Malta: Budget 2014 implementation: Tax updates
Recently, a number of amendments were made to the Maltese tax framework with the effect of bringing into force specific measures which were announced in Malta's budget for 2014.
Up to the end of 2013, only transfers of specific categories of intellectual property, that is, copyright, patents, trademarks and trade names were subject to income tax on capital gains in Malta. With effect from 2014, capital gains arising from the transfer of all intellectual property will be brought to charge under Malta's Income Tax Act (ITA). In addition, a new provision has been introduced to the ITA which brings to charge any sums receivable from "any sales" of such intellectual property rights and "all other income receivable" in respect thereof. This extends the scope of taxation in Malta of income or gains derived from intellectual property.
Taxation of rental income
With effect from January 1 2014, landlords leasing out residential tenements to individuals can opt to have their gross rental income taxed at the final withholding rate of tax of 15%. Such tax is final and thus no offset or refund is due to the landlord. Where the option is exercised during a relevant year as defined in the ITA, it will, for that particular year, apply equally to all the other rental income derived from any other residential tenements owned by the landlord.
Should a landlord not opt for this 15% final withholding rate of tax on rental income, marginal rates of tax which could range from 15% to 35% would be applicable to such income. The landlord's option is revocable.
Tax rates applicable to EU/EEA individuals
Also with effect from January 1 2014, EU or EEA nationals who derive at least 90% of their worldwide income from Malta are subject to tax in Malta at the rates applicable to Maltese resident persons, even though such persons may not be resident in Malta.
In addition, the provisions of the ITA that are applicable to exemptions, deductions, credits and refunds will, with effect from the same date referred to above, also be applicable to EU or EEA nationals which are subject to tax in Malta at the resident rates, even though such nationals may not be resident in Malta.
Other: Tax credits for micro-enterprises
A programme dubbed MicroInvest Tax Credits has recently been launched by Malta Enterprise – Malta's national development agency responsible for promoting and facilitating international investment. The scope of this scheme is to encourage undertakings to invest in their business, to innovate, expand and develop their operations.
Undertakings employing up to 30 full-time employees and which have a turnover not exceeding €10 million ($13.5 million), are eligible to apply. The extent of the relevant benefit, which comes in the form of tax credits, is calculated on the eligible costs incurred between January 2014 and December 2020, and will not exceed €30,000 to €50,000 over any period of three consecutive years.
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