#maltabudget2021

#maltabudget2021

#maltabudget2021

The 2021 budget sees the fourth year under the current government with no new taxes introduced. When it comes to property, several popular incentives have also been extended as highlighted below.

What does the 2021 Budget offer in terms of real estate?

FIRST TIME BUYERS

Buyers purchasing their first property will be able to benefit from the extended First Time Buyer scheme. Until this year, first-time buyers were exempt from paying stamp duty on the first €175,000 of the property value. The scheme has now been extended until the end of 2021 and with effect from 20th October 2020, the threshold on which one is eligible for a reduced tax rate has been increased to Euro 200,000. This is equivalent to a maximum saving of Euro 7,000.

First Time Buyers who purchase a property through Frank Salt Real Estate can also benefit from further offers thanks to our first time buyer enhanced package. (Read More)

EXTENSION OF THE ECONOMIC REGENERATION PLAN MEASURES

The measure applies for residential properties only and covers the first €400,000 of the property value. The rate of stamp duty on property purchases has fallen from 5% to 1.5% on the first €400,000 of property value and from 8% to 5% on those selling property, will remain in place for promises of sale registered until 31 March 2021 and contracts entered into by 31 December 2021.

SECOND TIME BUYERS

Individuals who sell their home to acquire another residential property are currently eligible to a refund on stamp duty of up to €3,000 (or €5,000 in the case of persons with special needs) provided that they do not own any other property at the time. This measure is being extended to qualifying acquisitions made during 2021.

Second Time Buyers who purchase and sell their property through Frank Salt Real Estate can also receive up to €1,000 in cash and benefit from further discounts on additional services. (Read More)

PROPERTY DONATIONS

Donated property by parents for their children to reside in will benefit from a tax exemption on the first €250,000 and the tax on amounts exceeding €250,000 will be subject to a tax of 3.5%.

PROPERTY TRANSFER TAX

Property transfer tax (also referred to as Final Withholding Tax) will be capped at 5%, this scheme offers vendors, who may have otherwise paid up to 10% in tax, a substantial saving. This applies to promises of sale agreements registered by 31 March 2021.

TAX ON THE ASSIGNMENT OF A PROMISE OF SALE

During 2021, all profits derived from the assignment of rights on a promise of sale relating to immovable property will be taxed at a final tax rate of 15%. This reduced final withholding tax was previously applicable on the first €100,000.

NEW AUTHORITY REGULATING THE CONSTRUCTION INDUSTRY

A new Authority regulating the construction industry will be established as from 2022 with the primary aim to safeguard the local environment and reduce accidents on construction sites. This Authority will be responsible to issue the necessary regulations and standards required within this industry. Decisions may be contested in front of an independent tribunal which will be set-up in the near future. A new Compensation Fund will also be formed to provide redress for any damages suffered as a result of any accidents.

Other property related initiatives that will be retained

STAMP DUTY ON PROPERTY SET IN URBAN CONSERVATION AREAS (UCAS)

In case of transfers of properties located in an Urban Conservation Areas, the current stamp duty rate of 5% will be reduced to 2.5%. This reduction on stamp duty will remain applicable until the end of 2021.

Furthermore, on the sale of a property within the UCA, the rate of final withholding tax levied on transfers of a restored property is also capped at 5%.

Urban Conservation Areas refer to areas that are protected, preserved, and carefully managed, such as most of the village cores. They generally offer traditional and historic local architectural and it is therefore in the interest of all to preserve the character of such areas.

STAMP DUTY ON PROPERTY PURCHASED IN GOZO

To promote the sale of property in Gozo, one can also benefit from a reduced rate on stamp duty of 2%, as opposed to the standard rate of 5%.

Should you wish to discuss how you can avail from the above measures, feel free to contact any of our branches, or request a one-to-one no-obligation appointment. We can also arrange a video chat if you find this more convenient.

Other Key Budget Measures

COVID-19 VOUCHER

  • Additional €100 Government vouchers to be issued of which €60 to be used for accommodation, hotels and restaurants and remaining €40 at other shops.

BUSINESSES

  • The 1.5% tax concession on the transfer of businesses is also being extended by a year.
  • The tax-free threshold for VAT-exempt businesses is being raised from the current €20,000 to €30,000.
  • New schemes will be introduced to help business start-ups, to encourage online business, and to help firms attract new foreign investment.
  • Farmers and fisherman will be given government grants equivalent to what they pay in tax on sales at the vegetable and fish markets.
  • Tourism regeneration strategy to be announced in coming weeks aiming to re-build the tourism industry following the effects of the COVID19 pandemic.

SOCIAL MEASURES

  • Cost of living increase of €1.75 per week.
  • One additional day of leave shall be added to all employees’ yearly leave balance.
  • Social security pensions shall be increased by €3.25 per week, totalling to €5 per week when including COLA adjustment.
  • Yearly increase in children’s allowance of up to €70 per child.
  • Foster Care allowance increased by €520 per child per annum.
  • €1,000 grant for couples who adopt a child locally.
  • An increase of between €70 to €108 per annum in the supplementary allowance for persons who are 65 years and over.
  • Additional assistance amounting to €300 per year for parents who have to stop working in order to care for children with severe disabilities.

INFRASTRACTURE

  • Continued investment on the upgrading road network project (in particular the completion of the Central Link Project and Swieqi junction.
  • Commencement works on new projects including the Luqa Junctions Project, Msida Creek Junction, Hal Kirkop tunnels and Airport Intersection Project).
  • Introduction of ‘Safe Cycle Routes Project’.
  • A €450,000,000 investment over 7 years in industrial infrastructure and office space covering amongst others, investment in a new Life Science Park, Kordin Business Centre, and the development of an SME space and a logistical centre in Marsa.
  • €11,000,000 investment in sports facilities over 3 years.

SUSTAINABILITY & THE ENVIRONMENT

  • Introduction of a long-term implementation plan towards achieving a ‘Net Zero, Carbon Neutral’ environment for the tourism industry.
  • The importation of single use plastic products will discontinue as from 1 January 2021 with the local sale and distribution to be prohibited as from 2022.
  • Distribution of water saving kits to households, improving the quality of tap water and the handling of water leaks.
  • Introduction of ‘Green Bonds’ for investments to finance projects which promote renewable energy and which reduce air pollution as well as installation of Green Walls.
  • Grants of up to €7,000 when one scraps a vehicle which has been in circulation for more than a decade, and which is replaced by a less polluting vehicle.
  • Grant of €400 for those who convert their vehicle to run on gas instead of fuel.
  • Machines for the collection of recyclable bottles to be installed in the coming year.

PERSONAL TAX

  • The maximum amount of exempt pension income will be increased to €14,058. Furthermore, persons claiming married rates will be entitled to a further €3,600 tax free amount in respect of income from other sources.
  • Income tax exemption relating to the Third Pillar Pension Scheme increased to €3000 per annum (increased to €6000 per annum in the case of a married couple where only one of the spouses works).
  • Income tax exemption relating to the Voluntary Occupational Pension Scheme increased to €3000 per annum.
  • Royalties derived from the sale of literary works shall be subject to a special final tax rate of 15%.

Get in touch

to find out more about the property-related measures
announced in the Malta 2021 budget