Anyone can be at risk of a tax audit, and being prepared is crucial. Tax audits can be daunting, requiring significant time and resources to gather necessary documentation and respond to inquiries. The fear of potential penalties or adjustments to tax liabilities adds to the anxiety. Ensuring good practices focused on...
The EU Pay Transparency Directive (Directive (EU) 2023/970) aims to ensure equal pay for equal work or work of equal value between genders across the EU by implementing measures of transparency related to remuneration and other benefits. The Directive, expected to be transposed into local legislation by June 2026,...
In December 2024, the FIAU issued revised IPs for CASPs, aligning the local AML/CFT framework with EU legislation. The inclusion of new risk factors, improved procedures and revised guidelines highlights the need for CASPs to implement a robust AML/CFT framework.
The Invest Scheme, launched in 2024, provides financial aid in the form of tax credits, cash grants, loan interest rate subsidies, and loan guarantees to businesses engaged in qualifying activities such as manufacturing, hotels, pharmaceuticals, computer programming, and data hosting. The aid is available for initial...
On February 26, 2025, the European Commission (EC) introduced a series of proposals aimed at simplifying European Union (EU) regulations, enhancing competitiveness, and unlocking additional investment capacity. Among these proposals, the Carbon Border Adjustment Mechanism (CBAM) is a key initiative designed to...
Effective retirement planning is essential for ensuring long-term financial security. Yet, many individuals in Malta continue to rely exclusively on the Government pension, assuming it will be sufficient to cover their needs. However, given the potential challenges posed by rising living costs, inflation and increased...
Amount B is a concept introduced by the OECD as part of its ongoing efforts to simplify and standardize transfer pricing rules, particularly for low-value-adding intra-group services. The primary objective of Amount B is to provide a fixed return for certain routine distribution activities. The simplified and...
On 14 February 2025, the Malta Tax and Customs Administration (MTCA) released the "Beneficial Loan Arrangements - Guideline for the purposes of rules 26 and 27 of the Fringe Benefits Rules" (FBR). This Guideline impacts qualifying employers, primarily Maltese licensed banks and authorised financial institutions, by...
The European Union (EU) has established mechanisms for exchanging tax-related information among member states to enhance transparency and combat tax evasion. The Directive on Administrative Cooperation (DAC), first introduced as Council Directive 2011/16/EU and subsequently updated seven times (the most recent being ...
A brief overview of the main updates and adjustments in relation to payroll, employment & related matters, including COLA, Minimum Wage, various Leave Entitlements, Tax Rates and Social Security Contributions for 2025, is set out below.
The Malta Financial Services Authority (MFSA) has issued amendments to the Prevention of Financial Markets Abuse Rules, raising the notification threshold for persons discharging managerial responsibilities (PDMRs) from €5,000 to €10,000. These changes, effective from 4 December 2024, aim to align with the Market Abuse...
The Court of Justice of the European Union (CJEU) has clarified the conditions under which an importer can deduct input VAT. The ruling in the case of Weindel Logistik Service (C-621/19) specifies that an importer may only deduct input VAT if: they bear the cost of importation, have the right to dispose of the...
In the context of Transfer Pricing, the purpose of a benchmarking study is to identify whether the tested related party transactions comply with the arm's length principle by identifying and using sources of comparable information about companies, prices and margins. In this short read we discuss what are the main...
The Digital Operational Resilience Act (DORA) will apply from 17 January 2025, requiring financial entities to address regulatory requirements related to ICT third-party service providers. This includes managing third-party risks, maintaining a detailed register of information, and including specific clauses in...
As the year ends, there are critical tasks that HR professionals need to focus on, including payroll accuracy, compliance with tax and employment laws, and renewals of necessary documentation. A proactive approach is crucial in ensuring operational success and employee satisfaction.
