VAT – proposed increase in ‘small undertaking’ threshold announced (Budget 2021)
In the 2021 Budget Speech of 19 October 2020 the Minister of Finance and Financial Services announced an increase in the threshold for small undertakings from €20,000 to €30,000.
The current thresholds for registration as a small undertaking are set out in Part 1, item 8 of the Sixth Schedule to the VAT Act (CAP 406 of the Laws of Malta).
To date the €20,000 threshold applies to supplies of services with a high value added (low inputs). This represents a derogation from Article 287 of the EC VAT Directive (Directive 2006/112/EC) which sets the maximum lowest threshold at €14,600. In 2018, Malta received authorisation to increase the threshold for the lowest of the three categories to 20,000 until 30 December 2020 (Implementing Decision (EU) 2018/279 ). On 5 June 2020, Malta requested authorisation from the Commission to continue to derogate from Article 287 of the VAT Directive and to apply this increased threshold until 31 December 2024 (See MIT News 5 October 2020).