December Tax News

𝐋𝐨𝐜𝐚𝐥 𝐓𝐚𝐱 𝐔𝐩𝐝𝐚𝐭𝐞𝐬

1. Value Added Tax Act – Amendments and Legislative Updates

Published on 17 December 2024, the legislative updates and amendments, consisting of Act XXXVIII of 2024 and numerous Legal Notices, transpose the VAT SME Scheme and the Reduced VAT Rates Directive into Maltese legislation together with various technical developments to existing rules. These come into force on 01 January 2025.

▪️Act XXXVIII of 2024 amended the VAT Act, Cap. 406.

▪️Legal Notices 344 to 353 of 2024 amended a small number of Subsidiary Legislation and Schedules under the VAT Act.

▪️Legal Notices 354 and 355 of 2024 introduced an exemption (with credit) on certain sanitary items essential for women’s health and certain medical accessories essential to compensate and overcome cancer in humans.



2. Amendments to Three Income Tax Rules

▪️ Legal Notice 356 of 2024 has amended the Pensions (Tax Exemption) Rules (S.L. 123.204).

- Pension income derived by an individual during basis year 2025 (year of assessment 2026) shall be partially exempt from tax on the first 80%, but not exceeding €13,309.

- Pension income derived by an individual during basis year 2026 (year of assessment 2027), and subsequent years, shall be fully exempt from tax subject to not exceeding €16,636.


▪️ Legal Notice 357 of 2024 has amended the Tax Rebate (Pensioners) Rules (S.L. 123.174).

- In respect of income earned as from 01 January 2025, the tax rebates allowed as a set-off against the tax on an individual’s chargeable income have been amended, in line with the changes to the tax rates for the same year.


▪️Legal Notice 358 of 2024 has amended the Deduction (Income from Employment) Rules (S.L. 123.149), in line with the changes to the tax rates for basis year 2025 (year of assessment 2026).



3. Extension of applicability and amendment of the Relief from Income Tax and from Duty on Documents and Transfers on Certain Property Transfers Rules (S.L. 123.203 and S.L. 364.19)

Legal Notice 363 of 2024 has extended the periods of applicability, by another year, of the following three schemes that grant final withholding tax and stamp duty exemptions (on the first €750,000) on certain property transfers:

▪️Transfers of vacant property.

▪️Transfers of property situated within an Urban Conservation Area (‘UCA’).

▪️Transfers of property developed in accordance with approved criteria.

Additionally, an amendment to Rule 3 of the Subsidiary Legislations, now sees the inclusion of a further proviso to the applicability of the Rules.

No relief from income tax and from duty on documents and transfers shall be allowed in accordance with this rule if the property that is transferred consists of:

a) immovable property intended for the storage of goods or materials; and/or

b) the property that is transferred consists of a garage (this applies if the garage transfer is not by means of the same deed and to the same person, and such garage not being either attached or underlying the residential property or being a garage of more than 30m2 situated more than 500 metres away from the residential property).





𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐓𝐚𝐱 𝐔𝐩𝐝𝐚𝐭𝐞𝐬

1. Signing of a new Double Tax Treaty between Malta and Bulgaria

On 10 December 2024, Malta and Bulgaria signed a new double tax treaty in Brussels. Whilst this treaty still needs to be ratified by both countries, it will revise the currently existing treaty from 1986 and includes various provisions based on the OECD’s BEPS Multilateral Instrument. Once it is put in force, it will replace the 1986 tax treaty.

This treaty aims to ensure a balanced distribution of the taxing powers between the two countries and introduces clear and effective tax rules to eliminate double taxation for business and individuals.