Recent national Budget announcements have outlined a number of enhancements to the Micro Invest scheme. These measures will apply once they are formally implemented through updated Malta Enterprise Incentive Guidelines. Until such guidelines are issued, the scheme continues to operate in accordance with the currently published rules, which remain legally binding
- Malta: 65%
- Gozo: 85%
Maximum Tax Credit (over any rolling 3-year period)
The 5-Year Absorption Rule: Approved tax credits can be absorbed within 5 years from the date included on the grant certificate.
- CPA Certified: Malta Enterprise will review the application within 4 weeks.
- Non-CPA Certified: Review can take up to 6 months.
- Note: Wage-related claims must always be certified by a CPA.
- Full-Time Only: Tax credits apply exclusively to the increase in wage costs of full-time employees.
- New Threshold: The wage increase must be more than €5,000 compared to the lowest wage cost in the prior 2 years (replacing the old 3% threshold).
- Benchmark Caps: The wage cost in the prior 2 years cannot be lower than the wage cost incurred in the benchmark year 2025, nor can it be lower than that of the previously submitted application.
- CPA Requirement: All wage-related claims MUST be certified by a CPA.
- The wage increase for the long-term employee must exceed 3%.
- Malta-based applicants: 65% tax credit of the increase, up to €780 per employee per year, for 2 consecutive years.
- Gozo-based applicants: 85% tax credit of the increase, up to 1,020 per employee per year, for 2 consecutive years.
- The second-year benefit is only applicable if the employee’s wage cost is maintained at the same level or increased.
- General Threshold: Only individual costs exceeding €500 (excluding VAT) are eligible for tax credits.
- Motor vehicles
- Other means of transport
- Vessels– must be covered by a commercial vessel licence issued by TM
- Aircraft– must be covered by a licence issued by TM
- Furniture & Fittings and Electronic Equipment
- Refurbishing of business premises
- Digital solutions
- Ineligible costs
- Transport fees
- Works of arts
- Antiques
- Spare parts
- Systems to produced alternative energy (such as solar panels)
- Software maintenance costs & renewal fees that do not meet Digital Solution criteria as per above
Contact us
📞 +356 2152 1025/6
✉️ info@brainston.mt
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]]>Under Article 2 of the Income Tax Act (Cap. 123) Tax is chargeable on a taxpayer’s total income. The Act explicitly defines total income as the aggregate amount of a person’s income from all sources, less any allowable exemptions and allowable deductions.
At the core of the Maltese tax framework lies a fundamental rule: to be considered a deductible expense for tax purposes, an expenditure must be incurred “wholly and exclusively in the production of the income.”
In practice, this means a cost is only tax-deductible if it is directly linked to the operations of the business or the active generation of its taxable income. Any expenditure falling outside this scope cannot be utilized to reduce taxable profits.
- Direct Costs: Employee wages and salaries, statutory bonuses, social security contributions (NI), sub-contracting fees, and direct transport expenses.
- Rent and Premises Costs: Rent paid for land or buildings occupied for the purpose of acquiring the income is fully deductible. This also includes any ground rent (ċens) paid on the business property, provided it relates directly to the income-generating activity.
- Administrative Expenditures: Day-to-day running costs including utilities, accounting fees, legal and consulting costs, marketing, and business insurance premiums.
- Repairs and Maintenance: Costs incurred for the repair of premises, plant, or machinery employed in the business, as well as the renewal or alteration of business implements and utensils.
- Borrowing Costs: Interest expenses on loans or capital employed directly for business purposes (subject to interest limitation rules under the Anti-Tax Avoidance Directive).
- Allowable Deductions: Under Article 14(1)(d) of the Income Tax Act and MTCA guidelines, debts are only deductible if they are proved to have become genuinely bad (irrecoverable) and are written off during the basis year. The claimant must show they have taken all reasonable, bona fide commercial steps to recover the money (e.g., formal demand notices, reminder letters, or legal tracking).
- The 2% Turnover Threshold: For direct tax reporting, if the total value of bad debts being written off in a single year exceeds 2% of the taxpayer’s turnover, or if the aggregate amount exceeds €1,200, specific debtor details and explicit proof of recovery attempts must be disclosed or attached to the annual tax return.