The voluntary dissolution of a Malta company is a significant legal process requiring careful consideration and compliance. It involves preparing legal documents, including a declaration of solvency. A vigilant liquidator ensures a smooth and lawful process, safeguarding all parties' interests and preventing legal and...
Malta’s Protected Cell Company (PCC) structure allows aviation businesses to segregate assets and liabilities, enhancing security and flexibility. Each cell operates independently, enabling risk mitigation in aircraft leasing, ownership, and financing. Malta’s EU membership, favourable tax regime, and strategic...
The CJEU ruled in Case C-73/23 that EU Member States can apply different VAT treatments to different gambling services. Based on fiscal neutrality principles, this decision distinguishes between online and physical lottery gambling, noting that variations in consumer needs justify different tax treatments.
Under Maltese law, companies must comply with the Companies Act by maintaining records, submitting annual returns, and providing up-to-date beneficial ownership information. Directors are responsible for accurate financial statements. Non-compliance can result in penalties, restrictions on directors, and reputational...
Under Article 163 of the Companies Act, companies must maintain accounting records and submit annual accounts to the Malta Business Registry. Private companies have 10 months, and public companies have 7 months, to approve accounts post-accounting period. After approval, they have 42 days to file. Missing deadlines...
The Malta Tax and Customs Administration (MTCA) issued Guidelines concerning the application of Article 6 of the Maltese Income Tax Act (ITA). The Guidelines do not set out any changes to the qualifying conditions or the tax benefits granted under this Article.
Malta's fiscal consolidation regime allows corporate groups to be treated as single taxpayers, simplifying tax reporting and improving cash flow management. Eligibility requires a parent company to hold at least a 95% shareholding in subsidiaries. Key considerations include registration timing, tax-sharing agreements,...
The EU AI Act, effective January 2025, sets stringent AI rules. To prepare, businesses should classify AI systems by risk, assess regulatory impact, implement a tailored governance framework, and develop training programs for AI literacy. Compliance with these steps ensures that businesses can innovate within...
Remote working is growing, raising social security considerations in Malta and beyond. Employers and employees must ensure compliance with relevant social security regulations and contributions. The applicable laws can depend on various factors, including work duration and bilateral agreements. Malta's EU Framework...
The EU's Public CbCR Directive, effective in Malta from June 2024, requires MNEs with annual revenues over €750m to disclose tax-related information publicly. This includes taxes paid, profits, and employee numbers for each EU Member State. Exemptions and specific reporting obligations apply, with penalties for...
The Highly Qualified Persons Rules (HQPR) have been implemented to address the increased demand for highly skilled professionals in key sectors like financial services, gaming, and aviation, where local talent is insufficient. These rules aim to attract specialized individuals to bolster these vital sectors, offering a...
In July 2021, the EU presented a package (the Package) of legislative proposals to strengthen the EU’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) rules. The package consists of four legislative proposals.
The EU AI Act aims to regulate AI systems and General Purpose AI (GPAI) models across the EU, ensuring the protection of human rights, democracy, and environmental sustainability. Organisations must classify their roles and AI systems based on risk, complying with specific requirements. Businesses should educate...
Recently Malta Enterprise Corporation launched several incentive schemes to support start-ups, SMEs and large enterprises with funding for initial investment projects and other eligible expenditures.
Malta's Transfer Pricing Guidelines, issued in January, simplify pricing for low-value-adding intra-group services, aligning with OECD and EU standards. These services are supportive but not core to the group's business, encompassing routine financial, HR, administrative, and IT tasks. The simplified pricing method...
Outsourcing accounting functions offers businesses expertise, technology access, and cost savings. It lets companies focus on core objectives and adapt to market changes swiftly. By streamlining operations and relying on external professionals, businesses achieve efficiency and competitiveness in a dynamic market,...
Malta Enterprise has recently launched a new incentive scheme, the Green Mobility Scheme, intending to encourage and incentivise businesses to invest in sustainable transportation and the relevant infrastructure.
