A. Income Tax
No new taxes have been introduced.
A final tax of 15% will apply on the first €100,000 of gains or profits derived from the transfer of a promise of sales. Any gains or profits over and above the €100,000 will remain taxed at 35% in terms of Property Transfers Tax.
A reduction in tax on over-time employment income paid in respect of the first 100 annual hours of overtime work derived by persons whose base salary does not exceed €20,000 per annum and who are not in a management grade to 15%.
Individuals whose income is less than €60,000 will continue to benefit from a refund of tax. Individuals whose income falls within the tax-free bracket will also benefit from such refund.
Pension income of less than €13,799, will not be subject to tax.
Other income exempt from tax received by couples with a single pension will be increased to €2,000, i.e. total income exempt from tax will amount to €15,798.
Certain pensioners will be exempted from paying provisional tax payments.
Tax Refunds will be provided within 6 months.
B. Duty on Documents and Transfers
The following existing tax schemes will be extended for another year:
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- the Scheme originally contemplated in Legal Notice 59 of 2016 providing for a reduced rate of duty of 2.5% on the higher of the amount or value of the consideration paid upon the acquisition of vacant immovable property situated within an Urban Conservation Area.
- the Scheme originally contemplated in Legal Notice 384 of 2016 providing for a reduced rate of duty of 2% on the higher of the amount or value of the consideration paid upon the purchase of residential immovable property situated in Gozo.
- the Scheme originally contemplated in Legal Notice 131 of 2017 providing for a reduced rate of duty of 1.5% on the real value of shares held in a family business or immovable property used in a family business donated to close family members.
- the Scheme originally contemplated in Legal Notice 39 of 2018 providing for a refund of a portion of the duty paid by second-time buyers upon the acquisition of their second immovable property situated in Malta.
The first-time buyers scheme providing for an exemption from duty on the first part of the consideration introduced by Legal Notice 393 of 2013 has been extended. In addition, the exempt portion has been increased from €150,000 to €175,000.
Those individuals acquiring property for the purpose of establishing their own residence who are either acquiring it by inheritance or are not first-time buyers will now be subject to duty at the reduced rate of 3.5% on the first €175,000 instead of €150,000.
Persons under the age of 40 eligible for a home loan may benefit from an interest-free loan of up to €17,500, which shall be repaid over a 15-year period, to assist them in the 10% initial deposit.
C. VAT
The VAT exemption on the provision of education provided for in Item 12 of Part 2 of the Fifth Schedule to the Maltese VAT Act, Cap. 406 of the Laws of Malta, will be extended to cover a wider range of services including vocational training and other educational services.
The VAT refund scheme associated with the acquisition of Bicycles and Pedelec Bicycles as per Government Notice No. 1,231 dated 15 December 2015 published in Government Gazette No. 19,512 will be extended for another year.
D. Social Measures
Annual Cost of Living Adjustment (COLA) increase is of Euro 3.49 for 2020.
The Grant on Special Equipment bought for people with a disability will be increased by €400 with the maximum capping increasing to €1,000.
Increase in Pensions of Euro 7 weekly.
Disabled persons that cannot work are given pensions equivalent to the minimum wage.
Free tal-Linja Card also extended for people over the age of 75.
Parents who are forced to leave employment to take care of their children with a rare disease will have social security contributions they miss because of this situation accredited to them, up to a maximum of eight years.
Disability pension will increase from €150 per week to €161.40. Invalidity pension will also be increased.
A one-off additional bonus of €15 for single person households and €35 for households which have more than one individual will be implemented in lieu of the fact that Government felt that the retail price index (on which COLA is measured) is not reflecting the real price inflation.
A National Strategy which will make Malta a carbon neutral country by 2050.
Installations of charging points around Malta and Gozo, including households, supported with reduced tariffs; particularly for residences which will be below €0.13c per unit.
Prohibition of importation of conventional single-use plastic bags, cutlery, straw and plates by 1st January, 2021. Full prohibition on sales and distribution by 1st January 2022.
E. Leave
Public Holidays falling on a weekend: Additional one-day leave for all employees for a total of 27 days of leave during a calendar year. This will be the third day of additional leave being given during this legislature. For 2020, an increase in leave of another day for all employees.
F. Bonuses
One-time bonus of Euro 300 for each new born child or each child that is adopted
G. Health
Sick leave extended for those suffering from Cancer.
Free medicines being extended.
H. Simplification Procedures & Measures to Combat Tax Evasion
Simplification of a number of measures related to the Tax departments such as online registration and de-registration of the VAT number and that tax refunds will be paid within 6 months rather than the longer time-period after which tax refunds are being issued at the moment.
Couples will be allowed to submit separate tax returns and the new system will provide for separate assessments for couples.
As from 2020, purchasing of property, cars, boats, diamonds and art objects cannot be done exclusively in cash. A limit of €10,000 in cash is to be established.
As part of the Strategy against fiscal evasion and money laundering a new agency will be set up to be known as Financial Organised Crimes Agency.
MFSA and FIAU will continue to take initiatives and make the necessary reforms in line with the recommendations of MONEYVAL.
I. Electric Cars
Exemption of Registration Tax when buying electric cars or electric hybrids.
Should you wish to know more about Budget 2020 please feel free to contact our team on [email protected].