- Not Allowable: General accounting provisions or prudent estimates for doubtful debts (e.g., standard matrix or percentage-based provisions) do not satisfy the MTCA guidelines and are strictly disallowed for income tax purposes.
💡 Note on VAT Bad Debt Relief: Keep in mind that reclaiming the VAT portion on a bad debt falls under separate MTCA VAT guidelines.
- The 51% Relationship: For group relief to apply, both the surrendering company and the claimant company must be resident in Malta and must be members of the same group, meaning one must be a 51% subsidiary of the other, or both must be 51% subsidiaries of a third Malta-resident company.
- The Co-Extensive Year Requirement: The group relationship must exist for the entire basis year preceding the year of assessment for which the relief is claimed. Furthermore, both companies must share concurrent (identical) accounting periods; you cannot surrender losses between companies with mismatched financial year-ends.
- Trading Losses Only: Group relief applies strictly to trading losses incurred in the current year. It cannot be used to transfer unabsorbed capital allowances or trading losses brought forward from previous years.
Intellectual Property Option: Under Article 14(1)(m) of the Maltese Income Tax Act, capital expenditure incurred on intellectual property used in the production of income, including patents, copyrights, know-how, software, and other qualifying IP rights , is tax deductible. While such deductions were previously required to be spread over a minimum period of three years, as from financial year 2023 taxpayers may elect either to deduct the expenditure over the useful life of the IP or claim the full deduction immediately in the year the cost is incurred or the IP is first used to generate income.
- Private School Fees: Parents with children attending private independent or church schools can claim a maximum annual deduction per child of:
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- Kindergarten: Up to €3,500
- Primary Level: Up to €4,600
- Secondary Level: Up to €6,500
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- Childcare and Summer Schools: Fees paid for registered childcare centers and summer schools can be deducted up to a maximum of €2,000 per year.
- Sports, Cultural, and Artistic Activities: A deduction of up to €300 per child under the age of 16 is available for fees paid to recognized entities for extracurricular athletic or creative development.
- Facilitator Services: Fees paid for the services of a facilitator for children with special needs during school hours are fully deductible.
- Alimony Payments: Legally binding maintenance/alimony payments made to an estranged spouse as ordered by the court or established via a public deed are deductible.
- Private Elderly and Respite Care: Fees paid for a private home for the elderly or registered respite care facilities are eligible for tax deductions.
- Tertiary Education Studies: Individuals who successfully complete a recognized course of study at tertiary level (MQF levels 5 to 8) can deduct tuition fees up to a maximum of €10,000. Any unabsorbed portion can be carried forward indefinitely, provided no other tax credit (such as the Get Qualified scheme) has been claimed for the same qualification.
Disclaimer: The information and amounts referred to above are based on the legislation and rates applicable as at the date of publication of this article. The availability and application of any deductions may be subject to the satisfaction of specific criteria, conditions, and regulatory requirements under Maltese tax law.
📞 +356 2152 1025/6
✉️ info@brainston.mt
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]]>- Eligibility: To qualify, individuals must be 61 years of age or older during the applicable basis year.
- Scope of Income: The exemption applies comprehensively to all recognized forms of retirement income. This includes:
- State Social Security pensions
- Service pensions
- Treasury/National pensions
- Foreign pensions received by Maltese residents
- Occupational pensions and qualifying Private Retirement Schemes (PRS / VOPS)
Under the established framework, pension income is 100% exempt from income tax up to a capped statutory threshold (regularly adjusted by the authorities to mirror the maximum pension benchmarks). Any pension income falling below this cap is entirely excluded from the individual’s chargeable income calculation.
If a pensioner’s non-pension income creates a tax liability under Malta’s progressive tax rates (Single, Parent, or Married computations), a specific Tax Rebate may be applied directly against the final tax due. This mechanism ensures that retirees who choose to remain active in the workforce or maintain investments are not fiscally disadvantaged.
Important Note: These rebates serve strictly to reduce or eliminate a calculated tax liability; they cannot be used to trigger a tax refund or be carried forward to subsequent years.