In today's job market, a robust pension scheme is key to retaining talent, offering security and attracting employees. Tax benefits under Maltese law further incentivise employers, who receive a 25% tax credit on contributions, up to €750 per employee annually. Employees enjoy tax-free contributions and investment...
Malta Enterprise re-launched the MicroInvest scheme for eligible businesses with up to 50 full-time employees and turnover under €10 million in 2023. It offers tax credits up to €50,000 or €70,000, depending on criteria met. Transport Malta also reintroduced grants for green transport initiatives. PwC Malta's...
On 18 November 2022, Transfer Pricing Rules (the Rules) were introduced in Malta. Initially, the Rules will apply in relation to any arrangement entered into on or after 1 January 2024 and arrangements entered into before that date that are materially altered on or after that date. As from 1 January 2027,...
The Malta Financial Services Authority (MFSA) has updated the 2021 Company Service Providers Rulebook (the Rulebook) to simplify the regulatory submission process for licensed CSPs, effective from 23 January 2024. The changes will impact regulatory submissions due in 2024 and beyond. The updated Rulebook is available...
The Malta Tax & Customs Administration has updated the Transfer Pricing Rules (TP Rules) with a sunset clause, making all agreements, regardless of when they were entered into, in scope from 1 January 2027. The TP Rules precede the Notional Interest Deduction (NID) Rules, and the guidelines provide insight into...
Addressing new cybersecurity mandates in Europe is critical for organisations. The NIS2 and CER Directives expand accountability for diverse service providers, necessitating compliance efforts similar to GDPR standards. The CER complements NIS2 by focusing on safeguarding critical infrastructures from physical threats....
The Tax and Customs Commissioner issued a clarification on FATCA and CRS guidelines, focusing on passive income definition for insurance companies. They emphasize determining income derivation and regulatory capital thresholds. PwC offers support for upcoming reporting deadlines with tools and assistance tailored to...
The Carbon Border Adjustment Mechanism (“CBAM”), currently applying to importers of mineral products (cement), electricity, fertilisers, iron and steel, aluminum and hydrogen from outside of the EU, came into effect from 1 October 2023. Further information may be found here.
Transport Malta has announced a new grant scheme with a total budget of €15,000,000 to encourage the purchase of new electric vehicles that fall within the following categories
In January 2024, the Malta Enterprise Corporation launched a number of schemes to assist start-ups, SMEs and large enterprises covering several eligible costs, including, capital investments and certain training costs.
The EU's Digital Services Act (DSA) becomes fully applicable on 17 February 2024, affecting entities like cloud service providers and online marketplaces. PwC Malta highlights key challenges, including designating a point of contact, updating terms and conditions, addressing content moderation, protecting minors, and...
On 13 December 2023, the European Commission issued revised De Minimis Aid Regulations (Regulations) which are applicable from 1 January 2024 until 31 December 2030. These revisions have brought about some positive changes that aim to adapt the rules more to the current economic reality faced by businesses, such as...
A brief overview of the main updates and adjustments in relation to payroll, employment & related matters, including COLA, Minimum Wage, various Leave Entitlements, Tax Rates and Social Security Contributions for 2024, is set out below.
The 2021 Nomad Residence Permit in Malta targets Third Country Nationals and families for employment. A recent Legal Notice clarifies tax treatment, featuring a 10% flat rate on authorized work income. Notable points include a 12-month tax liability grace period and considerations for non-domiciled residents,...
The EU has adopted the 'DAC 8' directive to enhance tax transparency in crypto-asset transactions. It expands reporting obligations for crypto service providers, covering various assets and income categories.
Amid the evolving global economy, Transfer Pricing is critical for companies in cross-border dealings. Malta's new rules, effective from 2024, intensify the need for Maltese entities to manage transfer pricing risks. PwC offers Transfer Pricing health checks, crucial for compliance, agreement updates, documentation...
