Family Business Incentives
Family businesses have been and still are a strong economic pillar. In Malta, numbers speak for themselves. Over 75% of businesses are family owned, the vast majority of small to medium enterprises, which count to 98% of Maltese businesses. They form a backbone to a country’s stability, generating income, jobs and innovation in their relevant field.
The propensity to grow and adapt is paramount for any family-run business. While first generations were defined by the ability to give to the market that which was missing, present generations are defined by the ability to diversify, modernize and innovate, because of the saturated and competitive markets most businesses find themselves in. Unfortunately, unlike other non-family run businesses, the ability to grow is dependent on the ease with which succession and transfer of ownership are executed, which may at times pose problems.
The “‘Support Incentives For Family Businesses: 2021 and beyond” is only the latest in a list of incentives meant to aid families in their transitory periods, with governance and fiscal benefits included in the scheme.
Governance incentives, subject to Malta Enterprise terms and condition include the following:
- Micro Invest tax credit over a three-year rolling period of up to €70,000
- Education and training. Education is not meant just for employees but also for the owners in a bid to achieve new knowledge and skills.
- Legal, notarial and accountancy advisory services meant to aid in the succession or business transfer of a family business;
- Grant to cover mediation services to solve any rising conflicts and to ensure smooth transition of owners in family business.
- The positive consideration of lease renewals occupying Government premises;
- Investment Aid – where a member of the family of the original owner, or an employee, takes over an enterprise, the condition that the assets be bought from third parties unrelated to the buyer shall be waived.
Fiscal incentives to be applied as follows, and should be integrated in the Duty on Documents and
Family Business Transfers: A reduced stamp duty of 5% to 1.5% with no limit on the amount to be transferred for parents transferring their family business to their children during 2021
Immovable Property: Duty on immoveable property shall be chargeable on the first EU500,000 of the value of the property at the rate of 3.5% when transferring a family business.
Shares, Interest: When transferring shares, interests in a partnership, trust or foundation no account shall be taken of the first €150,000 or such other greater amount as may be prescribed.
In addition to the above, family undertakings benefit from an advantageous loan debt financing by Bank of Valletta and Malta Development Bank of up to a value of €750,000.
How can we help?
Here at TACS we have the right experts to help you maneuver your way around the Family Business Incentives with ease. Speak to us, let us take care of your business, from our family, to yours.