On 11th October 2021, the Minister for Finance presented Malta’s budget for 2022. This budget summary presents the highlights of the budget speech:

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INCOME AND OTHER TAXES

• Exemption on pension income

The maximum amount of exempt pension income will be increased to €14,318. 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.

 

• Tax free pension income

Starting from 2022 and over a period of 5 years, pension income will gradually not be counted as part of taxable income. This is particularly relevant for pensioners having additional income apart from their pension to encourage them to continue working beyond retirement age.

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• 50% reduction in taxes on transfers of rented properties

This 50% 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.

 

• Reduction in duty rate on intra-family donations

The reduced 1.5% duty on certain intra-family donations of business property and shares in companies has been extended for another 1 year.

 

• Reduction in tax rate for overtime income

Qualifying overtime income up to €10,000 will be subject to tax at the reduced rate of 15%, provided that the annual basic salary does not exceed €20,000 and the employee is not in a managerial position.

 

• Reduced tax on part-time income

The tax rate on part-time income will be reduced from 15% to 10%.

 

• Increase in tax refund to individuals

The tax refund paid in the past years will continue to be paid to individuals earning not more than €60,000. Such refund will increase and vary between €45 and €140, depending on the level of income and the tax status of the individual, as shown in the tables below.

 

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• Tax incentives on transfer of family businesses

The reduced rate of 1.5% on certain intra-family donations of family businesses has been extended for another year.

 

• Intra-group transfers of capital allowances

A company that suffered losses due to the pandemic and has unabsorbed capital allowances in 2020 and 2021, may apply for such capital allowances to be transferred to another company within the group that has chargeable income in 2021.

 

• Tax benefit on Malta Enterprise Scheme

A new scheme will be introduced by Malta Enterprise where a tax benefit will be provided to businesses which reinvest a percentage of their profits in the same business or another business within two years from 1 January 2020.

 

• Remission of interest on overdue tax

Such remission of interest is considered only if the CfR is satisfied that the tax due was not paid within the prescribed period due to a reasonable cause.

 

The interest rate on outstanding income tax and VAT will increase to 7.2% per annum as from 1 June 2022.

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• No income tax and stamp duty on transfers of certain property

No income tax and stamp duty will apply on the first €750,000 of the value of property transferred, when such property:

• Has been constructed more than 20 years ago and has been vacant for more than 7 years; or

• Is situated in an Urban Conservation area; or

• Is built with typical Maltese architectural style and traditional Maltese features.

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This incentive also applies to buyers that have already entered into a promise of sale agreement but have not yet signed the contract of sale.

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First time buyers of properties referred to above, will also receive a grant of €15,000 and if the property is in Gozo, such grant will increase to €30,000.

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These incentives will be effective as from 12 October 2021 and apply for a period of 3 years.

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Anyone acquiring or already in possession of properties referred to above, are eligible for a VAT refund amounting to a maximum of €54,000 on the first €300,000 of expenses incurred in the restoration and improvement of the property.

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In addition, the stamp duty reduction schemes applicable to first time buyers, second time buyers and property acquisitions in Gozo will be extended for another 1 year.

 

SOCIAL MEASURES

• €1.75 per week cost of living adjustment for 2020

This adjustment is granted to all employees, pensioners and to those receiving social benefits. Students’ stipends shall be increased on a pro-rata basis.

 

An additional cost-of-living mechanism shall be set up for low-income families.

 

• Pensions

Social security pensions will be increased by €3.25 per week. Therefore, together with the cost-of-living adjustment, the increase for pensioners will be €5 per week.

 

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.

 

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.

 

As in 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 will increase to €200 per family, together with an additional €100 for every child. The thresholds will also increase:

• 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.

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A new in-work benefit of €150 will be introduced for workers working irregular hours and earning less than €20,000 per annum.

 

•     Part time workers will be given the possibility to pay social security contributions on more than one part time job, up to a maximum of 40 hours per week.

 

• Increase in supplementary allowance

Married persons and/or couples whose income for 2022 does not exceed €14,318, will benefit from an increase in their supplementary allowance ranging from €3.47 to €6.50 per week, based on their income.

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.

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• 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.

 

• €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 will be increased by 10% and students will be allowed to work up to 25 hours per week without forfeiting their stipend.

 

SUSTAINABILITY AND THE ENVIRONMENT

• Transportation and shipping

• Free public transport will start being provided to all Maltese residents as from 1 October 2022.

• New schemes for businesses to subsidise the cost of changing existing petrol or diesel engines to electric.

• New scheme to encourage transport operators to install Diesel Particulate Filters (DPF) and Selective Catalytic Reduction (CSR) system and to install PV panels.

• Increase in grants to €11,000 when buying a new electric vehicle or plug-in-hybrids. An additional €1,000 is granted for scrappage scheme (€2,000 in Gozo).

• Installation of around €1,200 charging points for electric vehicles around Malta over a 3 year period.

• The exemption from registration tax and annual road license on electric vehicles and plug-in electric vehicles for a period of five years from the date of first registration will be extended.

• Continuation of the reduced flat rate for residential charging of electric vehicles during the off-peak period.

• The following Transport Malta schemes were extended:

• Full vat refund on bicycles and electric bicycles

• Grants for those who change their vehicle to run on gas instead of petrol

 

• Financing Sustainability

• Extension of the Malta Development Bank SME Tailored Facility to provide finance for investments in sustainable and environmental projects by SMEs.

• Support for Maltese companies in evaluating the environmental and social impact of their activities.

• Launching of a process whereby any surplus carbon credits generated by private and public entities investing in green projects may bevoluntarily purchased by other private and public entities.

• Provision of incentives for organic farming and carbon farming. Grants of a maximum of €8,000 may be claimed by farmers who have agricultural land which is not being used or with low levels of production to convert them into  systems of agroforestry based on fruit trees.

 

CULTURE AND ART

• As from 2022, a lower of income tax rate of 7.5% will apply to artists.

 

• €1M will be committed to provide for a guarantee for independent artistic activities to assist producers in recovering costs which are not recovered due to unforeseen circumstances

 

• €2M for events when seats cannot be sold due to the new COVID restrictions on such events

 

• €2M for a Malta Arts Council scheme to assist independent artistic projects