Malta: Malta Budget 2019

Last Updated: 14 November 2018
Article by Mamo TCV Advocates

Most Read Contributor in Malta, November 2018

Below are the salient points of the Malta Budget for 2019, which was presented to the House of Representatives by the Hon. Prof. Edward Scicluna, Minister of Finance, on 22 November 2018.

Economic Performance

  • Malta registered the highest fiscal surplus in the EU – Malta registered a surplus of €392.7 million, equivalent to 3.5% of GDP in 2017. Government debt has been reduced to 47% of GDP.
  • Economic growth – Malta registered an economic growth of 5.4% in the first 6 months of 2018.
  • Unemployment rate – Malta registered a record unemployment rate of 3.8%.
  • Cost of living – The Minister announced that the cost of living allowance (COLA) is set to be €2.33 per week.

Tax

  • No new taxes were registered, be it direct or indirect taxes.
  • Tax refunds to employees earning less than €60,000 shall continue to be granted in 2019.
  • Single taxpayers earning part-time income ranging between €9,100 and the minimum wage shall not be subject to tax.
  • Tax deductions given to parents of children attending private schools shall be increased by €300.
  • Voluntary Organisations whose income does not exceed €10,000 shall be exempt from tax.
  • Fiscal incentives shall be given to entities operating in the film industry.
  • VAT refunds of up to €70 shall be given for the installation and use of domestic reverse osmosis systems.
  • The VAT rate for electronic books and musical instruments shall be reduced to 5%.
  • Purchasers of bicycles or electric-bicycles shall be eligible for a VAT refund.
  • Vehicle VAT refunds are to be concluded with the final tranche of payments for cars registered in 2008.
  • The reduced rate of stamp duty applicable to the transfer of shares in a family business from 2% to 1.5% shall be extended for a further year. For more information, please click here.

Pensions

  • An increase was granted in contributory and non-contributory pensions of €2.17 per week, over and above the COLA increase.
  • Non-taxable pension income shall increase to €13,434 to ensure that pension increases are not taxed.
  • Persons over 75 years of age still living at home shall continue to receive grant of €300 per year.
  • Bonds shall once again be issued for pensioners to emulate the Savings Bonds 62+.
  • Service pensions shall increase by €200, and the method in which they are calculated shall also change, leading to an increase of up to €11 per week.
  • Public sector workers shall be able to postpone retirement and benefit from an increased pension once they decide to retire.
  • The means test shall no longer be used for carers below the pensionable age who live with and care for an elderly person.
  • Persons caring for persons over 85 years of age shall be eligible for a carer's allowance, with no medical assessment needed.
  • Measures shall be introduced to enhance the Third Pillar Pension Scheme and the Voluntary Occupation Pension Scheme.

Property

  • The Parliamentary Secretariat for Social Accommodation has published a White Paper proposing the setting up of a new regulatory framework to reform the residential rental market in Malta. For more information, please click here.
  • The means test shall no longer be used to determine who has a right to affordable housing. There shall instead be two criteria for eligibility: the family's gross income and rental costs.
  • Landlords shall be offered fiscal incentives in return for providing affordable housing to tenants for a period of seven years.
  • An equity sharing scheme is to be introduced in terms of which, persons over 40 years of age that purchase a residential home, paying 50% themselves and paying the remaining balance with a bank loan, shall be subsidised by the Government and not pay interest on their loans.
  • Social housing is to be bolstered, with the conversion of dilapidated properties into social housing.
  • All previous property incentive schemes related to first-time buyers, second-time buyers, properties in Urban Conservation Areas, property restoration and purchasing property in Gozo shall all be extended for a further year.
  • Should you require further information, please do not hesitate to contact our Real Estate Team.

BANKING & FINANCE

  • Malta is strengthening its anti-money laundering strategy, by increasing transparency and accountability, strengthening its regulatory base, finalising its national risk assessment plan and setting up a national coordinating committee.
  • The Malta Development Bank is to offer new schemes and facilities to provide investment opportunities to SMEs and infrastructure projects. The Bank is to launch a financial instrument in collaboration with a commercial bank and the Family Business Office to facilitate the transfer of family businesses.
  • The Malta Stock Exchange has launched a programme called the FinTech Accelerator to assist companies starting operations in the FinTech sector. Plans have been put in place to allow for financial instruments known as Real Estate Investment Trusts (REITS) to be traded on the Exchange.
  • For more information, please do not hesitate to contact our Banking & Finance Team.

FinTech

  • Malta has promulgated a number of new crypto laws, namely the Virtual Financial Asset Act, the Malta Digital Innovation Authority ("MDIA") Act and the Innovative Technology Arrangements and Services Act, making Malta one of the first jurisdictions in the world to regulate this innovative technology sector.
  • Malta also has plans to lay down a regulatory framework in artificial intelligence and the internet of things.
  • The Malta Communications Authority is launching a feasibility study identifying interest and the application of 5G technology.
  • A new entity, called Tech.MT, shall focus on marketing Malta as a hub for the digital economy and disruptive technologies, such as blockchain.
  • Should you require further information, please do not hesitate to contact our FinTech Team.

iGaming

  • A new Gaming Act has been promulgated, amassing all gaming laws and regulations in Malta under a single Act. Click here for more information.
  • Incentives are to be introduced encouraging eSports companies to establish themselves in Malta.
  • Should you require further information, please do not hesitate to contact our Gaming Team.

BREXIT

  • Malta Enterprise is to launch a business advisory service intended to assist Maltese SMEs whose business depends on the UK market.
  • Plans have been put in place to attract investment to Malta once Brexit is concluded.

Start-ups

  • The Seed Investment Scheme, which promotes start-up growth, is to be extended.
  • A start-up visa scheme is to be introduced to encourage foreign start-ups to establish themselves in Malta.
  • A co-working space scheme is to be launched as an accelerator program in partnership with an international entity.

AVIATION

  • Air Malta, the national airline, is expected to announce financial results that show the national airline is breaking even.
  • The National Aviation Policy is to be updated to include a Master Plan for the Malta Airport.
  • Work is to commence on the construction of an Air Traffic Control Centre to service the needs of the sector for the next fifty years.
  • Should you require further information, please do not hesitate to contact our Aviation Team.

Justice

  • Plans have been put in place to increase parliamentary and court autonomy.
  • Improvements shall be made to the Court's internal IT systems and online systems.
  • Improvements shall also be made to the legal aid system.

Citizenship

  • The Malta Individual Investor Programme and the Malta Residency and Visa Programmes have once again been extended.
  • Should you require further information, please do not hesitate to contact our Immigration Team.

Other Measures

  • A beverage refund scheme is to be introduced allowing for the operation of a deposit and recovery scheme for beverage containers in Malta.
  • Plans are in the pipeline to establish public-private partnerships which turn private lots into public car parks.
  • A Public Procurement Agency shall be set up to monitor all types of government contracts or concessions.
  • One additional day of vocational leave shall be granted to all workers in order to compensate for public holidays falling on a weekend.
  • Further investment in road Infrastructure has been made and €100m has been set aside for 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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