Malta Budget 2024 – Highlights

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The Budget for the 2024 legislature was presented to the Maltese Parliament on the 30th of October 2023, against a backdrop of momentous global economic influences...

Malta Tax

Overview

The Budget for the 2024 legislature was presented to the Maltese Parliament on the 30^th of October 2023, against a backdrop of momentous global economic influences, including the upheaval being caused by the Russia-Ukraine war, the recessions being experienced by a number of European states, as well as the unprecedentedly high inflation rates.

Despite the Malta's high inflation rate, various measures are also being implemented to counteract the effects of the rising cost of living particularly felt by those who are most vulnerable, such as pensioners and low-income families. This is evidenced through the minimum wage raise, increases in pensions and children's allowance.

High on Government's agenda is the prioritised action against climate change, with the aim of reaching climate neutrality by 2050. This will be achieved through fostering sustainable investment in Maltese businesses, guaranteeing a concrete commitment to green infrastructure, increasing waste and energy security and diversification in Malta, and allocating larger sums of money to cleaner transport and renewable energy sources. The Climate Action Authority is being established to work towards attaining this goal.

For another year running, no new taxes were introduced.

Economic Performance

Gross Domestic Product	GDP growth of 4.2% of GDP in real terms in 2024, driven primarily by domestic demand.
Inflation	The annual inflation rate for 2023 is anticipated at 5.7%, which is however expected to ease at 3.7% in 2024
Unemployment	The unemployment rate is expected to remain steady at 2.7% throughout 2024.
Government Debt	4.5% deficit of GDP is expected for 2024, a slight decline from the 5.0% deficit expected to be registered for 2023. The debt-to-GDP ratio is expected to amount to 52.8% for 2023, increasing to 55.3% in 2024.
Cost of Living Increase (COLA)	COLA will be increased by €12.81 per week in 2024, and is applicable to employees, pensioners and individuals receiving social benefits.

Personal Income Tax Measures

Workers are set to continue benefitting from the extended tax refund scheme featuring payments between €60 and €140 to be made to recipients based on their income.
Aimed at encouraging pensioners to continue working beyond retirement age, the tax-free bracket for pension income is being increased from 40% to 60%.
Any widow/er below the age of 61 receiving a pension shall be exempt from paying income tax on such pension income with effect from 1^st January 2024.
With effect from 2024, the tax credit for parents with children with disabilities receiving qualifying therapy, will be increasing from €200 to €500.
Updates are in the pipeline to the scheme providing fiscal incentives to highly qualified persons, with a view of this being better aligned with Malta's economic development.
Extension of the reduced tax rate of 7.5% currently applicable to income derived by athletes, licenced coaches, to other persons engaged in sports activities.

VAT Measures

The VAT refund scheme on restoration works, which currently reimburses first-time buyers for the cost of construction, completion and any rehabilitation works, will be modified to address the anomaly in the system under which couples are presently eligible for a higher refund than single persons.
As is the case with income tax, certain VAT incentives will also be applicable to persons buying or selling property located in an urban conservation area or property which has been built for more than 20 years and has been vacant for a period of more than seven years. In this respect, such persons will also benefit from a VAT refund of a maximum of €54,000 on the first €300,000 restoration and renovation related expenses.

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