Training is often viewed as a cost rather than an investment, leading to overlooked workforce development. Tailored training programmes, addressing soft skills and technical knowledge, prove crucial. Regulatory training should go beyond reciting legal text, enabling implementation. PwC offers customised training...
The relaunched Skills Development Scheme focuses on enhancing employee skills, including communication, digital, and ESG practices. Support is available to registered undertakings based on size. Start-up incentives are available until 31 October 2023. Important reminders include the Smart and Sustainable Investment...
The MFSA issued a Guidance Note on 4 October 2023 providing Corporate Service Providers (CSPs) with insight on the Authority’s expectations in fulfilling post-authorisation requirements imposed as part of the new CSP authorisation process which came in force on 16 March 2021.
Dismissing the assumption that Tax Authorities lack access to foreign-held information is a risky strategy. Global governments are increasingly using information exchange tools to combat tax evasion. The Maltese government is actively participating in this effort. Non-compliance can result in severe penalties,...
There have been pivotal stages in M&A negotiations, focusing on aligning pricing mechanisms with stakeholder interests. Examine Closing Accounts and Locked Box mechanisms, evaluating their merits and drawbacks. Delve into the role of business valuation, distinguishing between enterprise and equity value, and consider...
The EU Commission's recent adequacy decision on the EU-US Data Privacy Framework has major implications for data transfers. While it offers economic opportunities, it demands rigorous compliance, particularly for US businesses previously under the Privacy Shield. Key considerations include data transfer mapping,...
Country-by-Country Reporting (CbCR) mandates Multinational Enterprises (MNEs) with over €750m in revenue to disclose operational and financial data in various jurisdictions to tax authorities. The primary aim is to prevent tax avoidance and ensure taxation aligns with economic activities. The regulations specify which...
The European Commission has proposed sweeping reforms to the EU customs environment, aiming to modernise and streamline operations. Key changes include establishing an EU Customs Authority and Data Hub for unified risk analysis, creating a Trust and Check status for trusted traders, altering e-commerce duty processes,...
Malta supports family businesses through various incentive schemes. The Family Business Grant Scheme aids transition by offering up to €15,000 for advisory and mediation services over three years. Advisory services grant covers 50% of costs, up to €2,000, for creating succession plans. Mediation services support costs...
Immovable property transfers are typically subject to an 8% withholding tax, but exceptions apply. Duty on Documents and Transfers is generally 5%, but exceptions include reduced rates for sole residences, first-time buyers, and property in Gozo. New tax benefits are also provided for specific property types. Main...
Amidst the aftermath of the COVID-19 pandemic, manufacturers worldwide have recognised the significance of agile and resilient supply chains. Embracing digital technologies and innovations has become essential to ensure growth, efficiency, competitiveness, cybersecurity, and sustainability. The PwC network's survey on...
A Transfer Pricing (TP) adjustment, solely for direct tax purposes, is not expected to impact the value of the supply for VAT purposes, since the TP Rules specifically apply to income tax matters and VAT is excluded from the purport of the said Rules. However, taxpayers should not lose sight of the potential VAT...
The European Parliament has recently adopted several key pieces of legislation that are part of the Fit for 55 package, which represents the EU’s plan to reduce greenhouse gas (GHG) emissions within the EU bloc by at least 55% by 2030 when compared to 1990 levels. One key development is the inclusion of the maritime...
On 16 May, the Council of the European Union held an Economic and Financial Affairs Council meeting where the EU finance ministers reached a political agreement on the compromise text for the Directive on Administrative Cooperation implementing the Organisation for Economic Co-operation and Development's rules on...
Digital transformation is reshaping the way business is conducted faster than ever before. Traditional business models are being impacted and businesses that don’t adopt technological transformations and automate their processes are unlikely to be able to compete effectively with those that have embraced such...
Social security contributions, as a general rule, should be due in the country in which one carries out their employment activity. In those instances where it’s difficult to establish where this activity is being carried out, one may need to refer to EU regulations to determine the country in which social security...
