2022 has arrived, that means time to recall Malta 2022 Budget. Malta’s budget speech for 2022 was delivered by the Minister for Finance on 11 October 2021.
How will the new Budget 2022 measures impact you and your business? Our comprehensive summary offers a look into the salient points of the new Budget document that different individuals and businesses alike ought to be familiar with.
I. Tax measures: income and other taxes
1. Pension income:
- Tax brackets have adjusted to support pension income of a maximum of €14,318 will not to be taxed. Couples having pension income and opting for a joint computation are entitled to a further exemption of €3,600 in respect of income from other sources.
- Starting from 2022 and over a period of 5 years, pension income will gradually not be counted as part of taxable income.
2. 50% reduction in taxes on transfers of rented properties:
This reduction on the first €200,000 applies to transfers of property that has been leased for a period of not less than 10 years to a person paying subsidized rent under any Housing Authority scheme. If such property is transferred to the tenant, no taxes will be due.
3. Transfers of family businesses:
The reduced duty rate of 1.5% (rather than 5%) applicable to specific intra-family donations of family businesses has been extended once again.
4. Reduction in income tax rate applicable to overtime income:
The first €10,000 in overtime income earned by employees whose basic annual salary does not exceed €20,000 and who do not occupy a managerial position is taxed at 15%.
5. Reduced tax rate on part-time income:
As of this year, tax levied on income derived from part-time work is reduced from 15% to 10.
6. Tax rebate cheque:
The Government will be once again gifting workers on the lowest incomes with a €140 cheque, while those in the top category, earning up to €60,000 will get a refund of €60.
|Income, €||Amount, €|
|0 - 15,000||125|
|15,001 – 30,000||95|
|30,001 - 59,999||60|
|Income, €||Amount, €|
|0 - 20,000||140|
|20,001 - 40,000||110|
|40,001 - 59,999||65|
|Income, €||Amount, €|
|0 - 15,000||135|
|15,001 – 40,000||105|
|40,001 - 59,999||60|
7. Full VAT refund on bicycles and electric bicycles:
VAT continues to be refunded on the purchase of bikes and e-bikes.
8. Intra-group transfers of capital allowances:
Unabsorbed capital allowances generated during YA 2021 and 2022 can be used to set off intra-group income during YA 2022.
9. Measures related with property – no income tax and stamp duty on transfers of vacant property, ‘UCA’ property and property with traditional Maltese features:
- Exemption from income tax and stamp duty, applying with respect to the first €750,000 of the value of the property transferred, when such property (1) has been constructed more than 20 years ago and has been vacant for more than 7 years, or (2) is in an Urban Conservation Area, or (3) is built in typical Maltese architectural style and possesses traditional Maltese features. This incentive also applies to buyers who, having entered into a promise of sale agreement, have yet to execute the deed of purchase.
- Cash grants are to be given to first-time buyers: they will receive a grant of €15,000, increased to €30,000 in respect of properties situated in Gozo. These measures are effective as from 12 October 2021, for a period of 3 years.
- With effect from 12 October 2021, VAT refunds also are granted on the first €300,000 (capped at €54,000) worth of expenses incurred on the restoration/improvement of the said property.
- The stamp duty exemption for first time buyers (exemption from stamp duty on the first €200,000 of the consideration), second time buyers (refund of duty paid on the first €86,000 of the value of the replacement property, or the first €150,000 in the case of persons with disability or guardians of persons with disability) and purchases of property in Gozo (rate of duty of €2 for every €100 or part thereof with respect to transfers inter vivos of residential property situated in Gozo) is extended.
- Eligible age for the Equity Sharing Plus scheme is lowered from over 40 to over 30 years of age.
10. Tax benefit on Malta enterprise scheme:
Malta Enterprise has introduced a tax benefit applicable to businesses which invest in eligible projects of that same business or investments in other businesses as long as the investment is made within two years from 1st January 2022.
11. Crack down on tax evasion:
With effect from 1 June 2022, the rate of interest charged on outstanding income tax and VAT dues is to increase to 7.2% per annum (0.6% per month). Requests for a remission of interest charged on overdue tax will only be considered if the Revenue is satisfied that the tax due was not paid within the prescribed period due to a reasonable cause.
12. Tax measures which are targeted towards Culture and Arts industry:
- As of 2022, individuals working in the arts, culture and entertainment sectors must benefit from an income tax rate of 7.5%, calculated on a 3-year average period.
- €1 m guarantee fund was set up for artistic events so that producers and promoters can recover their costs when unexpected restrictions are introduced.
A further amount of €2m for events when seats cannot be sold due to the introduction of any new restrictions on such events.
An amount of €2m for a scheme to be administered by the Malta Arts Council to assist independent artistic projects.
