What incentive schemes are available to support start-ups?

Over the past years, Malta has established itself as an attractive European destination for new business activities, providing solid foundations for an attractive economic environment. The country is moving a step further to ensure that start-ups play an important role in the post-pandemic regeneration era and, indeed, there are currently already a good number of incentive schemes through which innovative start-ups can benefit from support of over €1 million.

Further support measures for start-ups were also announced during the Budget 2023 speech, so this is definitely an evolving context and something to watch out for in the coming year.

Business Development 2021 Scheme

The Business Development 2021 Scheme is intended to, amongst other things, facilitate value added projects that are expected to contribute to the regional development of Malta. Supported initiatives should lead to the development of new business opportunities, an increase in employment, and an increased market base or competitiveness.

The Malta Enterprise Corporation (MEC) may award tax credits or cash grants to undertakings that carry out a project aimed to expand their business operation or to consolidate their current operations. The aid shall be awarded to support eligible costs incurred, including payroll costs, rental costs, acquisition of tangible assets, and support and advisory costs amongst others, subject to various conditions and criteria.

This scheme primarily targets undertakings engaged in prescribed qualifying activities such as manufacturing, research & development activities, digitisation of processes and the development of digital services and systems etc.

Aid in the form of tax credits may be applicable to other undertakings not operating in such qualifying activities which invest in projects which may lead to an increase in business performance and innovation.

This incentive scheme is regulated under the European Commission’s De Minimis Regulation and, as such, the aid awarded is subject to a maximum capping of €200,000 over a three-year period to a single undertaking. The scheme closes on 31 December 2023 and application forms, accompanied with a business plan, should reach MEC by 31 October 2023.

Business START 2021

Business START is intended to support small start-up undertakings (as defined) engaged in qualifying activities, including manufacturing, software development, pharmaceuticals and other innovative economic activities, which have a viable business concept throughout their development phase.

Initiatives that are deemed to be economically feasible shall be supported through an initial grant of up to €10,000 and those start-up undertakings that present a viable business plan may receive additional assistance of up to €25,000 per quarter depending on the number of employees engaged.

A project may be considered eligible for assistance if it meets two of the following criteria:

the proposed products and/or services have the potential to generate income from various geographical markets;
the applicant produces or intends to produce products which are new or substantially improved compared to existing products on the market or provides or intends to provide services which are new or substantially improved compared to existing services on the market;
The applicant shall utilise processes, which are new or substantially improved compared to those adopted in current complementary activities.

Aid under this scheme is capped at a maximum of €200,000 and is disbursed between two stages:

The Pre-Business Plan Support is provided at an early stage of development (where no business plan is submitted), where the start-up may be awarded an initial funding of up to €10,000 after taking into consideration various factors of the proposed business.
The Post-Business Plan Support is provided to start-up undertakings that present a business plan setting out an economically viable concept - a maximum grant of €200,000 may be awarded which is limited to €25,000 per quarter and which is granted for a period not exceeding 24 months (depending on the number of full-time employees employed with the start-up undertaking).

The scheme closes on 31 December 2023 and application forms should reach MEC by 31 October 2023. Furthermore, during the funding process, beneficiaries are required to submit periodic reports and management accounts as requested by the Corporation.

Start-Up Finance 2020

This scheme is intended to support eligible small start-up undertakings (as defined) engaged in qualifying activities, including manufacturing, software development, pharmaceuticals and other innovative economic activities, that demonstrate a viable business concept to expand and further their economic activity.

A project may be considered eligible for assistance if it meets two of the following criteria:

proposes products and/or services that have the potential to generate income from various geographical markets;
produces products and/or services which are new or substantially improved compared to complementary products on the market;
utilises processes which are new or substantially improved compared to those adopted in current complementary activities.

Through this scheme, MEC may provide support linked to private equity, wage costs, crowdfunding, procurement of tangible and intangible assets, working capital and participation in a recognized Start-Up Accelerator program that essentially provides connections, mentorship, training and other support culminating in a pitch event through which the start-up undertaking may receive equity from private or institutional investors.

