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MALTA BUDGET 2021 HIGHLIGHTS

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MALTA-BUDGET-2021-HIGHLIGHTSSOCIAL MEASURES

Cost of living allowance

The cost of living adjustment for year 2021 will be €1.75. The increase reflects the low inflation experienced throughout the past 12 months. The COLA will be granted to all employees, pensioners and individuals who are on social benefits.

Students' stipends will increase pro-rata.

Employee’s leave and public holidays

An additional day of leave for 2021 will be granted as compensation for public holidays falling on weekends.

Better childcare allowance

Additional supplement will be granted to every child born. A supplement of €70 per child, will be given annually to families whose income does not exceed €25,318.

Others will be granted an annual supplement of €50 per child.

Foster care allowance

Increase in foster care allowance as from January 2021 of €520, amounting to a total of €5,720 per year.

Incentivising local adoption

Maximum of €1,000 in allowance will be granted to couples who adopt children from Malta as from next year.

Increase in aid supplements

Maximum of €108 in aid supplement to couples and individuals with low income and who live alone.

Additional payment of €150 to individuals who are 65 years old or above and who benefit from the Aid Supplement.

Civil union and cohabitation

Amendment in the definition of the term “widow” in the local Social Security legislation so that in cases of death, persons who are in a civil union or a registered cohabitation are recognised as a widow of their partner.

Amendment will also cater for those circumstances where due to the death of one of the parties outside marriage or civil union, the cohabitation was not contracted or registered in time. 

Increase of carer at home scheme rate 

The Carer at Home Scheme provides a flat subsidy to the elderly who employ home carers. In 2021 Budget the rate has been increased from €5,291 to €6,000.

Expanding carers benefits

Retired persons will now be able to benefit from the Increased Carers Allowance and the Carers Allowance – an allowance for persons who take care of a disabled relative, provided that the person under care is not a spouse and that the carer undergoes periodical fitness assessment.

Introducing carer grant 

Budget 2021 introduces new grant of €300 per year for parents who must leave work to take care of a disabled child over the age of 16

Homeowner assistance and rent subsidies

Equity Sharing Scheme will be extended to persons under 40 years of age allowing the purchase of residential property at half the price with the other being paid by the Housing Authority. Rent benefits and social housing benefits will continue. Equity Release Scheme which will allow middle-age homeworkers to access cash backed by their property has been announced and will be offered by the market after all the regulations and laws will be in place. New scheme will be announced to help families fix planning contractual mismatches for their residences and garages which make it impossible to transfer those properties at a later stage.

 

COVID 19

Stimulation of economic activity

New €100 vouchers will be distributed to everyone who reaches 16 years of age by end of 2020, €60 of which can be used in accommodation, hotels and restaurants, while the remaining €40 can be used on retail and other services.

Work-in benefits

Eligibility thresholds will be extended so that more families can benefit from the in-work supplement.

Where both parents work, the threshold will increase to €35,000.

For single parents who work, the threshold will increase to €23,000.

Where only one parent works, the threshold will increase to €26,000

Extension of the COVID-19 Wage Supplement and the Economic Regeneration Plan

The COVID-19 Wage Supplement and the Economic Regeneration Plan will be extended until the end of March 2021

 

REAL ESTATE

Extension of existing incentive schemes on the purchase and sale of real estate

The existing incentive schemes such as those for first and second time buyers, purchase of vacant property in Gozo and refund on expenses incurred on restoration work will continue. 

First time buyers will now benefit from an exemption from duty tax on the the first €200,000 of the value of the property.

New reduced transfer duty tax of 3.5% which will apply on the first €200,000 of the value of a newly-purchased residential property, even if the purchaser already benefited from first buyer scheme or already lives in a property left by inheritance.

As part of the Economic Regeneration Plan the reduced transfer duty of 1.5% on the first € 400,000 of the value and the 5% capital gains tax on transfer value will continue to apply for promise of sale agreements (konvenji) registered until 31 March 31 2021 and final deeds concluded by 31 December 31 2021.

Increase of transfer duty exemption on donated property

When parents donate residential property to their children the first €250,000 of the value will be exempt from transfer duty – an increase by €50,000 from last year.

Remaining value will be subject to tax at 3.5%

Tax on transfer/assignment of rights

As from 1 January to 31 December 2021 the 15% final tax rate will be levied on entire amount of gains and profits derived from a transfer or assignment of rights over a promise of sale contract (konvenju).

 

TAX INCENTIVES

Increase in tax refund

More than 218,000 individuals will benefit from an increase in tax refund, which refund will amount to a maximum of €95. The highest amount will be granted to those who earn the lowest income

Family business transfer

The reduced transfer duty of 1.5% on transfers of family businesses between relatives will continue for another year.

Withholding tax on royalties from books

To incentivise writers, the royalties from the sales of books which have been authored or co-authored will benefit from a reduced final withholding tax of 15%.

Increase in the exempt VAT threshold

The VAT exempt threshold is being raised from the current €20,000 to €30,000.

The volunteer field

Registered Voluntary Organizations are exempt from paying tax on any profit made during the year if the annual income does not exceed €50,000.

