The Malta Budget Measures Implementation Act

  • By:Melissa Speigner
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The Malta Budget Measures Implementation Act (the Act) was passed on 29th March 2018. The below is an update on the most interesting of the measures:


Amendment to the definition of ‘participating holding’: the percentage equity holding requirement has been reduced to 5% (down from 10%) of the equity shares of a company, such shares conferring an entitlement to at least 5% of any two of either (i) the right to vote, (ii) profits available for distribution; and (iii) assets available for distribution on a winding up. The Act has also included holdings in Partnerships and European Economic Interest Groupings which have not elected to be treated as a company for the purposes of the Income Tax Acts. The additional conditions, being those that must exist for the application of the participation exemption, remain unchanged.


Paving the way for deductions on income derived from qualifying IP: The Act now provides for a deduction, capped to a percentage of qualifying income, that is derived from qualifying intellectual property. The rules to be prescribed by the Minister for Finance are yet to be published. More details to come as these are available.


Minimum Tax for certain ordinary res-non-doms: Effective as of basis year 2018, a minimum tax shall be chargeable to individuals that are ordinarily resident but not domiciled in Malta, not taxable under any scheme, and who derive income of not less than €35,000 arising ourside of Malta but which income is not received in Malta. The minimum amount of tax is €5,000 per annum (before taking into account any foreign tax relief). This minimum tax may however be capped to a lower amount in certain cases.


Restriction of remittance basis taxation: Individuals who have obtained long-term residence status under the Long-Term Residents (Third Country Nationals) Regulations, and those individuals obtaining permanent residence in terms of the Free Movement of European union Nationals and their Family Members Order will no longer be able to benefit from the remittance basis of taxation.

Posted in: Maltese Tax Law