several key points, such as employment, education and property. The announcement can be viewed, in its entirety, below:

However, if you don’t have time to watch the speech, you can read some of the highlights below.

Employment

  • The approval of an additional day of leave in 2020 due to public holidays falling on weekends. Annual leave will now increase to 27 days in 2020. 
  • A tax refund ranging from €40 and €68 will be paid to individuals who earn less than €60,000 per annum.

Personal Tax

  • The first 100 hours of overtime for employees who (a) have a basic pay below €20,000 and (b) are not in a managerial position will be taxed at 15% in 2020.
  • The tax compliance process will be simplified, and a new system will allow couples to submit separate tax returns and have independent assessments.

Pensions

  • Pensions will increase by €7 per week, including the adjustment to the Cost Of Living Allowance (COLA).
  • The exempt threshold for pension income will increase:
    • Married couples receiving one pension – €15,798
    • Other cases – €13,798.

Social Security

  • An allowance for persons aged 65 years and over in risk of poverty will increase by €50 to €150.
  • Persons aged 80 years and over who live in their homes or with relatives will increase by €50 to €350.
  • Persons residing in a home for the elderly shall receive a grant of €300. This grant increases to €350 for persons older than 80 years.
  • Parents will receive a €300 bonus for every child born or adopted.

Property

  • From October 15th 2019, first-time buyers will be exempt from duty on the first €175,000.
  • Individuals acquiring a residential property to live in will benefit from a reduced rate of duty of 3.5% on the first €175,000.
  • A new scheme will see people under the age of 40, who cannot cover the 10% deposit to buy a house, gain a government interest-free loan up to a maximum of €17,000, that is paid back over 15 years.
  • Profits received on the sale of immovable property will be taxed at 15% on the first €100,000. Gains over € 100,000 are taxed at 35%.
  • The property restoration refund scheme has received an extension.

Family Businesses

  • Duty of 1.5% on the transfer of family business shall be extended by another year until the end of 2020.

Tax Evasion

  • Malta ranked fourth amongst the EU Member States in terms of lowest VAT evasion, by decreasing by 8%.
  • Purchases of property, cars, boats and yachts, diamonds, precious stones and works of art cannot exceed €10,000 in cash payments.
  • A new agency called the ‘Financial Organised Crimes Agency’ (FOCA) will be set up to combat money laundering and financing of terrorism.

Green Incentives

  • Operators within the construction industry can opt to replace existing machinery with new environmental-friendly machines. In doing so, they can receive a grant of up to €200,000 by Malta Enterprise (provided that the old machinery is scrapped). This scheme is also relevant for the purchase of new equipment (excluding vehicles) that reduces the impact on the environment.
  • A grant equal to 25% of the cost (up to €1,000) will be given to aid the acquisition of batteries storing renewable energy.
  • The exemption of electric and hybrid vehicles from registration tax will receive an extension for another year.
  • Schemes contributing towards the efficient use of energy and production of power from renewable sources will continue during 2020.
  • ‘Green Bonds’ will be issued to incentivise investment in projects related to clean energy, sustainable resources and environment protection.
  • A grant will of up to €3,000 will be given to stores introducing green corners in their shops.

Persons with Disability

  • An increase of €11.40 per week will go toward assisting persons with a severe disability who are unable to work.
  • The grant on specialised equipment shall increase by €400 to €1,000.

Gozo

  • Improving the Start-up tax credit for new businesses who start a new business in Gozo.
  • Relocation incentives will be given to companies who relocate to Gozo. Companies providing teleworking and back-office work from Gozo will also receive fiscal incentives.

Education

  • An investment of over €7 million will go towards developing the University of Malta and MCAST.
  • Individuals who opt to study a foreign language overseas will be eligible for a grant up to €850.
  • The VAT will be removed on educational and vocational services, including distance learning.

Other Resolutions

  • There will be a ban on the importation and production of certain single-use plastics from January 1st 2021.
  • The sale and distribution of certain single-use plastics will also be banned from January 1st 2022.
  • A gas pipeline project between Malta and Sicily to supply the Delimara Power Station is expected to be completed by 2024 through an investment of €400 million.
  • Vehicle scrappage scheme will continue to be available with grants up to €1,500.

The Economy Overview

  • The economy is expected to grow by 4.3%
  • The budget surplus for 2020 is projected at 1.4%
  • The debt-to-GDP ratio in 2020 is slated to drop to 40.4%
  • For the third year running, the budget has no tax increases
  • The 2020 Budget will cost more than €5 billion
  • The economy is expected to grow to €14 billion

Summary

If you would like more information on Malta’s Tax System, Setting up a Company in Malta or VAT in Malta you can click any of these links. If you need a consultation, you can contact us below.

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