Malta Budget 2025
The Minister for Finance and Employment, the Hon Clyde Caruana, has delivered the Budget Speech for 2025. The following is an overview of some of the fiscal measures announced:
→ The income tax brackets for individuals (single, married and parent computations) will be widened, which is expected to result in annual tax savings ranging from €345 – €675;
→ Increase in the deductions for fees for private schooling;
→ Increase in the tax credit for qualifying therapy for children with disabilities
→ Increase of the pension income eligible for exemption from tax;
→ VAT on sanitary products and certain medical accessories will be removed;
→ Reduction in excise duty on certain alcoholic beverages produced locally;
→ Extension of the Highly Qualified Persons rules;
The following existing measures will continue to apply in 2025:
→ the reduced stamp duty rate of 1.5% applicable to inter-family transfers of shares/qualifying family businesses;
→ the stamp duty schemes for first time buyers and second time buyers;
→ the tax exemption on first €750,000 on transfers of certain property (property constructed over 20 years ago which has been vacant for 7 years, property in an UCA or new property developed according to specified criteria);
→ the grant equivalent to the VAT paid (up to €54,000) on the restoration of certain property (property constructed over 20 years ago which has been vacant for 7 years, property in an UCA or new property developed according to specified criteria);
→ the tax credit of a maximum of €500 on donations made by companies to voluntary organisations operating in certain sectors.
International Tax developments and the obligations under the global minimum tax framework arising under the Pillar 2 Directive (Dir 2022/2523)
The Minister for Finance has announced that Malta will once again opt for the derogation granted in terms of Article 50 of the Directive, which allows Member States in which no more than twelve ultimate parent entities of groups within the scope of the Directive are located not to apply the Income Inclusion Rule and the Undertaxed Profit Rule for six consecutive fiscal years beginning from 31 December 2023. Malta made such an election in 2024 and this will continue to apply for 2025.
Malta’s tax system
Following the Government’s pledge, with the Budget for 2024, to work on the introduction of fiscal measures in the form of Qualified Refundable Tax Credits which are compliant with Malta’s obligations under the global minimum tax framework, the Minister announced that discussions are ongoing with the EU Commission so as to ensure that the proposed measures are in line with EU law.
Download the budget speech here.