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Investment Aid Tax Credits

The Investment Aid 2021 (‘ITCRs’) is a scheme available to Maltese companies designed to facilitate and incentivize initial investment projects in Malta such as the setting up of new establishments and the expansion and development of existing businesses through assistance in the form of tax credits or cash grants.

This scheme is applicable to companies, partnerships, co-operatives, family business or similar set-ups operating from Malta and incorporated in the European Union, which may include an undertaking newly set up for the implementation of a new project.

Do you have an Initial Investment Project?

An initial investment project is one which results in the development; expansion; diversification or a fundamental change in the carrying out of a Qualifying Economic Activity in Malta.

Are you engaged in a qualifying activity?

The guidelines underlying this scheme have widened the scope of qualifying activities in certain economic sectors, while easing some conditions previously applicable in other sectors. 

Qualifying activities include, but are not limited to, the following*:

  • Manufacturing;
  • Industrial Services and/or Packaging;
  • Computer Programming;
  • Data Processing and Hosting Facilities;
  • Call Centers;
  • Research, development and design;
  • Waste Treatment;
  • Environmental Solutions;
  • Life Sciences;
  • Pharmaceuticals;
  • Filming and Audiovisual productions;
  • Digital video games development;
  • Human Inpatient services;
  • Day care services;
  • Logistics Support;
  • Provision of Education;
  • Freeport Operations;
  • Cultural and Sports facilities;
  • The operation of Hotels and similar tourist accommodation facilities;
  • Knowledge intensive business services.

 

*May be subject to further conditions including a qualifying NACE Code

Qualifying Expenditure

The qualifying expenditure which form the basis for funding may consist of either investment in tangible and intangible assets, or the wage costs of new employment created within three years of the completion of the project. The amount of tax credits or cash grant to be awarded is calculated as a percentage of the qualifying expenditure, ranging from 10%-30% depending on the size of the undertaking.

What is the size of the undertaking?

The determination of the size of the undertaking requires a group-wide analysis with reference to linked and partner enterprises rather than considering the applicant undertaking in isolation. This exercise, which can be quite complex, is central to the application process as it impacts eligibility and aid intensity.

Malta Incentives Aid Tax Credits

Interplay with the Maltese general tax system

The interplay between the ITRCs and the Maltese general tax system comprising, where applicable, the tax refund system and the notional interest deduction results in further benefits for the qualifying company, including a very beneficial effective tax rate which can go down to 0% together with an increase in the longevity of the ITCRs.

How can we help?

Our Incentive Legislation team can provide a holistic service with regards to the applicability of ITCRs and its interplay with Maltese income tax legislation and other incentive schemes. This includes the analysis of whether the eligibility conditions are satisfied, restructuring advice to ensure the eligibility, as well as assistance in the application process and the claiming of the funding awarded.

The guidelines of the scheme are effective as from 1 January 2021 to 31 December 2021, however, in practice, the Corporation is also accepting applications for any investment projects with start of works being between 1 January 2022 and 31 December 2023 (or later in specific cases) provided that the applicable application forms are submitted to the Corporation by not later than 31 October 2021. If you are planning to undertake an investment project in Malta during the coming three years, we invite you to get in touch with our specialised team of experts as they can help you to apply for the scheme within the stipulated deadlines.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.