Tax Credits for Micro Enterprises and the Self-Employed

Micro enterprises and self-employed persons may benefit from a tax credit equivalent to 45% of eligible expenditure (subject to certain conditions). An additional bonus of 20% (total 65% tax credit) applies to undertakings operating from Gozo.

For an eligible cost to be claimed the costs must be incurred between 1st January and 31st December (both days included) of the year preceding the year in which the claim is submitted. The deadline of 23 March 2022 applies for any eligible expenditure incurred from 1 January 2021 to 31 December 2021 by any self-employed individuals submitting their tax return in June. On the other hand, the deadline of 25 May 2022 applies to companies that submit their tax return in September.

Late submissions may be accepted by not later than the extended deadline of the following year in which the expenses are incurred – however, in such case the tax credit may be availed of only from the year of assessment commencing in the following year. For expenses incurred in 2021, the extended deadline for late applications is 14 December 2022 (for both self-employed individuals and companies), and accordingly, any tax credits claimed by virtue of a late application may be available from the year of assessment 2023 onward.

Eligible expenditure under these rules includes:

  1. Furbishing and refurbishing of business premises;
  2. Investment in acquiring machinery, technology, apparatus, or instruments which enhance the operations;
  3. Capital investment in Information Technology;
  4. Purchase costs of one commercial vehicle incurred over a period of 3 years. As of 2022, (for costs incurred in 2021) operators licensed to provide passenger transport services holding a license (Taxi Driver Permit and Tag) from Transport Malta may claim in any rolling three-year period the costs incurred for the purchase of a (one) plug-in hybrid or electric passenger vehicle purchased for the provision of passenger transport services;
  5. Wages costs where an increase over the last 3 years of the gross wages paid by the company exceeding 3% of the highest wage costs in any of the previous two (2) fiscal years (i.e. 2019 and 2020).
  6. Certification Costs where eligible businesses may claim the cost incurred for attaining certifications relevant to their business. Examples are CE markings and ISO certification.

The maximum eligible tax credits per single undertaking shall be capped at €50,000 over any period of three (3) consecutive fiscal years, starting from eligible expenses incurred and paid for during the year preceding the year in which the claim is submitted. Such limit is increased by an additional €20,000 (i.e. raised to €70,000) for undertakings

(a) operating in Gozo;

(b) registered as a Family Business;

(c) having more than 50% of the ownership attributable to female persons.

Eligibility: main conditions to be satisfied (at the point of application) for undertakings to benefit from this Scheme:

  1. The applicant must be a single undertaking that employed not more than fifty (50) persons on Full Time (FT) contracts (the data used to verify this condition is provided by Jobsplus) for a consecutive three (3) month period during the year in which the costs were incurred;
  2. The applicant (in the case of a legal person) must employ at least one (1) person (on a full or part-time basis) on the date of application. The person employed may be the applicant himself in the case of self-employed persons. In any case, such employment must be registered with Jobsplus;
  3. The applicant must be a single undertaking whose turnover did not exceed €10 Million in the fiscal year preceding the year in which the application is submitted;
  4. For any eligible expenses incurred (except wages costs) a copy of each tax invoice or a fiscal receipt (as applicable) must be submitted to Malta Enterprise;
  5. Start-ups are given 5 years to utilize tax credit;
  6. Unless exempted, applicants should be registered with the VAT department;
  7. Self-employed persons should be registered with Jobsplus;
  8. Applicants must not be defaulting on VAT, Income Tax, and Social Security. No Tax Certificate will be issued by the Corporation prior to regularising the position with the relative departments;
  9. Persons or undertakings engaged in activities specifically excluded under the de minimis regulations (these include undertakings active in the fishery, aquaculture sectors, the agricultural sectors, and certain undertakings involved in the road freight transport sector) are not eligible for this incentive;
  10. This incentive is not intended for voluntary organizations;
  11. The application form should be submitted (online) all at once. Undertakings wishing to benefit from this incentive may submit one (1) application per calendar year.

This article reflects the guidelines published by Malta Enterprise as of 16 February 2022.

For further information contact

Roberto Sammut
Senior Accounts Manager
E:roberto.sammut@dfkmalta.com

Olivianne Sammut
Accounts Manager
E:olivianne.sammut@dfkmalta.com

Mark Baldacchino
Senior Accounts Manager
E:mark.baldacchino@dfkmalta.com