- Non-Filers: Pensioners whose total income consists solely of a pension that is fully exempt, or whose secondary income is entirely taxed at source, generally fall under the “non-filer” category and are not required to submit an annual return.
- Standard Filers: Pensioners who exceed the statutory exemption caps, or who have untaxed secondary income streams, must file a comprehensive self-assessment return within the standard Inland Revenue deadlines to prevent late-submission penalties and interest.
- Form TA23: Utilised to declare and pay flat-rate tax on part-time employment income.
- Form TA22: Utilised for declaring part-time self-employment income under favorable flat rates.
- Form TA24: Utilised to declare rental income derived from residential or commercial properties, subjecting the gross rental revenue to a final, low-rate flat tax.
Alternatively, taxpayers retain the right to opt out of these flat-tax mechanisms and include these streams in their global income computation if the progressive rates prove more financially advantageous.
Here is a highly professional final section tailored specifically for your firm, focusing on your core corporate services, compliance, and wealth/pension advisory capabilities.
We assist local and expatriate clients with a comprehensive suite of services, including:
- Personal Tax Optimization: Analysing your total income profile, including pensions, investments, and active earnings, to implement the most tax-efficient structure under Maltese law.
- Compliance & Tax Filing: Determining your filing status, preparing annual self-assessments, and ensuring correct submission of forms (including TA22, TA23, and TA24) within strict statutory deadlines.
- Cross-Border Pension Advisory: Guiding expatriates on the tax implications of transferring or receiving foreign national, occupational, or private pensions in Malta.
- Corporate & Payroll Solutions: Assisting working pensioners and employers with specialized payroll adjustments to properly reflect tax-exempt pension thresholds against active employment income.
Optimise Your Fiscal Position
Whether you are approaching retirement or managing complex income streams as an active pensioner, our team is here to protect your wealth. Contact Brainston Advisory today to schedule a consultation with one of our tax professionals.
📞 +356 2152 1025/6
✉️ info@brainston.mt
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]]>This is not simply a tax incentive. It is a regulatory-led talent strategy, designed to channel expertise into industries that are critical to Malta’s long-term economic positioning.
The regime applies until 31 December 2040, offering long-term certainty for both employers and internationally mobile executives. It introduces defined qualification, role-based, and compliance requirements, to ensure that only genuine, high-value employment roles benefits from the incentive.
An individual may only benefit if they hold an “eligible office” with an undertaking that is licensed or recognised by a statutory competent authority named in the rules.
Malta Financial Services Authority
- for eligible offices within licensed or recognised financial services undertakings;
Malta Gaming Authority
- for eligible offices within licensed gaming operators;
Transport Malta, in relation to:
- aviation undertakings holding Air Operator Certificates or aerodrome licences
- maritime undertakings holding ISM or MLC certification
- shore-based ship management and offshore oil & gas servicing companies
The Office of the Chief Medical Officer to Government
- in respect of highly skilled medical and healthcare roles;
Malta Enterprise
- covering recognised strategic, innovation-driven and STEM-based industries.
This structure makes the regime a sector-specific tool, not a general expatriate tax programme.
- Be non-domiciled in Malta
- Derive qualifying employment income in Malta
- Hold an eligible office within a licensed or recognised undertaking
- Earn at least €65,000 per year (excluding fringe benefits)
- Possess recognised qualifications or professional experience
- Be protected as an employee under Maltese law
- Hold private medical insurance and maintain normal accommodation in Malta
Substance is essential. Artificial job titles, restructured remuneration, or collusive arrangements are expressly targeted by anti-abuse provisions.
First renewal -> +5 years
Second renewal -> +5 years
Maximum benefit -> 15 years
Up to -> 31 December 2040
If you are considering this regime, contact Brainston for tailored advice and support.
