Malta Budget 2025

Malta Budget key highlights

Key measures announced by the Minister for Finance and Employment in the budget speech for 2025 include:

COLA will amount to €5.24 per week

Continuation of derogation for Pillar 2

Increased deductions for private school fees

Additional €2 million to be allocated to support local film productions

Highly Qualified Persons Rules will be extended to back office services

Income tax exemption to increase to 80% of pension income

Obligation on employers to set up an occupational pension scheme

Grant for the acquisition of electric motor vehicles and motorcycles

Continuation of various fiscal benefits relating to immovable property

Various allowances and increases for families with special needs children

Extra year of paid NI required for those born after 1976

Increase in children’s allowance of €250 per child per year

6 month free gym membership for certain youths

Changes to the income tax bands resulting in tax savings of between €345 and €675

Extension of the 1.5% reduced stamp duty rate applicable to certain transfers of businesses to descendants

Explore the Key Measures

Performance of the Economy

The Maltese economy grew by 7.5% in 2023, driven by net exports, and is expected to continue its momentum with GDP growth projected at 4.9% in 2024 and 4.3% in 2025, mainly due to domestic consumption. The debt-to-GDP ratio is anticipated to be 49.5% in 2024, rising slightly to 50.1% in 2025, as the Government maintains energy support measures. The deficit is expected to be 4.0% of GDP in 2024, decreasing to 3.5% in 2025 and further to 2.6% by 2027. Inflation is projected to drop to 2.5% in 2024 from 5.7% in 2023, while unemployment is expected to remain stable at 3.5%. The economy is set to reach a GDP of €22.3bn in 2024, with Government revenue at €7.2bn and expenditure at €7.8bn. Government debt is projected to be €11.1bn in 2024, with interest payments increasing to €263mn. Employment is expected to grow by 4.6% in 2024.

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Explore the full analysis

Income & Other Taxes

The government has announced a widening of tax-free brackets for individuals using single, married, and parent computations, resulting in annual tax savings ranging from €345 to €675. Tax refunds of €60 to €140 will be paid again to individuals earning less than €60,000. Pension income will gradually be excluded from taxable income, with 80% of pension income not considered taxable for 2025. Increased pension benefits for those aged 61 and over, as well as for widowed individuals, will be tax-exempt. Parents with children in private schools will benefit from increased deductions against their chargeable income.

Malta continues to defer the implementation of the OECD's Pillar 2 initiative, which introduces a global minimum tax rate of 15% for large multinational enterprises. The reduced stamp duty rate of 1.5% for certain business transfers to descendants has been extended. The Highly Qualified Persons rules will be extended to entities providing back office services. Excise duty on certain beer and wine produced by small local producers will be reduced. The VAT rate for essential sanitary products and medical accessories for women will be reduced to 0%. The scheme providing a full VAT refund for bicycles and electric scooters, as well as grants for converting vehicles to run on gas, will be extended.

Learn more about Income & Other Taxes

Other Measures

The education, health and financial sectors will be prioritised to receive funding and support with forward looking legislative initiatives. Measures include increasing teachers’ salaries, reimbursing gym memberships and investing in more community health services. Focus will also shift to important industries (including aviation, fintech and AI), nascent industries (with proposed initiatives for startups) and the continued assistance in the restoration and acquisition of certain vacant properties for residential purposes.

Sustainability and the Environment

The Budget 2025 includes several sustainability and environment-related initiatives. Existing incentives for clean transport will be extended, and infrastructure projects such as the second interconnector and zones for offshore floating wind turbines and solar farms will continue. A national water irrigation management plan and a new bulky waste regeneration plant are being launched, along with plans for more public green spaces.

Assistance will continue for residences investing in renewable energy, and for large renewable energy installations in the private sector. Investments in free public transport services, including ferry services, will increase, and sustainable transport schemes will be extended.

A national strategy focusing on cycling and an intelligent traffic management system will be published. Further projects for the regeneration of public and green spaces are planned, and a new financial incentive will help reduce food waste. Waste management measures will transform organic waste into clean energy and soil additives, and a new plant will separate bulky refuse for recycling.

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At the back, from left to right:
Bernard Attard, David Ferry, Francesca Fenech, David Valenzia, Neville Gatt, Steve Gingell and Chris Mifsud Bonnici

In front, from left to right:
Mirko Rapa, Edward Attard, Stefan Diacono and Mark Lautier

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Previous editions of Malta Budgets

Visit the 2024 Malta Budget page or request a copy of any older edition of the Malta Budgets, published in previous years.