II. Social Measures in Malta
Cost of living increase of € 1.75 per week applicable to all employees, pensioners and those entitled to social benefits. Students receiving stipends shall benefit from a pro-rata increase. Additional cost-of-living mechanism was set up for low-income families.
- Social security pensions are increased by €3.25 per week. Therefore, together with the cost-of-living adjustment, the increase for pensioners will be €5 per week (€260 per year).
- In addition, pensioners who retired after 2008 will also benefit from a maximum increase of €2.50 per week to their cost of living bonus (€130 per year).
- Furthermore, pensioners who benefit from the widow’s pension and whose income is less than €10,221 per annum, will receive an increase varying between €520 and €780 per year.
- Those persons who have reached their retirement age but do not qualify for a pension due to lack of contributions, will be granted an increase of €150 per annum to the annual bonus.
- Similar to previous years, the portion of any service pension which is not to be reduced from the social security pension is being increased by a further €200.
- Persons, who have paid at least 10 years of social security contributions before January 1979 and none after such date, can qualify for the equivalent of the minimum rate of the two-thirds pension, amounting to around €50 per week.
Increase in in-work benefits:
- The minimum annual in-work benefit is increased to €200 per family, together with an additional €100 for every child.
- The thresholds are also increased: for couples in gainful employment from €35,000 to €50,000; for single parents from €23,000 to €35,000; for a couple where only one person is in gainful €26,000 to €35,000.
- A new in-work benefit of €150 is introduced for workers working irregular hours and earning less than €20,000 per annum.
- Part time workers are given the possibility to pay social security contributions on more than one part time job, up to a maximum of 40 hours per week, which should result in a higher pension.
- Government is setting up a website to make available templates of employment contracts containing minimum requisites provided at law thus ensuring all employment rights are respected.
Increase in supplementary allowance:
- Married persons and/or couples, whose income for 2022 does not exceed €14,318, shall benefit from an increase in their supplementary allowance ranging from €3.47 to €6.50 per week, based on their income.
- In addition, single persons including widowers whose income for 2022 does not exceed €10,221, shall benefit from an increase in their supplementary allowance ranging from €4.10 to €5.00 per week.
- Increase of €50 for those 80 years and over, who live in a private residential home.
- Increase in the Carers’ allowance from €6,000 to €7,000 per year.
- An increase to the “Home Helper of Your Choice” scheme subsidy from €5.50 per hour to €7.00 per hour.
- An increase of €5 per week to the disabled child allowance resulting in a yearly allowance of €1,560.
- €300 per annum increase for those parents who stop working in order to take care for children with severe disabilities.
- An increase of €100 given upon a child’s birth or adoption, resulting in a total grant of €400 per child.
- Students’ stipends are increased by 10% and students are allowed to work up to 25 hours per week without forfeiting their stipend.
Public transport in Malta:
Free public transport to Maltese residents as of October 2022.
III. Other Salient Measures
Environment, green economy:
- Increase in grants to €11,000 when buying a new electric vehicle or plug-in-hybrids. Such grant may increase to up to €12,000 if used together with the motor vehicle scrappage scheme (€13,000 in Gozo).
- The existing schemes in relation to the purchase of electric motor vehicles are extended, including the exemption from registration tax and exemption from the payment of annual road licence for a period of 5 years from the date of first registration, for electric MV and plug-in vehicles.
- A new grant of up to €900 is introduced for the installation of PV panels on vehicles such as minibuses, coaches and trucks.
- The grant for scrapping polluting motor vehicles in Gozo is increased from €1,000 to €2,000.
- New schemes for businesses to subsidise the cost of changing existing petrol or diesel engines to electric.
- Continuation of the reduced flat rate for residential charging of electric vehicles during the off-peak period.
- Installation of around €1,200 charging points for electric vehicles around Malta over a 3 year period.
The Government is allocating €470m in spending on industrial estates while continuing road building.
A new residence permit (‘startup visa’) for non-EU individuals is being introduced to attract local startups and entrepreneurs. The idea behind this permit is to grant a visa package to start-up entrepreneurs. Those who fulfill the criteria, are allowed to move to Malta and hence contribute economically.
Investments for businesses:
- The SME Tailored Facility issued by the Malta Development Bank started including loans for sustainable and environmental projects for the private sector as well. SME businesses will be able to benefit from up to €5 million.
- Blue Med Hub, a startup hub, is establishing to attract local and foreign entrepreneurs. The hub would collaborate with entities located in Africa and in the Middle East.
Research and innovation:
Maltese entities and researchers to benefit from funds of the Horizon Support Measures scheme and engage in collaborations with European and international research entities.
Malta will host the Games of the Small States of Europe 2023. Grants in the region of €7 million started being distributed from sports associations and the Maltese Olympic Committee.
During 2023 and 2024 Malta will be a non-permanent member of the United Nations Security Council.
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