Contact us
📞 +356 2152 1025/6
✉️ info@brainston.mt
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]]>To support the sustainability of the creative sector, the Maltese Government, in collaboration with Arts Council Malta (ACM) and the Malta Tax and Customs Administration (MTCA), offers a specialized fiscal incentive: a reduced income tax rate of 7.5% for creative practitioners. This incentive is primarily governed by Article 56(26A) of the Income Tax Act (Cap. 123) and is specifically regulated under Subsidiary Legislation 123.211 (Income from Artistic Activities Rules). Most notably, the scheme was recently enhanced by Legal Notice 137 of 2025, which transitioned the tax base from a gross to a net basis for the 2025 basis year (Year of Assessment 2026).
This guide explains who qualifies, how the tax is calculated, and the key updates applicable from the 2025 basis year (Year of Assessment 2026).
From 2025 onwards, eligibility has been expanded to include a broader range of economic activities under specific NACE Rev. 2.1 codes.
Eligible activities include:
- Performing Arts: Actors, dancers, musicians
- Artistic Creation: Painters, sculptors, writers
- Support & Production: Artistic directors, choreographers, curators, and those involved in motion picture or TV production.
- Intellectual Property: Royalties or licensing income from artistic works
- Threshold: Applies to the first €50,000 of net profits from qualifying activities
- Excess Profit: Any profits earned above the €50,000 threshold is added to your other income (if any) and taxed at the standard progressive rates of 0% to 35%
- Final Tax: The 7.5% is a final tax, meaning it cannot be offset against other income or used to claim refunds
- Previous Years (2022–2024):
The 7.5% rate applied to gross income (total revenue before expenses)
- New Rules (Effective 2025):
Following updates in Legal Notice 137 of 2025, the 7.5% rate is now explicitly applicable to a maximum net income of €50,000. This means the tax is calculated on your profit after deducting allowable business expenses as defined in Article 14 of the Income Tax Act.
Step 1: Certification by Arts Council Malta (ACM)
You must first obtain certification confirming that your activity qualifies.
Required documentation:
- VAT certificate
- Proof of NACE classification
- Signed accountant’s declaration
Step 2: Submission of Form TA26
Once the notification letter from ACM is received:
- Complete Form TA26
- Submit the form and payment by 30 April (Year of Assessment)
Important: Late submission may result in 0.6% interest charges or loss of eligibility for the reduced rate.
However, since it is a final tax with a capped threshold, it is essential to compare this option with the standard tax system based on your specific financial situation.
At Brainston Advisory, we assist creative professionals with obtaining the required certification, ensuring full tax compliance, and providing tailored advisory to optimise their tax position.
Get in touch with our team today:
📞 +356 2152 1025
📧 info@brainston.mt
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]]>FSS compliance carries real risk if not handled correctly. Late or incorrect submissions are subject to penalties and interest, and even small errors can trigger statutory fines unless properly managed.
It applies to:
- Employment income
- Pensions
- Annuities
- Other annual payments
Once registered, employers must:
- Apply the correct FSS tax treatment for each employee
- Calculate payroll tax and Social Security Contributions (SSC)
- Deduct and pay the relevant tax and SSC amounts
- Submit the required statutory forms within the prescribed timeframes
- Complete annual reconciliations to confirm all figures are aligned
![lala]#](https://www.brainstonadvisory.com/wp-content/uploads/2027/02/lala.png "lala]#")
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- Class 1: For employees, contributions are deducted monthly from their gross emoluments by their employers. Employers are required to remit these contributions to the Malta Tax and Customs Administration (MTCA) each month.
- Class 2: For self-occupied individuals (earns income from a trade, business, profession, vocation or other economic activity), contributions are paid quarterly directly to the Commissioner for Revenue (April, August and December) on the net annual income from the prior year.
- FS5: By the end of the following month
- FS3: By 15 February
- FS7: By 15 February
We can assist you by:
- Payroll setup and onboarding
- Employee registration and compliance support
- Preparation of payslips
- Monthly FSS and SSC calculations and submissions
- Ongoing compliance and payroll consultation
- Updates on legislative and rate changes
- Direct liaison with the MTCA on your behalf
- Payroll reviews and annual reconciliations
- Work permit applications for Third Country Nationals
Let’s discuss your payroll needs and show you how we can support your business.
Contact us
📞 +356 2152 1025/6
✉️ info@brainston.mt
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