Malta Budget 2021 – Fiscal measures

Earlier this evening the Minister for Finance and Financial Services, Prof. Edward Scicluna, delivered the Budget Speech for 2021.

The following is an overview of some of the fiscal measures announced.

Tax Refund

In 2021, eligible persons will receive a tax refund in an amount ranging from €45 to €95.

 

Property transfers

Certain fiscal measures relating to property transfers already in force will be extended into 2021, including:

  • Stamp duty exemption for first time buyers – as of tomorrow 20 October 2020, the first €200,000 will be exempt from duty (increased from €175,000);
  • Reduced rate of duty (3.5%) on the first €200,000 (increased from €175,000) of value of property inherited which is the residence of the heirs;
  • Reduced rate of duty (3.5%) on the first €200,000 on the acquisition of residential property (even if not first time buyers);
  • Refund of duty on the purchase of a new residential home for “Second-Time Buyers” (refund of up to €3,000 or up to €5,000 in the case of persons with special needs);
  • Reduced rate of duty on the acquisitions of residential property in Gozo, and of property in Urban Conservation areas (2.5% instead of 5%);
  • Exemption from stamp duty on the first €250,000 (increased from €200,000) on donations of immovable property from parents to children to be used for residential purposes (additional value will be taxed at 3.5%);
  • The reduction of duty to 1.5% and the reduction of transfer tax to 5% on immovable property transfers on the first €400,000, introduced earlier this year (COVID-19 regeneration measures), will continue to apply to promise of sale agreements entered into by 31 March 2021 where the contract is concluded by 31 December 2021.

 

Transfer of business

The reduced rate of duty of 1.5% on the transfer of a family business will continue to apply.

 

Profits/gains from assignment of konvenju

Profits/gains from the assignment/cessation of any rights acquired under a promise of sale of immovable property (Konvenju) will be subject to a tax at the rate of 15% from 1 January 2021 – 31 December 2021 (in 2020 the 15% rate applied to the first €100,000).

 

Pensions

  • The bracket for exempt annual pension income will be increased to €14,058. In the case of persons applying the married rates, the exemption will apply to an additional €3,600 of income from other sources.
  • In the case of persons who contribute to private pension schemes, the maximum tax benefit shall increase to €1,500.

 

Royalty income

Royalties earned by author/co-authors will be taxed at a flat rate of tax of 15%.

 

Voluntary Organisations

Certain income derived by registered voluntary organisations whose annual income does not exceed €50,000 will be exempt from tax.

 

VAT

  • The registration threshold for small undertakings (the so-called VAT-exempt threshold) will be increased from €20,000 to €30,000 (see MIT News 21 October 2020).
  • The scheme for VAT refunds on the purchase of bicycles and e-bikes will be extended.

 

Updated: 21 October 2020
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