Malta

The following are some of the more recent significant developments that were introduced in Maltese tax law:

• Maltese tax law provides for a tax deduction for expenditure of a capital nature on IP or IP rights incurred in the production of income - such deduction should be taken over the life of the relevant IP but, in any case, over a minimum period of three consecutive years. As from the year of assessment 2024, such expenditure of a capital nature on IP/ IP rights may at the option of the taxpayer be deducted in full in the year in which the expenditure is incurred or in the year in which the IP/ IP rights are first used or employed in producing the income - if such an option is taken, the resulting accelerated deduction may only be claimed against income produced through the use of the respective IP/ IP rights.
• Transfer Pricing Rules were published in November 2022 and apply for basis years commencing on or after 1st January 2024. Further information on the Transfer Pricing Rules is set out in the ‘Transfer Pricing’ section.
• In terms of the European Minimum Tax Directive,it was confirmed by the Maltese Minister for Finance  during the 2024 Budget that Malta will apply the derogation provided by the EU and that the application of the Income Inclusion Rule and the Undertaxed Profits Rule may be deferred by up to six years.
• The possibility of setting up protected/segregated cell companies in the aviation and shipping sectors remains an option under Maltese law. Such cell companies allow for the possibility of segregating vessels or aircraft portfolios within the same corporate entity, thus segregating the risks and benefits attributable to the particular cell, without affecting the risks and benefits attributable to other cells within the same cell company.
• By means of the Consolidated Group Income Tax Rules, a parent company and its 95% subsidiary can form a fiscal unit for income tax consolidation, provided certain conditions are satisfied.
• The Patent Box Regime Deduction Rules provide for deductibility rules applicable to income derived from qualifying intellectual property (IP).
• Further tax incentives for occupational pension schemes are available.
• The minimum shareholding requirement of a ‘participating holding’ under the Maltese Income Tax Act is 5%. This enables Maltese companies holding at least 5% of the equity shares, to claim a participation exemption (subject to the satisfaction of other conditions) on dividend income and gains derived by a Maltese company from a qualifying ‘participating holding’ or from the disposal of such holding (apart from this 5% minimum equity holding, there may be other alternative conditions to qualify for the participation exemption). 
• A notional interest deduction (NID) system, aiming to approximate the tax treatment of equity with that of debt.
• By virtue of a number of schemes, such as the Investment Aid for Energy Efficiency Projects Regulations and a number of Research and Development schemes, undertakings operating in various industries may qualify for assistance by the Malta Enterprise.
• Recent updates relating to excise duty further  transpose Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (recast), relating to the excise duty which may be levied directly or indirectly on the consumption of, amongst others, energy products, alcoholic beverages and tobacco, therefore ensuring further harmonisation and similar treatment across the EU. 
• Recent VAT regulations require payment service providers to keep records of payments made and to submit such information to the VAT Commissioner in accordance with the provisions of Title V of Council Directive 2006/112/EC.