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MALTA BUDGET 2025

Pensions & Elderly People

Personal Taxation

Businesses

Family & Children

Manufacturing

Agriculture & Fishing

Sustainability

Property

Personal Taxation

Starting from 1st January, 2025, the personal income tax bands will be widened. The updated tax rates, shown in the table on the right, will lead to annual tax savings ranging from €345 to €675, depending on income levels.

Pensions & Elderly People

Pensions will rise by €8 per week, which translates to an annual increase of €416. The gradual tax exemption on pensions for individuals aged 61 or older, which was introduced in 2022, will continue in 2025. For 2025, 80% of the pension will be exempt from tax, subject to the prescribed cap. The pension bonus rates for individuals with insufficient social security contributions will be revised, leading to an increase ranging from €550 to €1,000. The grant for elderly individuals aged 75 to 79 who live at home or in a privately funded care facility will be increased by €50, bringing the total to €350. The Carer at Home Scheme will be increased by €500, bringing the annual amount to €8,500. The pension for individuals with disabilities who retire from work will be increased to offset the loss of disability allowance, ensuring the pension meets the national minimum wage.

Family & Children

The children's allowance will be increased by €250 per child. The €150 grant for individuals working atypical hours in certain sectors will be maintained. The bonus for families with a third or subsequent child will rise from €1,000 to €1,500. The marriage grant will be increased to €1,000 per couple. The 100 hours of paid leave for employed prospective parents undergoing IVF treatment will be extended to self-employed individuals as well. The current 10 days (or 80 hours) of paid paternity leave for employed fathers will be extended to self-employed fathers, with payment based on the minimum wage. The fostering allowance will increase by €10 per week, bringing the total to €120 per week for each foster child under 21. The Supplementary Allowance will rise by €190 for couples and €60 for single individuals, with an expanded income eligibility bracket. Two years of social security credits will be provided to individuals who complete a drug rehabilitation program and secure employment. The capital asset threshold for eligibility for non-contributory benefits will increase to €26,000 for couples and €16,000 for single individuals. An increase in disability benefits and carers' grants will be implemented. The tax credit for parents of children with disabilities who require specialized therapy will rise by €250, bringing the total to €750. This tax credit will also be available to unemployed parents or those receiving social benefits. The maximum tax deduction for school fees paid for children attending private schools will be increased to €3,500 for kindergarten, €4,600 for primary school, and €6,500 for secondary school. The government will fully subsidize the first six months of gym membership for youths born in 2005, 2006, and 2007.

Businesses

The European Digital Innovation Hub (DiHubMT) will continue to support start-ups and SMEs by offering mentorship, pre-accelerator and incubator services, as well as access to a High-Performance Computer to assist with their research. The government plans to introduce a Digital Identity Wallet, allowing individuals and businesses to securely share their digital identity through an app on their smartphones. The reduced duty rate of 1.5% on the real value will continue to apply to the transfer of company shares and commercial property in intra-family donations. Malta will continue to promote the establishment of back-office services, including administrative and support services, among others.

Manufacturing

Development has begun on the industrial area in San Gwann, which will feature laboratories and space for light industry companies. Additionally, an incubation center is being established in Hal Far to support start-ups in scaling up their operations. An SME Park in Hal Far is being created to house businesses such as panel beaters, carpenters, and sprayers, with the goal of relocating these industries from residential areas. In 2024, the Invest Gozo platform was launched, offering targeted information on investment opportunities, research, and employment in Gozo.

Agriculture & Fishing

New incentives will be introduced for non-commercial farmers leasing agricultural land from the government, encouraging them to form partnerships with commercial farmers to cultivate the land. A Food Safety Authority will be established as the sole regulatory body in this field, with the responsibility of ensuring food safety, particularly in times of crisis. Fiscal incentives will be introduced for food producers and vendors to help reduce food waste. Infrastructure investments will be made to support the fishing industry, along with aid to minimize pollution and its environmental impact. A €4 million project, funded by the EU, will enhance digitalization in the fisheries and aquaculture sectors. Excise duties on low-alcohol beer produced by small, independent breweries in Malta and on small wine producers will be reduced.

Sustainability

Schemes aimed at encouraging investment in residential renewable energy systems will continue, including the installation of PV panels, home energy storage batteries, heat pump water heaters, solar water heaters, and water purification systems. The government will also keep incentivizing the private sector to develop renewable energy installations. The strategic vision for clean energy is evolving and includes: (i) the implementation of the second interconnector, (ii) investment in large-scale energy storage using batteries, (iii) a national policy for renewable energy projects, and (iv) an initial consultation to assess market readiness. Following the identification of six zones for potential renewable energy projects, a Strategic Environmental Assessment has identified two zones where such projects would have a lower environmental impact. The scheme offering incentives for the purchase of new electric vehicles will be extended, with grants of up to €2,000 for new motorcycles and up to €8,000 for new vehicles and small vans. Additional schemes promoting the shift to environmentally friendly vehicles will also be extended. These include incentives for purchasing electric bikes, pedelecs, and e-kick scooters, as well as the vehicle scrappage scheme and grants for converting vehicles to LPG or electric power. Electric vehicles and plug-in hybrids with an electric range of at least 50 km will continue to benefit from exemptions on registration tax and the annual road license fee for five years from the date of first registration.

Property

The duty exemption for first-time buyers, the partial stamp duty refund for second-time buyers, and the €10,000 grant for first-time buyers (spread over 10 years) will be extended. The exemption from income tax and duty on the first €750,000 of the higher of the value or consideration of the property will continue, provided the property is located in a UCA (Urban Conservation Area), is over 20 years old, vacant on the transfer date, and has been vacant for at least 7 continuous years prior to the transfer. VAT refunds (up to a maximum of €54,000 on the first €300,000) will continue for expenses incurred in the restoration and finishing of properties located in a UCA, over 20 years old, vacant on the transfer date, and vacant for 7 continuous years prior to the transfer, or for new properties developed according to approved criteria. The grant for first-time buyers of residential properties located in a UCA, over 20 years old, vacant on the transfer date for 7 continuous years, or newly developed properties meeting approved criteria will be extended. The grant for properties in Malta is €15,000, while for properties in Gozo it is €40,000. A new scheme will be launched to enable the redemption of temporary emphyteusis, broadening eligibility for current and past schemes.

Economic Review

Malta's employment grew by 6.1% in 2023, with projections indicating an increase of 4.6% in 2024 and 4.1% in 2025. Meanwhile, inflation is expected to decline to 2.5% in 2024 and further decrease to 2.1% in 2025. Although the current deficit exceeds the EU's 3% threshold, it is anticipated to reduce to 4.0% in 2024 and continue to decline, reaching 2.6% by 2027. Despite this deficit, debt as a percentage of GDP is projected to reach 49.5% in 2024 and 50.1% in 2025. The government will maintain subsidies for energy fuels, grains, and animal feed prices. The cost of living adjustment (COLA) for 2025 has been set at €5.24 per week and the national minimum wage, which remains untaxed, will increase from €213.54 weekly to €221.78 per week.

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