Income tax

LN 37 of 2018 – introduced a notional interest deduction (NID) allowed to be utilized by undertakings on profits allocated to the Foreign Income account (FIA) and the Maltese taxed account (MTA) equivalent to a % calculated by reference to the yield to maturity on Malta Government stocks with a remaining term of approximately 20 years plus a premium of 5%. Undertakings benefitting from these reductions are deemed to have distributed interest to the shareholder or partner.  When the shareholder or partner prepares his personal tax return, and the shareholder or partner of the undertaking is not resident in Malta, the deemed interest is exempt from tax in Malta under section 12 of the Income Tax Act if the specified criteria is met.

Also under article 56 of the Income Tax Act,  from year of assessment 2019 (basis year 2018) individuals not chargeable under any scheme who are ordinarily resident in Malta but not domiciled in Malta, and who derive income amounting to not less than EUR 35,000 which is not received in Malta, shall be subject to a minimum tax of EUR5,000 per annum unless the individual can prove to the satisfaction of the Commissioner that without applying these sections, the total tax payable by him would have amounted to less than the minimum tax.

Startups and grants

LN 99 of 2018 relates to Applications for Startup Advance scheme, creates a scheme for eligible business activities to avail themselves from a grant, provided that these economic activities submit their application to Malta Enterprise by 30 October 2020.

LN121 of 2018 introduce a number of tax credits allowed for Micro enterprises and self-employed.

Maritime industry

After the EC decision which included a detailed list of 25 commitments, LN 128 of 2018 updated the Merchant Shipping Act of Malta regulating shipping activities which include the international carriage of goods or passengers by sea, the business of operating tonnage tax ships, and ancillary activities.  In this legal notice, the income of these companies is exempt from Income tax under regulation 5, provided that all tonnage tax was duly paid and no further tax shall be charged or payable on any income, profits or gains of any shipping organization derived from the sale or other transfer of a tonnage tax ship.  These shipping companies are required to submit a declaration in lieu of the tax return by a certified public accountant and auditor.

LN140 of 2018 set up the maximum income subject to tax for qualifying employment in maritime activities and the servicing of oil and gas industry activities.


LN 163 of 2018 updated the entry and exit threshold for a person to qualify as a small undertaking for VAT purposes.  Article 11 registered persons as a small undertaking are not required to charge VAT on goods and services provided by them and they do not claim input VAT.

LN 162 of 2018 introduced VAT grouping provisions applicable to companies in the financial services and in the gaming industry listed in the schedule attached in this legal notice, where two or more persons can register as a single taxable person.

Ultimate beneficial owner

LN 184 of 2018 introduced a form required to be submitted to the Registry of Companies to register the beneficial owners of a company.


Seven gaming legal notes were introduced during 2018 (LN242-LN248).  In particular LN248 of 2018 announced the Gaming Tax Regulations Act which introduces a gaming tax and a levy on gaming devices.

Payroll matters

LN 148 of 2018 introduced a penalty of EUR 15 if a payer fails to submit the monthly FS5 as required and within the specified time to the Commissioner for Revenue, and a penalty of EUR 200 if a payer fails to submit the FS3 and FS7s on time.

LN 440 of 2018: The employer may only use up to twelve days for shut downs.  Also, if an employee overuse his leave entitlement for a particular year, it shall give rise to a civil debt in the case of a termination of employment unless the leave was taken as forced leave.

LN439 of 2018: gives the right to an employee to request his sick leave balance up to a maximum of four times a year, the sick leave entitlement and the sick leave availed of during the year and the employer is required to provide the employee with this information within five days from the date of the request.

LN 443 of 2018: As advised during the last budget, employees are given a cost of living increase of EUR 2.33 per week which shall be increased by a mandatory increase of EUR 1per week for employees working 40 hours, or pro-rata for other employees.

The government has now updated the website with the new social security rates to be used for 2019:

The sick benefits for 2019 have changed to EUR 20.79 for single parent or married person maintaining a spouse and EUR 13.46 for any other person.

Our services

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We take this opportunity to wish you all the best for the New Year we have just started.