The Malta Tax and Customs Administration (“MTCA”) has published a memorandum clarifying a number of measures enacted as amendments to the Income Tax Act (chapter 123 of the laws of Malta – the “ITA”) by virtue of the Budget Measures Implementation Act (Act IX of 2025).
The MTCA memorandum clarifies the amendments made to a number of articles in the ITA, including:
Article 5A (4)(c), ITA – Exemption from property transfer tax:
For the purposes of the exemption from property transfer tax on the sale of one’s home, where this was jointly owned by a couple and occupied for at least 3 years, the property is not considered vacated when the couple separates and one spouse vacates the property. The property is considered vacated on the date other spouse also vacates same and must then be transferred within the 12 months from the property being vacated in order toa vail of the exemption.
Article 14 (1)(ma), ITA – Deductions for business permits:
A deduction for capital expenditure incurred on or after 1 January 2025 in the course of a person’s trade or business may be taken on the acquisition of:
- A business permit;
- A concession;
- A commercial lease (including of a commercial concern).
The memorandum provides further detailed guidance on the conditions which must be satisfied to benefit from said deductions as well as a worked example.
Article 14B, ITA – Adjustment to deduction for school fees:
As of 1 January 2025, the maximum annual allowable deduction parents may claim with respect to private school fees has been increased to:
- €3,500 for every child attending kindergarten;
- €4,600 for every child attending primary school;
- €6,500 for every child attending secondary school.
Article 56 (1) – Adjustment of personal tax rates:
Personal tax bands have been widened as of 1 January 2025, with the amended rates available on the MTCA’s website here.
The memorandum also clarifies that the parent rates of tax will apply to parents who have custody or pay maintenance in respect of a child even where said child is in gainful employment, irrespective of the amount of income earned by the child since the income threshold of €3,400 has been removed.
Article 56 (26A) – Tax rate on income from artistic activities:
As of 1 January 2025, the reduced tax rate of 7.5% on income from artistic activities applies on the net income derived by the taxpayer and not the gross income.
Read more:
Budget Measures Implementation Act 2025 memo: Amendments to the Income Tax Act
OUTLINE
