Tax incentives applicable to donations to Culture

In order to foster further partnership between Malta’s corporate and cultural sectors, the Maltese Government has recently announced some amendments to the tax incentives applicable to companies that grant cash donations to various cultural organisations.  These amendments were made possible through LN 147 of 2016.  Through these incentives, companies (i.e. limited liability companies and partnerships […]

Written By ACT Team

On May 6, 2016
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In order to foster further partnership between Malta’s corporate and cultural sectors, the Maltese Government has recently announced some amendments to the tax incentives applicable to companies that grant cash donations to various cultural organisations.  These amendments were made possible through LN 147 of 2016. 

Through these incentives, companies (i.e. limited liability companies and partnerships which for tax purposes opt to be treated as companies) that give such donations may claim for income tax purposes such donations against the income for the year of assessment when the donation was made, as though such donations were expenses incurred in the production of the income.  Furthermore such expenses can be increased by another 50%. The maximum tax deduction for culture however is capped at €50,000.   

The beneficiaries of such donations can be:  

  • Non-profit Cultural Organisations that are registered as Voluntary Organisations or Non-Governmental Organisations
  • Public Cultural Organisations
  • Arts Council Malta – provided that the donation is granted for the purposes of achieving the Council’s strategies and objectives or as an intermediary for a pre-approved third party project.

All applications for any donations given during the calendar year 2016 must be submitted to the Arts Council Malta together with:  

  • A copy of an eligible Donation Agreement between the donor company and the beneficiary organisation which includes details on the amount donated and the activity that is being supported
  • Proof of Transaction documentation that is certified by either the Bank used to effect payment of such a donation or a Certified Public Accountant

Once all documentation is submitted to the Council, the donor will receive an Incentive Certificate (IEC), which must be submitted together with the donor company’s income tax return.

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].