Income and Other Taxes

Exemption on pension income

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

Couples receiving a pension and opting for a joint computation will be entitled to a further €3,600 tax-free amount in respect of income from other sources.

Tax-free pension income

To encourage pensioners to continue working beyond retirement age, over a period of 5 years starting from 2022, pension income will gradually not be considered as part of the taxable income. This is particularly relevant for pensioners earning additional income on top of the pension.

50% reduction in taxes due on transfers of certain rented properties

A 50% reduction in the taxes applicable on transfers of property (up to the first €200,000) will apply when the property has been leased for a period of not less than 10 years to a person paying subsidised rent under any scheme administered by the Housing Authority. 

No taxes will be due if such property is transferred to the tenant. A 50% reduction in taxes on transfers of property may also apply when such transferred property is leased (under a subsidised rent scheme) for a period of more than 3 years and less than 10 years.

Reduction in income tax rate applicable to overtime income

As from next year, qualifying overtime income up to an amount of €10,000 may be subject to income tax at the reduced rate of 15% (to the extent that the annual basic salary does not exceed €20,000 and provided that the employee is not in a managerial position).

Reduced tax rate on part-time income

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

Increase in tax refund to individuals

The tax refund paid in the past years will be paid again to individuals earning less than €60,000. The refund will increase, and vary between €45 and €140 (as set out in the table below), depending on the level of income and the tax status of the individual, with the lowest income-earners eligible for the highest tax refund.

Tax incentives upon the transfer of family businesses

The reduced duty rate of 1.5% applicable to certain intra-family donations of family businesses has been extended once again.

Capital allowances may be transferred intra-group

In terms of a temporary scheme, a company having unabsorbed capital allowances in 2020 and 2021, due to losses suffered as a result of the pandemic, may apply for such capital allowances to be transferred to another group company which derived chargeable income during 2021.

Tax benefit on Malta Enterprise scheme

Malta Enterprise will introduce a scheme where a tax benefit will be given to businesses which reinvest a percentage of their profits in the same or another business as long as the investment is made within two years from 1 January 2022. 

Remission of interest on overdue tax

Requests for a remission of interest on overdue tax will only be considered if the CfR is satisfied that the tax due was not paid within the prescribed period due to a reasonable cause.

As from 1 June 2022, the interest rate on outstanding income tax and VAT balances will increase to 7.2% per annum.

No income tax and stamp duty on transfers of vacant property, 'UCA' property and property with traditional Maltese features

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.

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

First time buyers of the properties referred to above, will also receive a grant amounting to €15,000. Such grant will be increased to €30,000 for property situated in Gozo.

These incentives will enter into force as from 12 October 2021 and will be applicable for a period of 3 years.

In addition, anyone acquiring or already in possession of any of the properties referred to above, will be eligible for a refund of VAT amounting to a maximum of €54,000 on the first €300,000 of expenses incurred in the restoration or improvement of the property. This refund is also applicable to persons who have already acquired property and are in the process of carrying out the said restoration or improvement works.

A number of anti-abuse measures will be introduced in respect of this scheme.

The stamp duty reduction schemes applicable to first time buyers, second time buyers and property acquisitions in Gozo will be extended for a further year.

Culture and Art

A number of measures will be introduced for artists, producers and promoters of art, culture and entertainment activities including:

• a lower income tax rate of 7.5% will apply to artists, as from 2022. A mechanism will be introduced to calculate the income of artists over an average period of 3 years;
• an amount of €1m will be committed to provide for a guarantee for independent artistic activities in order to assist producers and promoters in recovering costs which would otherwise not have been recovered due to unforeseen circumstances;
• a further amount of €2m for events when seats cannot be sold due to the introduction of any new restrictions on such events; and
• an amount of €2m for a scheme to be administered by the Malta Arts Council to assist independent artistic projects.