The Malta Budget for 2025, presented by Finance Minister Clyde Caruana, outlines several key measures aimed at supporting households, enhancing the business climate, and continuing sustainable development.
In this article, we’ll first look at the current state of the Maltese economy, and we’ll then go through a summary of the key takeaways from this year’s annual appointment.
The State of the Maltese Economy
Despite the weak external environment, the Maltese economy proved resilient in 2023, as economic activity increased by 7.5 per cent in real terms and 13.2 per cent in nominal terms. In accordance with Eurostat, Malta’s real economic growth in 2023 stands out in comparison to a growth rate of 0.4 per cent recorded in both the EU and the Euro area (EA). Source: Eurostat
Employment growth in 2023, as measured by the Labour Force Survey, reached 5.3 per cent when compared to the previous year. Such employment growth is on the backdrop of strong economic activity and the Government’s stance on active labour market policies. Source: Eurostat
While the deficit is currently higher than the 3% EU threshold, this is expected to decrease to 4.0% in 2024 and continue decreasing to 2.6% by 2027. Notwithstanding this deficit, as per NSO statistics, debt as a percentage of GDP is expected to close at 49.5% in 2024 and 50.1% in 2025. The Government will continue to subsidise prices of energy fuels, grains, and animal feed. Source: NSO, Minister for finance (MFIM)
Malta Budget Key Takeaways
The following is a breakdown of some of the highlights announced during this year’s Budget, split into themes.
COLA, COLA Bonus & Minimum wage
This year’s Cost-of-Living-Adjustment (COLA), calculated automatically based on inflation and other cost-of-living indicators, will see a weekly increase of €5.24.
An extra COLA payment for vulnerable workers which was named COLA Plus will remain unchanged – payments will top out at €1,500 per year and will be paid across two payments.
The minimum wage will increase by €8.24 per week to reach €221.78 per week and will fall beneath the taxable threshold.
Pensioners
Pensioners will get a €8 increase per week—which totals €416 a year.
Revision of pension bonus rates for persons who do not have sufficient social security contributions, resulting in an increase varying from €550 to €1,000.
For 2025, the exempt portion is 80% (60% for 2024), subject to the prescribed cap.
Carer at Home Scheme to increase by €500 to €8,500 per year.
Senior citizens aged 75-79 who choose to continue living in the community will get a €350 payment, up from the previous €300.
Senior citizens aged 80+ will get the same €450 payment they received previously.
Children and education
An increase of €250 per child in children’s allowance will impact around 42,000 families.
Parents with children in private kindergartens will get a €3,500 tax credit, those in primary school will get a €4,600 tax credit and those in secondary school will get €6,500.
New social benefit
There is an introduction of a new category of social assistance, named Social Medical Help. It will go to families whose working members cannot work for some sort of reason, and such families will receive an added €5 per member per week.
Personal Pension Contributions
Existing tax incentives will continue, offering a 25% credit on personal pension contributions, capped at €750 annually. Employers also benefit from tax credits on contributions made toward employee pensions. These incentives are designed to encourage private retirement savings, supporting financial security for future retirees.
A new measure has been introduced where the government employees benefit from a matching contribution program where the government will contribute up to €100 monthly to their pension accounts.
Income tax cuts and tax refunds
Workers on single tax rates will save anything between €435 and €675 a year. Anyone earning over €19,500 a year will save €675. A couple in which both partners work and use the single computation will jointly save €1,350 in a year.
Married couples who opt to taxed according to married tax rates will save between €345 and €645 a year, with all couples earning over €28,000 to save €645.
Couples with children whose income is taxed based on parent rates will save between €375 and €650, with the max rate applying to all parents earning more than €21,200.
Consequently, families with two children and median income will end up with an additional €1,800 every year.
Tax refunds
Tax refund cheques will be paid to eligible individuals, ranging from €60 and €140.
Property incentives
The duty exemption for first time buyers and the partial stamp duty refund to second time buyers, as well as the grant of €10,000 spread over 10 years for first time buyers will be extended.
