Summary of the Malta 2018 Budget

  • By:Silvio Cilia
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On October 9, 2017 the Finance Minister of Malta gave the 2018 Budget speech which did not include any new taxes or tax increases. The salient provisions of the Maltese 2018 Budget are being explained briefly in the outline below.

Income Tax

The electoral manifesto of the current government included a promise to decrease the income tax burden of all workers. In an effort to keep this promise the government is committing to pay a refund for taxes paid in 2017 for all individuals having an annual income of €60,000 or less. The refund will be paid by cheque based on the circumstances of the individual and level of income received by them in 2017, as follows:

Single Computation
Income €Refund Amount €
0 – 15,00060
15,001 – 30,00050
30,001 – 59,99940


Married Computation
Income €Refund Amount €
0 – 20,00068
20,001 – 40,00056
40,001 – 59,99944


Parent Computation
Income €Refund Amount €
0 – 15,00064
15,001 – 30,00052
30,001 – 59,99940


Pensioners with income not exceeding € 13,200 will not be subject to tax, while they will receive an increase of € 2 per week on their pension.

The cost of living adjustment will be € 1.75 per week.

From academic year 2017/2018 persons under the age of 40 qualifying in full-time post-graduate courses at Masters or Ph.D. level will be entitled to a tax exemption on their income for up to € 60,000, through tax credits. This will also be granted on a pro-rata basis for part-time qualifications.


VAT and excise duty

VAT Rate for hiring bicycles will be reduced from the standard rate of 18% to the reduced rate of 7%.

There will be an extension to the VAT Refund scheme for the purchase of Bicycles and Pedelecs.

There will be a VAT Refund to persons who registered their vehicle in 2007.

Increase in VAT Threshold

Any economic activity in Malta requires VAT Registration. The three types of registration for VAT are as follows:

Registration under Article 10 whereby a person supplying goods and/or services with an annual turnover exceeding the established exempt threshold, will be liable to charge VAT on taxable supplies and can claim back VAT incurred in the course of that business activity.

Registration under Article 11 whereby a person supplying goods and/or services with an annual turnover not exceeding the established entry threshold, will not be charged VAT on supplies and cannot claim back VAT incurred in the course of that business activity.

Registration under Article 12 whereby a person is liable to register and pay VAT In Malta if that person is a non-taxable legal person or taxable person not registered under article 10, which makes intra-community acquisitions of goods in Malta with a value exceeding € 10,000 a year.

During the Budget 2018 speech, the Finance Minister announced that the entry threshold will increase from €14,000 to €20,000. Therefore, economic activities with an annual turnover of less than €20,000 will be exempt from VAT.

VAT Grouping

A new regulatory framework is going to be implemented, with the introduction of the concept of VAT Grouping for the regulated sectors in financial services and gaming. With this concept, related entities which are legally independent can register as one taxable person. This results in intra-group transactions falling outside the scope of VAT.

Groupings provide administrative savings as well as advantages for businesses, particularly in the financial services sector, as it will allow the companies to disregard intra-group supplies.

Excise duty adjustment will be made to rates of steel rods and bars falling under Specific HS Codes.


Duty on Documents and Transfers

First Time Buyers Scheme will be extended for another year waiving off the Duty on the first € 150,000

Second Time Buyers who sell their first residential home shall receive a stamp duty refund of a maximum of € 3,000. This will increase to € 5,000 where the individual is a disabled person.

Reduction of duty on documents from 5% to 2.5% applicable on the acquisition of immovable property situated in an Urban Conservation Area will be extended for another year.

Reduction of duty on documents from 5% to 2% applicable on the acquisition of immovable property in Gozo will be extended for another year.


Other measures

Penalties for tax offences will increase as part of Malta’s effort to combatting fiscal evasion.

The Individual Investment Programme will be extended for another year.


A Taskforce has been set up by the government to implement a national strategy on blockchain.

In the forthcoming months the government will be investing in a Blockchain Lab within Malta Information and Technology Agency (MITA).

A training programme on blockchain for civil servants is also going to be held.

The government will also establish a web-portal as a means of communication for all those interested in blockchain and cryptocurrencies.

The government will help startups working on this technology by providing equivalent support. Therefore, a Blockchain Hub is going to be set up.

Changes to the MicroInvest and Business START Schemes. MicroInvest will ensure that enterprises may claim assistance of up to €50,000 if based in Malta and €70,000 if either based in Gozo or predominantly owned by women. Self-employed women may also benefit from the €70,000 incentive. Enterprises employing less than 50 people on a full-time basis will also become entitled to avail themselves of the said scheme.

Individuals investing in green cars will not be liable to pay vehicle license tax for the first five years. In case of commercial companies, the benefit cannot exceed €200,000. Furthermore, private companies installing bicycle-racks will continue to benefit from grants for another year.

Facility to submit social security forms and VAT returns electronically will be extended to cater for companies and enterprises employing 10 people or more.

Additional incentives for the creation of jobs with the private sector in Gozo whereby private entities will benefit from a 30% refund of the average wage of an employee up to €6,000 for each employee who is offered a contract of at least 3 years.