Malta Budget 2021

On the 19th of October 2020, Minister of Finance Hon. Prof. Edward Scicluna presented the Budget for 2021 to the House of Representatives. The following are the main highlights of the said budget. Tax implications on the transfer of Immovable Property The reduced rate of stamp duty of 1.5% upon the acquisition of immovable property introduced […]

Written By Elaine Camilleri

On October 20, 2020
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On the 19th of October 2020, Minister of Finance Hon. Prof. Edward Scicluna presented the Budget for 2021 to the House of Representatives. The following are the main highlights of the said budget.

Tax implications on the transfer of Immovable Property

  • The reduced rate of stamp duty of 1.5% upon the acquisition of immovable property introduced as part of the Economy Regeneration Plan has been extended;
  • The First-Time Buyers Scheme- the first Eur175,000 value of property which are exempt from duty for first time buyers has been increased to Eur200,000;
  • The Second Time Buyers Scheme – this scheme which grants a refund of duty of up to Eur3,000 to individuals that buy their second residential home and sell their first one, has been extended for a year;
  • Duty on the acquisition /inheritance of ordinary residence- Currently, those persons who acquire/inherit property in which they reside, are subject to a reduced stamp duty of 3.5% on the first Eur175,000 value of the property. This will be increased to Eur200,000;
  • Acquisition of property in Urban Conservation Areas (UCAs)- the reduced rate of duty of 2.5% applicable on the acquisition of property in UCAs has been extended;
  • Acquisition of Property in Gozo- individuals that acquire their residential property in Gozo during 2021 will continue to benefit from a reduced rate of duty of 2%;
  • Duty on Donations to Descendants- The duty exemption on the donation of property by parents to their descendants has been increased from Eur200,000 to Eur250,000. Any value of property over and above this amount is subject to duty at the rate of 3.5%;
  • Transfer of Promise of Sale- gains or profits derived from the assignment of promise of sale during 2021 shall be subject to a flat tax rate of 15% (this was previously capped at Eur100,000);
  • The 1.5% stamp duty applicable to the transfer of family businesses has been extended.

Other Income Tax Measures

  • Royalty Income

With effect from 2021, royalty income derived by authors and co-authors from the sale of their books shall be subject to a flat rate of tax of 15%.

  • Tax Refunds to Individuals

The tax refunds granted to individuals earning less than Eur60,000 will be extended. The amount of refund varies between Eur45 and Eur95 depending on the amount of income and the tax rates applicable to the said beneficiary.

  • Exempt Pension Income

The amount of exempt pension income will be increased as follows:

  • For those applying the single/parent rates from Eur 13,798 to Eur 14,058;
  • For those applying the married rates from Eur13,798 ( + another Eur2,000 derived from other sources) to Eur 14,058( + another Eur3,600 derived from other sources).
  • Contributions to Pension Schemes

The maximum tax benefit in respect of contributions made to the Third Pillar Pension Scheme and Voluntary Occupation Pension Scheme shall increase to Eur1,500 on an annual investment of Eur3,000. 

  • Income of Voluntary Organisations

The income of certain voluntary organisations which does not exceed Eur50,000 will be exempt, s.t.c.


VAT Measures

  • Exempt Threshold

The VAT exempt threshold will as of 2021 increase from an annual turnover of Eur20,000 to Eur30,000. This means that small businesses providing certain categories of services, can opt to be registered as VAT exempt persons if their annual turnover is under Eur30,000.


Social Measures

  • Cost of Living Adjustment

The COLA for 2021 will be of Eur1.75 per week.

  • Increase in Pension

Pensions will be increased by Eur3.25 per week in 2021.

  • Additional Day of Vacation Leave

Employees will be granted an additional day of vacation leave for 2021.

  • Children’s Allowance

Children’s allowance will be increased as follows:

  • By Eur70 per year per child for families whose annual income is of Eur 25,318 or less;
  • By Eur50 per year per child for families whose annual income is of more than Eur25,318.
  • In- work benefit thresholds

The thresholds for the eligibility of the in-work benefit will be increased as follows:

  • Eur23,000 for single working parents
  • Eur26,000 for couples with a single working permit
  • Eur 35,000 for couples in gainful employment
  • Allowance for the care of children under a Protection Order

As of January 2021, such allowance will increase by Eur520 to a total of Eur5,720 a year.

  • Adoption Grant

Parents adopting children locally will be given a grant of Eur1,000.

  • Allowance for Carers at home

Those elderly who employ a full-time or part-time carer, will have their subsidy increased from Eur 5,291 to Eur6,000 per year.

  • Care of Children with Severe Disability

A new assistance has been introduced whereas parents who have to stop working to take care of their children with severe disabilities will be granted an annual grant of Eur300.

  • Grant for the Elderly

The grant of Eur300 to persons aged 75 and over and Eur350 to those aged 80 years and over will be extended.


COVID related Measures

  • COVID Wage Supplement 

The COVID Wage Supplement introduced earlier this year to help enterprises during the pandemic, has been extended to March 2021.

  • Government Vouchers

Vouchers of Eur100 each will be given to all citizens aged 16 and over to be spent on retail outlets, restaurants and hotels.

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the 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.