Grants, Benefits and Incentives for Business in Malta
Malta is a unique EU destination for investment. Labor costs are very
competitive, with the Malta annual average wage being around Eur 14,600.
Banking charges are also very reasonable. Finally a 2008 Forbes Tax and
Misery report ranked Malta as the most attractive EU country for taxes
and social security contributions paid out by companies. Malta grants,
benefits and Incentives are regulated by a plethora of laws,
regulations, guidelines and policies. Businesses engaged in the
following sectors may be eligible to benefit:
- Production, manufacture, improvement, assembly, preservation,
processing of any goods,
materials, commodities, equipment, plant, machinery;
- The rendering of any industrial services analogous to the activities referred to in (1);
- The repair, overhaul or maintenance of pleasure crafts, yachts
not having more than thirty berths,
aircraft, engines or equipment incorporated or used in such vessels or aircraft;
- Information and Communications Technology (I.C.T.) developmental activities, software development, Information Technology (IT) enabled services including call centres and Information Technology (IT) solutions as may be prescribed, but excluding telecommunications service providers;
- Research and development, and innovative start-ups;
- Eco-innovations, waste treatment and environmental solutions;
- Biotechnology, comprising the production or development of intellectual property or goods or the rendering of services resulting from, or related to, the study, research, discovery application, modification or development of living organisms or materials derived from them as may be prescribed in the Guidelines;
- The provision of facilities directly required in the development or production of feature films, television programmes or commercials as may be prescribed in the Guidelines;
- The provision of science and technology private tertiary education;
- The provision of private health-care services through the setting up of new projects carrying out an investment of not less than 2.5 million euro in medical equipment, excluding land or buildings
- The provision of logistics services that include part transformation that adds value by undertakings employing not less than two hundred and fifty fulltime employees or their equivalent
- Activities set out
in Article 11 of the Malta Freeports Act.
What type of benefits are envisaged?
- There are many types of
incentives envisaged. The following are some examples:Investment tax
- Cash grants of up to 50% for
acquisition of qualifying tangible and intangible assets/ qualifying
services for new eligible businesses;
- Cash grants of between 35%-25% for expenditure incurred in the
first 5 years of operations on:
a. Advisory /consultancy/ legal / administrative costs relating to the setting up of the corporate structure;
b. Interest on bank loans;
c. Energy/water costs;
d. Depreciation of assets;
e. Lease of production facilities/equipment;
f. Wage costs (including national insurance contributions)
- Cash grants of up to 50% of costs involved in engaging experts
- Cash grants of up to 65% of costs involved in participation in fairs and exhibitions
- Cash grants of up to 65% for costs of assistance in the preparation and submission of proposals for participation in projects funded by the European Union such as the Seventh research Framework programme (FP7) and the Competitiveness and Innovation Framework Programme.
- Cash grants of up
to 100% for the first 15 hrs of the cost of certain
Are incentives granted subject to tax in the hands of the beneficiary?The rule is that incentives, benefits and grants given are exempt from tax in the hands of the beneficiary unless they take the form of income substitution.
What type of confirmation will I receive when my grant / inventive is approved?The award of incentives to a particular enterprise is formalized in an Incentive Entitlement Certificate. An Incentive Entitlement Certificate outlines the type of support granted and its terms and conditions. It is deemed “conclusive evidence” of the entitlement and is has the legal strength of contract between the beneficiary enterprise and the Government of Malta. An Incentive Entitlement certificate is also considered a public instrument and proof of its contents.
What is the role of ACS? What are our fees?Our role is to represent our clients in front of the national authorities and follow through all the procedures leading to the Incentive Entitlement Certificate. Our commitment, knowledge of relevant laws and policies, and negotiating skills are the main reasons why clients seek our services. This is what we propose:
- After signing an NDA with Client, the client presents us with a short business plans of the intended operations in Malta.
- We then prepare a report on the main incentives applicable. The cost of this report is typically under Euro 950. It also includes a meeting with the Governmental authorities in order to obtain their preliminary feedback on the proposal. This stage allows potential investors to ‘test the ice’ without the need of coming to Malta.
- If the client decides to take the case
further, we typically :
b. Assist with negotiations to ensure that the client obtains the best deal.
c. Investigate the permits required for the business to operate;
d. Help the client commence operations in Malta.
We always strive to adopt a fee structure which enables Clients to know in advance our professional fees. Moreover, in certain cases our fees actually constitute eligible expenditure which entitles the client to obtain cash grants from Governmental Authorities.