Malta Budget 2027
On 26 October 2026, the Minister for Finance and Employment, the Hon Clyde Caruana, delivered the Budget Speech for 2027. Download the Budget Speech here
The following is an overview of some of the fiscal measures announced:
INCOME TAX
→ Widening of the individual’s Income Tax brackets over 2027 and 2028 resulting in:
- 0% tax for married families with one child on the first €20,000 in 2027 and €22,500 in 2028
- 0% tax for parents with one child on the first €16,000 in 2027 and €18,000 in 2028
- 0% tax for married families with at least two children on the first €30,000 in 2027 and €37,000 in 2028
- 0% tax for parents with at least two children on the first €24,000 in 2027 and €30,000 in 2028
→ Reduced corporate income tax rate of 25% on retained or reinvested profits for small businesses with turnover below €1 million (35% rate applies if dividends are distributed).
→ The Minister announced a project for the reform of the tax return filing process for married couples: it is being proposed that separate returns for each spouse’s own income will become the default with the option for couples to opt for joint filing.
VAT
→ The introduction of a mandatory domestic ‘reverse charge’ mechanism for construction-related supplies between businesses, such that, as a default, the supplier will not charge and collect VAT but the customer will be required to report (and, where relevant, pay) the VAT due on the purchases subject to the right to recover as input tax if eligible (this anti-abuse measure is effectively a revision to the current ‘Tax in Danger’ measures in the VAT Act)
→ The publication of guidance on the scope of the current exemption (zero-rate) for the supply of food
→ Failure to issue a fiscal receipt will be addressed by an administrative fine rather than criminal proceedings, with criminal liability for the breach extinguished if the penalty is paid within 30 days. The administrative penalty scale within a 24-month period will be €100 for the first breach, €200 for the second, €400 for the third, €500 for the fourth and each breach subsequent.
ECO-CONTRIBUTION
→ The current Eco-Contribution rate of €1.50 per night will be increased as of 1 January 2027 to €8 per night capped at €64 per stay. The rate for short-let accommodation will increase to €10 per night capped at €80 per stay. Eco-Contribution will no longer be chargeable on accommodation provided by English Language Schools;
→ Eco-Contribution at the rate of €10 will apply to each Cruise Ship passenger disembarking in Malta and reembarking on the same vessel
→ Eco-Contribution of €5 will be payable for each tourist visiting the Blue Lagoon.
OTHER MEASURES
→ The Minister announced that measures will be introduced for property transactions involving the sale of airspace intending to ensure that transactions are taxed according to their economic substance.
→ Existing schemes relating to property acquisition or renovation will be renewed for 2027
→ Likewise existing benefits around EVs, renewable enegry, NGOs and sports will also be renewed.