Budget 2020 highlights

The Ministry of Finance has on Monday 14th October 2019 delivered the Budget Speech for the year 2020.  The following are the highlights of his speech. 

  • Cost of living adjustment (COLA) set at Eur3.49 a week;

  • An additional bonus to be granted and financed by the Government of Eur15 for single persons and Eur35 for families;

  • The granting of an additional day of leave in 2020 to compensate for public holidays falling on a weekend;

  • A tax refund between Eur40 and Eur68 to be granted again in 2020 to individuals who earn less than Eur60,000 p.a.;

  • In 2020, the first 100 hours of overtime for employees whose annual basic salary does not exceed Eur20,000 and who does not hold a managerial position will be subject to tax at 15%;

  • Couples to be allowed to submit separate income tax returns and to be taxed separately;

  • Increase in pensions by Eur3.51 per week in addition to the COLA;

  • An increase of Eur11.40 per week will be granted to persons with sever disability who are unable to work;

  • The grant on specialised equipment used by persons with disability shall increase from eur600 to a maximum of Eur1,000;

  • The exempt threshold for pension income to be increased to Eur15,798 in the case of a married couple receiving one pension and to Eur13,798 in all other cases;

  • Additional allowance granted  to persons aged 65 years or over who are in risk of poverty to be increased by Eur50;

  • Persons who are aged 80 years and over who live in their homes or with relatives shall have their grant increased by Eur50;

  • Grant of Eur300 will be paid to persons residing in a home for the elderly.  The grant will increase by Eur50 for persons older than 80;

  • Parents who will have a new born baby or adopt a child will receive a bonus of Eur300;

  • With immediate effect, the threshold on which no stamp duty will be paid by first time buyers has increased from Eur150,000 to Eur175,000;

  • Individuals who acquire or inherit residential property on which they plan to establish their own residence will be subject to a reduced rate of stamp duty of 3.5% on the first Eur175,000;

  • A new scheme will be introduced which will be applicable to persons under the age of 40 to assist them with the financing of their initial deposit to acquire their immovable property.  The assistance will amount to a maximum of Eur17,500 which will be repayable back to the Government over a 15 year period.  No interest will be paid by such persons as this will be covered by the Government;

  • Profits derived from the assignment of rights on a promise of sale agreement will be taxed at 15% rather than 35% for the first Eur100,000.  Profits in excess of Eur100,000 will be taxed at 35%;

  • Reductions on stamp duty applicable to acquisitions of residential property in Gozo, acquisitions of property by second time buyers and the purchase of vacant property in urban conservation areas have been extended for another year.  The property restoration refund scheme has also been extended;

  • The reduced rate of stamp duty on the transfer of a family business has been extended for another year;

  • As from 2020, it would not be possible to effect payments in cash exceeding Eur10,000 to buy items such as property, cars, boats, yachts, diamonds, precious stones and works of art;

  • A new agency called ‘Financial Organised Crimes Agency’ will be set up to continue combating money laundering and financing of terrorism;

  • Malta Enterprise will be issuing a grant up to a maximum of Eur200,000  to operators in the construction industry that opt to replace their existing machinery with new environmental friendly machinery provided that the old machinery is scrapped.  The scheme will also be applicable for the purchase of new additional equipment and vehicles which will result in a reduced impact on the environment;

  • The exemption of electric and hybrid vehicles from registration tax will be extended for another year;

  • As from next year, a grant equal to 25%of the cost (capped at Eur1,000) will be given to purchasers of batteries storing renewable energy.  This grant will be eligible to individuals who had acquired solar panels and whose contract covering feed in tariffs has expired;

  • Schemes contributing towards the efficient use of energy and production of energy from renewable sources will continue during the next year;

  • New incentives will be introduced to promote the issue of green bonds with the aim of incentivising investment in projects related to clean energy, sustainable resources and environment protection;

  • A new grant of Eur3,000 will be paid to those stores who introduce green corners in their shops;

  • Individuals who opt to study a foreign language overseas will be eligible to maximum grant of Eur850;

  • The Start-up tax credit for new businesses set up in Gozo will be improved;

  • New fiscal incentives will be introduced on relocation expenses incurred by companies which relocate to Gozo and for companies providing telework and back office work from Gozo;

  • Vehicle scrappage scheme will continue to be available with grants up to a maximum of Eur1,500. 

How can we help?  

For further information, please contact either Stephen Balzan on [email protected] or Elaine Camilleri on [email protected].  ACT can help you understand the changes to the income tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected]. 

 

Disclaimer  

This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.   

16th October 2019

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