In the fast-paced realm of mergers & acquisitions (M&A), one crucial practice stands out as a beacon of success - due diligence exercises. The significance of these exercises cannot be overstated, as they not only increase the chances of a transaction’s success but also equip the parties with informed perspectives,...
Succession planning within family businesses is key to ensure continuity and that the entity has the right leaders in place to enable the business to be resilient in the face of changing business conditions.
Council Directive (EU) 2021/514 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC 7) extends the EU tax transparency rules to digital platforms and introduces an obligation on “reporting platform operators” to collect, verify and report specific information with respect to...
The European Parliament has recently adopted several key pieces of legislation that are part of its Fit for 55 Package, which is its plan to reduce greenhouse gas (GHG) emissions within the EU bloc by at least 55% by 2030 when compared to 1990 levels. One such key development is the Carbon Border Adjustment Mechanism...
Organisations are increasing their Environmental, Social and Governance (ESG) efforts in response to public awareness over a wide range of issues such as the impact of climate change, supply chain labour standards, access to finance, corporate governance and board diversity.
Entry in Declarant’s Records (EIDR) is one of the simplified procedures introduced in the Union Customs Code (UCC) and refers to the process of recording the details of goods which are being imported or exported through the EU customs territory.
On 9 March 2023, the European Commission endorsed amendments to the General Block Exemption Regulations (GBER) that incorporate measures to make it easier, simpler and quicker for Member States to grant support to key sectors for green and digital transitions in line with the European Green Deal. The European Green...
The pressure on employers to recruit and retain individuals with the necessary skill set continued to sustain the significant increase in remote working originally brought about by the pandemic.
Transport Malta has recently re-issued a number of incentive schemes aimed at improving the sustainability and accessibility of road transport. The schemes are available until 31 December 2023 unless modified or terminated through the full use of the respective allocated budget before such date.
The EU list of non-cooperative jurisdictions for tax purposes is part of the EU’s work to fight tax evasion and avoidance. It is composed of countries which have failed to fulfil their commitments to comply with tax good governance criteria within a specific timeframe, and countries which have refused to do so.
Despite the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines (TPG) and the arm’s length principle being accepted by the majority of the countries, tax authorities may still apply the OECD TPG differently. This often leaves MNEs trying to avoid double taxation as a result of the...
As already explored in our previous Short Read entitled Mergers & Acquisitions: The 5 stages of an M&A transaction, there are a number of steps to consider when dealing with transactions relating to a merger or acquisition of a business or part of a business. One of the major factors to consider is whether the business...
New Incentive Scheme: “Support for Reducing the Environmental Impact of Construction Activities” A recent scheme launched by the Malta Enterprise Corporation (MEC) aims to support businesses (limited liability companies, partnerships and self-employed persons) engaged in construction activities to make investments...
Capital gains arising from transfers of shares which are listed on the Malta Stock Exchange, are exempt from income tax and duty in Malta. With effect from 1 January 2022, various provisions of the Income Tax Act referring to a ‘Stock Exchange’ have been widened.
A brief overview of the main updates and adjustments in relation to payroll, employment & related services, including COLA, Minimum Wage, various Leave Entitlements, Tax Rates and Social Security Contributions for 2023, is set out below.
The end of November saw the adoption of a directive by the European Parliament that seeks to promote gender equality by introducing gender representation quotas for the Boards of listed companies, known as the ‘Women on Boards’ Directive.
It is undeniable that the world of technology is moving at such a fast-tracked pace, that criminals are always finding innovative ways to avoid detection when carrying out illicit activities and transactions.
Transfer pricing rules (the Rules) have been introduced in Malta through Legal Notice 284 of 2022 published on 18 November 2022. The Rules are based on the draft rules that were included in the document issued for public consultation by the Commissioner for Revenue (CfR) in December 2021.
