Malta has established itself as a business-friendly destination, offering a range of programmes and incentives designed to attract and support both local and foreign businesses. Key among these initiatives is the Foreign Tax Credit, which allows businesses to offset taxes paid abroad against their Maltese tax liability, further enhancing Malta’s appeal as a base for international operations.
Another significant programme is the Invest – Support for Initial Investment Projects scheme, launched in January 2024. This initiative offers tax credits, cash grants, and subsidies on interest rates, incentivising companies to expand their operations and contribute to Malta’s economic diversification. This scheme is available until December 2026, providing substantial support for new ventures.
Additionally, the Start-Up Residence Permit targets non-EU and non-EEA nationals, offering a three-year residency permit, renewable for an additional five years. This programme supports start-up founders, their families, and core employees, enabling them to bring their innovative ideas to the European market while ensuring business and family stability.
Through these programmes, Malta demonstrates its commitment to creating a conducive environment for business growth, making it an attractive destination for entrepreneurs and investors worldwide ( Worldwide Tax Summaries Online ) . Many companies have relocated to Malta; Ryanair, Sketcher, Costa Coffee, and Guess are just a few of the companies that have also established a presence in Malta, further demonstrating the country’s appeal to international businesses.
Let’s examine these incentives and schemes in detail and see how they have supported both inbound investments and homegrown enterprises.
Foreign Tax Credit is A Gateway to Global Expansion
One of the key pillars of Malta’s business-friendly environment is its provision for a Foreign Tax Credit. This credit allows businesses to offset taxes paid abroad against their Maltese tax liabilities.
Such a mechanism not only prevents double taxation but also encourages businesses to explore international markets without fear of excessive tax burdens. This way, foreign investors can maximise their returns while contributing to the local economy.
Note: The Foreign Tax Credit (FRFTC) corresponds to 25% of the foreign source income acquired by the Malta-based company or branch after deducting foreign taxes paid.
Inbound Investment Incentives
The Malta Enterprise Act serves as the cornerstone for attracting inbound investments, particularly in high-value-added sectors such as manufacturing, pharmaceuticals, and research and development. Under this framework, enterprises engaging in qualifying activities stand to benefit from a suite of incentives designed to support their growth aspirations.
Invest – Support for Initial Investment Projects Scheme
Launched in January 2024, the Invest – Support for Initial Investment Projects scheme provides a lifeline for businesses starting new ventures. The Invest scheme is designed to support initial investments in various forms, including setting up new establishments, expanding existing facilities, and diversifying business operations.
Eligible businesses can avail themselves of investment aid in various forms, including tax credits, cash grants, and subsidies on interest rates. The scheme, valid until December 2026, incentivises companies to expand their operations and contribute to Malta’s economic diversification.
One notable company that has benefited from this scheme is GO plc, a leading telecommunications provider in Malta. GO plc received support to extend its Fibre-To-The-Home network, enhancing high-speed broadband access to thousands of homes across the country. This project aligns with the scheme’s objectives by contributing to technological advancement and economic growth in Malta. Eligible businesses, especially small and medium-sized enterprises (SMEs), can apply for these aids to facilitate access to funding and accelerate their return on investment.
Tax Credits and Special Incentives
Tax credits and special incentives offer various forms of aid, including tax credits, cash grants, and subsidies for interest rates. This initiative aims to encourage businesses to start new ventures or expand existing ones, thereby contributing to Malta’s economic diversification and development.
Several well-known companies in Malta have benefited from the country’s tax and special incentive schemes. For instance, BMIT Technologies plc, a leading provider of data centre, cloud, and managed IT services, received significant support to enhance its infrastructure and expand its service offerings. This aligns with Malta’s aim to boost technological advancement and economic growth. Moreover, the combination of tax treaties and domestic laws can further reduce the tax burden for eligible companies, promoting a conducive environment for sustainable growth.
Seed Investment Scheme
Recognising the importance of nurturing start-ups, Malta introduced the Seed Investment Scheme to provide much-needed capital and tax relief. Qualifying investors can benefit from a tax credit of up to 35% of their investment in eligible companies capped at €250,000 per year, coupled with exemptions on gains derived from such investments.
Revolut, the fintech giant, has benefited from Malta’s supportive investment given by the Seed Investment Scheme. This has facilitated Revolut’s expansion and the establishment of its presence in Malta, enhancing the financial technology landscape in the region (3A Malta). For more detailed information on the scheme and application procedures, you can visit the Malta Enterprise website.
Innovation is A Catalyst for Success
In addition to traditional incentives, Malta has embraced innovation as a driver of economic development. Initiatives like Start in Malta and the Start-Up Residence Permit aim to cultivate a vibrant start-up ecosystem, attracting talent and capital from around the globe.
By offering streamlined processes and support services, Malta empowers entrepreneurs to overcome the complexities of business ownership while leveraging the country’s resources for growth.
Start in Malta and the Start-Up Residence Permit
Start in Malta Program
Start in Malta is a government initiative aimed at fostering a vibrant start-up ecosystem. It provides various support mechanisms, including funding, mentorship, and networking opportunities, to help start-ups establish and grow their businesses in Malta. The initiative is designed to attract innovative entrepreneurs and tech talent from around the globe, encouraging them to set up their ventures in Malta.
The Malta Startup Programme offers financial incentives to support innovative startups. Through the Business Start Scheme (BStart), new businesses can receive up to €200,000, divided into two phases: up to €10,000 for the pre-business plan phase and up to €200,000 for the post-business plan phase, spread over 36 months with quarterly payments of €20,000. Additionally, the Start-Up Finance scheme provides up to €800,000 for innovative enterprises, which must be repaid once the company starts making a profit. Other financial assistance includes tax credits or cash grants of up to €200,000 for business development and transformation efforts (MEA – INDeX) (MaltaToday.com.mt).
Start-Up Residence Permit
The Start-Up Residence Permit, launched in 2022, is specifically designed for non-EU and non-EEA nationals. This programme offers a three-year residency permit, renewable for another five years, to start-up founders, their families, and core employees. The permit aims to attract innovative start-ups and scale-ups to Malta, providing them with a stable business environment and access to the European market.
Conclusion
Malta’s incentives for businesses represent a strategic commitment to inspiring economic growth and prosperity.
Compared to other European nations, Malta’s offerings are particularly attractive. Countries like Ireland and Luxembourg also offer tax incentives, but Malta’s comprehensive support system and strategic location make it a prime destination for businesses looking to expand in Europe.
Prominent companies such as Ryanair, Betsson Group, and VistaJet have relocated to Malta, benefiting from its favourable business environment. For instance, VistaJet moved its global headquarters to Malta, leveraging the country’s thriving economy and strategic location to drive continued growth. Similarly, the Betsson Group, a leading gaming company, chose Malta for its regulatory framework and supportive business climate (TradeGov).
Malta is a compelling destination with new opportunities waiting to be unlocked. It’s easy to see why Malta continues to draw in global enterprises, bolstering its reputation as a leading hub for innovation and business growth. For more information on these programmes and how to apply, visit the Malta Enterprise website.
Sources
Invest – Support for Initial Investment Projects scheme
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