The support provided under this scheme varies from a one time Accelerator Grant to repayable advances of amounts depending on the type of category the start-up undertaking is applying under. In any case, the assistance is capped at €400,000 which may be increased to up to €800,000 if the start-up is an ‘Innovative Enterprise’ as defined in the relevant Guidelines.

This incentive shall be available until 31 December 2022. A start-up undertaking may apply under this scheme by submitting an application form to MEC within 36 months from the start-up date.

MicroInvest

The MicroInvest Scheme encourages undertakings to invest in their business, so as to innovate, expand and develop their operations. Undertakings benefiting from this measure will be supported through a tax credit calculated as a percentage of eligible expenditure, which also covers increase in wage costs.

Start-ups operating from Malta may benefit from a tax credit equivalent to 45% of eligible expenditure, while those operating from Gozo benefit from an 80% rate.

This De Minimis scheme provides for a maximum amount of eligible tax credits per single undertaking capped to €50,000 over any period of 3 consecutive fiscal years. This is increased to €70,000 for single undertakings operating from Gozo, registered as a Family Business or having more than 50% of the ownership attributed to female persons.

Applications with respect to eligible costs incurred in 2021 should be submitted by 14 December 2022. This scheme is currently available until 31 December 2023 - application forms relating to eligible costs incurred in 2022 should be submitted by 24 May 2023, with the availability for a late submission application by 13 December 2023.

Kick START

Kick START is a recently issued scheme administered by MEC that supports start-up undertakings that are considered as economically feasible and innovative, in participating in an accelerator programme recognised by MEC. In fact, this scheme supports start-up ventures that have a viable business concept based on sound technical and scientific knowhow and that are in the process of developing the technology into a market ready offering.

Eligible start-up undertakings include companies:

which are registered with the Malta Business Register for no longer than 60 months;
which do not have a single corporate shareholder that owns or controls more than 50% of the company (subject to certain exceptions);
engaged in qualifying activities (including manufacturing, software development and other innovative economic activities amongst others); and
where the activities of the start-up undertaking are linked to the knowledge and/or experience of the key persons.

An applicant may be considered eligible for assistance if it meets at least two of the following criteria:

proposes products and/or services that have the potential to generate income from various geographical markets;
produces products and/or services which are new or substantially improved compared to complementary products on the market or provides or intends to provide services which are new or substantially improved compared to existing services on the market
utilises processes which are new or substantially improved compared to those adopted in current complementary activities.

The aid awarded under this scheme is in the form of a one time grant, capped at €100,000, to cover certain operational costs. The scheme closes on 31 December 2023 and application forms should be submitted electronically to MEC by 31 October 2023.

Start-Up Investment Grant Scheme

Under Operational Programme I for Malta’s EU Cohesion Policy programme (2014-2020), €51m had been earmarked for ERDF Grant Schemes in aid of SMEs. There are a number of schemes that are broadly aimed at supporting investments made by SMEs, one of which is specifically tailored to assisting start-ups, the Start-Up Investment Grant Scheme.

This Start-Up Investment Grant Scheme seeks to assist start-ups established for less than three years and supports investment in tangible and intangible assets required by the start-up undertaking for its operations in line with an approved business plan. This incentive scheme provides support for certain eligible expenditure, including the lease of private operational premises, construction and upgrades of such premises, purchase of new plant, machinery and equipment and patents and licences. The grant awarded is calculated at the rate of 50% of eligible expenditure, capped at €300,000.

This incentive scheme is administered by the Measures and Support Division through an open rolling call, with the latest cut-off date being 31 December 2022.

Malta Startup Residence Programme

Malta will shortly enact 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 by giving them the legal entitlement to live and work in Malta, and have access to the Maltese market as a platform for European and International expansion.

Our multidisciplinary teams can help you determine whether this programme is right for you, and provide you with bespoke advice and support.

Click here to read more about this programme and how we can help you.