Council Directive (EU) 2021/514 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC 7) extends the EU tax transparency rules to digital platforms and introduces an obligation on “reporting platform operators” to collect, verify and report specific information with respect to...
Malta has introduced new rules that recognise the importance of attracting new talent and highly innovative startups from around the world and launched the Startup Residence Programme. The aim of the programme is to support third-country national entrepreneurs and their family members and give them the opportunity to...
Mergers and acquisitions (M&A) transactions are never the same. More complicated transactions tend to take on different structures depending on a number of factors, varying from, among other things - the size of the transaction; any international elements; employees the target company might have; competition matters;...
Following the enactment of Act No. LX of 2021 on 26 October 2021, the Malta Business Registry has issued a notice for companies requesting them to provide an adequate email address that is accessible to all the company's officials by 30 September 2022. This email address will be used for all official electronic...
Below is a summary of new incentive schemes that have been introduced or updates made to existing schemes, and other relevant developments over the last months.
ESG (Environmental, Social, and Governance) compliance is becoming an increasingly complex and challenging regulatory environment for entities to navigate into since the regulatory landscape needs to adapt to the effects of global warming, constitutional rights, social responsibility and environmental crimes.
On 2 June 2022, the Malta Financial Services Authority (MFSA) published the Prevention of Financial Markets Abuse Rules in terms of the Prevention of Financial Markets Abuse Act (Cap. 476 of the Laws of Malta). The Rules have superseded the Prevention of Financial Markets Abuse Guidance Notes, which have therefore...
The General Data Protection Regulation (GDPR) has now been in force for four years. As is the case with any other regulation, the level of regulatory risk is linked to its enforcement in practice.
Restructuring usually involves changing an organisational set-up or business model. This requires proper documentation and might induce changes to the Transfer Pricing (TP) model, require compensation and/or trigger exit tax. Such TP and related implications must be assessed early in the process in order to avoid...
Various amendments to the rules and other relevant subsidiary legislation have continued to enhance the tax benefits attached to pension schemes and make them more appealing. The latest of such amendments, Legal Notice 98 of 2022, Pensions (Tax Exemption) Rules, can indeed be a game changer in this regard.
Cash is particularly susceptible to misuse for money laundering and funding of terrorism (ML/FT) purposes. Credit institutions have always been exposed to the risks presented by cash since they are the main entry point through which cash can be introduced into the financial system and subsequently transferred to third...
It is no secret that Malta’s state pension system can no longer be considered as the only source of pension income in the future for the workers of today. It is not a sustainable pension system and it is now more apt than ever to start considering other options.
Malta Enterprise Corporation has recently issued guidelines for a new incentive scheme catering for changes in State Aid rules brought about by the European Commission’s adoption, during 2021, of revised Regional Aid Guidelines for 2022-2027. Similar to its predecessor scheme (the Investment Aid Scheme), the new...
The EU Directive No. 2019/2121 (New Directive) amended the Directive (EU) 2017/1132 (2017 Directive) as regards cross-border conversions, mergers and divisions, was published on 12 December 2019. It is set to be transposed into national law by the Member States by 31 January 2023. This New Directive is part of the...
On 16 May 2022, PwC’s Data Protection & Technology team organised a panel discussion which saw the Information and Data Protection Commissioner and members from the PwC team discuss a number of aspects pertaining to the lifecycle of personal data from a practical and pragmatic view point.
Fuelled by substantial listing activity during the past few months, the MFSA has continued its efforts to create a robust and dynamic capital markets framework with the establishment of the Capital Markets Supervision Function as of 1 May 2022.
There are no sophisticated TP rules in Malta, so far, but a number of other jurisdictions have TP rules in place and are increasingly becoming more active in respect of TP matters.
The international community has set an ambitious agenda in the fight against climate change. The UN 2030 Agenda for Sustainable Development and the EU’s Green Deal are the key strategic frameworks for the transformation of Europe into a climate-neutral continent. The need to meet the challenges is urgent. With a...