BUSINESS INCENTIVES

Start-Ups

The government will continue to incentivise start-ups which want to operate in Europe, which will be supported by the government to develop the Maltese industry

Scheme for companies employing less than 50 employees

A Malta Enterprise scheme will be created for companies employing less than 50 employees to undertake innovation projects for a defined period of one year and will cover 50% of the costs up to a maximum of €200,000 per company.

The maximum cost may be increased with €35,000 if the company is in collaboration with research institutions (local or international).

New foreign investment schemes and other schemes

Malta Enterprise will continue to extend, strengthen and launch schemes, such as Micro Invest, the Business Development and Continuity Scheme, the Research and Development 2020 Scheme, R&D Feasibility Study Scheme and the Business Start scheme.

Malta Enterprise is also encouraging new companies to use new technologies, such as Internet of Things, facilitating loan and tax credit schemes for companies wishing to implement it.

 

PENSIONS

Increase in pensions

Increase of €3.25 weekly for pensioners in addition to the €1.75 COLA adjustment.

Adjustment in pension tax relief

Exemption from tax on pension income which amounts to less than €14,058.

Couples who are subject to the married tax rates will be exempt from tax on an additional €3,600.

Other benefits to the elderly

An increase of €50 in the annual bonus for persons aged 65 years or older, especially women, who were unemployed for several years and who are not eligible for a pension

Service pension

An additional €200 in service pension will not be considered for the assessment of social security pension, resulting in an exempt amount of €2,866 for year 2021.

Only 25% of the service pension will be calculated when computing the social security pension of persons who turn 72 years.

Continuance of government savings bonds for pensioners

The government will continue to issue Savings Bonds 62+ for the next year which produce higher interest rates than their commercial counterparts. According to the government approximately €400 million have already been invested into these types of bonds.

Improving tax incentives for private pensions

The amount of contributions to either a Third Pillar Pension (private pension) or Voluntary Occupational Pension (employer’s pension) that will be exempt from tax has been increased by €1,000 per year and now stands at €3,000 per year.

For married couples where only one person works the amount of exempted contributions to Third Pillar Pension is increased to €6,000 per year

ENVIRONMENT 

The single-use plastics measure

In the coming year the government will aim to reduce the use of single-use plastics.

The government will stop the importation of single-use plastics products from the 1st of January of next year.

In 2022, the sales of these products will cease.

Financial grant on scrapping of polluting vehicles

€1.5m will be allocated to vehicle scrapping schemes. The grant will vary depending on the emissions of the new vehicle.

Schemes that have been in place for scrapping vehicles that have been in circulation for more than a decade, and that are replaced by less polluting vehicles, will be awarded a grant that varies according to the level and category of the vehicle. The highest grant amounts to €7,000.

Private individuals, private companies and non-governmental organizations that are registered as such are eligible for these schemes.

Investments in alternative means of transport

The government will extend for another year the measures related to the purchase of electric vehicles.

The measures of non-registration tax and exemption from the payment of the annual road license for electric vehicles and electric vehicles plug- in will be extended for a period of 5 years from the date of first registration.

The special rate applicable to residential homes for individuals who have an electric vehicle and want to charge the battery at night will remain in place.

Other schemes

Schemes that offer a grant equivalent to a full refund of VAT on bicycles and electronic bicycles will be extended again. The same will apply to the scheme that incentivizes the purchase of motorcycles, scooters and bicycles assisted by an electric motor for a maximum of €400.

The grant for those who switch their vehicle to run on gas instead of petrol, will now rise to €400. In order to be eligible, the reduction of the CO2 emissions of said vehicle must be reduced by 25%.

This scheme will be extended to all passenger and freight transport vehicles and the grant in this case will amount to a maximum of €800.

The annual circulation license for motorcycles with a cubic capacity between 125cc and 250cc will be reduced from €65 to €25 upon renewal for another year.

All vehicles, including motorcycles, which are already registered with the Transport Authority, will be able to apply for their vehicle to be licensed for use on weekends and public holidays only. In this case, they will benefit from a reduction of 35% of the annual circulation license fee.

A budget will be allocated to new taxis by awarding them a grant of €10,000 upon registration of a new wheelchair accessible taxi vehicle (WAT).

Incentives for financing the Green Economy

Over the next year, the Malta Stock Exchange will introduce "Green Bonds." These bonds will be able to finance projects that promote renewable energy and reduce air pollution

 

GOZO

The Employment Refund Scheme will be extended. The Back to Office Employment Refund Scheme and the promotional support schemes for Gozitan enterprises operating especially in the digital innovation, internet technology and tourism sectors will be improved to achieve more positive results. More details will be announced at a later stage.

 

REFORMS TO STRENGTHEN THE GOVERNANCE 

Set up of a Cabinet Committee on Governance tasked with ensuring that Malta complies with the recommendations submitted by the Venice Commission, GRECO and Moneyval. Investment in the Asset Recovery Bureau through new technologies for the exchange, management and recovery of information and the construction of a specialised building for the preservation of confiscated assets.

 

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