First-time buyers are exempt from duty on the first €200,000 of the consideration, while second-time buyers receive a refund on duty paid on the first €86,000 of the value of the replacement property. The duty rate of €2 for every €100 or part thereof in case of transfers inter vivos of residential property in Gozo will also continue until the end of 2024.
A VAT refund of up to €54,000 on the first €300,000 worth of expenses incurred for restoration and improvement can be claimed by persons owning eligible properties.
The grant to first-time buyers of residential properties that are located in a UCA, or built for more than 20 years and are vacant on the transfer date and have been so vacant for a period of 7 continuous years immediately preceding transfer date, or new properties developed in conformity with approved criteria will be extended. The grant for properties situated in Malta amounts to €15,000 while the grant for properties situated in Gozo amounts to €40,000.
A scheme enabling the redemption of temporary emphyteusis will be launched. This will widen the eligibility on current and past schemes.
Pillar II Tax Deferrals
Malta will continue delaying the OECD’s 15% global minimum tax implementation, providing a favorable environment for multinational businesses. The “Highly Qualified Persons” scheme has also been extended to back-office roles to attract skilled workers.
Businesses
Family Businesses
The Malta Budget 2025 includes measures designed to support family businesses, focusing on generational succession and reduced tax burdens. Key highlights include the extension of the reduced stamp duty rate of 1.5% on the transfer of family businesses to descendants. This provision aims to make it more feasible for families to pass on businesses without heavy tax impacts, fostering continuity in family-owned enterprises.
Small and Medium sized Businesses
Extensions of cash grants, interest rate subsidies and tax credits to develop and expand their business and remain competitive in the industry.
NGOs
The government has implemented several supporting measures aimed at empowering NGOs including a centralised database of volunteers that will allow NGOs to be matched to people with the skills they need. Companies giving donations to these NGOs will get a tax credit of up to €500 for any donations they make to voluntary organisations.
Agriculture and Fishing Industry
The agriculture and fishing industries receive targeted support aimed at enhancing sustainability, modernizing infrastructure, and fostering competitiveness. For agriculture, the budget allocates funds for farmers to invest in sustainable practices and upgrade machinery, with grants available for environmentally friendly equipment and irrigation systems.
Incentives will be introduced for non-commercial farmers who lease agricultural land from the Government to enter into arrangements with commercial farmers to work their land.
Investment in the infrastructure will be undertaken to sustain the fishing industry and aid will be provided to decrease pollution and environmental impact.
Digitalisation in the fisheries and aquaculture sector will be improved by a €4 million project funded by EU funds.
Food producers and sellers
Malta’s Budget 2025 brings in measures to support food producers and retailers by promoting cost-effective and sustainable practices. The budget provides subsidies and grants to lessen the impact of high energy costs on production and storage, with a particular focus on helping businesses invest in solar power systems and efficient refrigeration, reducing operational expenses while making eco-friendly practices more achievable.
Additionally, VAT reductions on essential sanitary products and lowered excise duties for locally produced beer and wine benefit small producers and sellers. These initiatives not only cushion rising costs but also support local, sustainable production in alignment with Malta’s environmental and economic goals.
Start ups
Supporting measures continue to exist for start-ups, aiming to foster innovation and growth in this sector. Following the success of the one-stop shop ‘Start up Malta’ https://startinmalta.com/ in the previous year, this year there were key initiatives include tax credits, grants, and funding programs that make it easier for new businesses to access capital and invest in research and development. For example, start-ups focusing on green technology, digital transformation, and sustainable practices are eligible for special grants and tax incentives, aligning with Malta’s emphasis on sustainability and innovation.
The Malta Start up Residency program, which allow foreigner entrepreneurs to establish business in Malta has been extended.
Quality Leap in Tourism
In accordance to an article published by the Central Bank of Malta, the tourism industry in Malta has witnessed strong growth over recent years, with 2024 shaping up as a record-breaking year. NSO data indicate inbound tourists increased by 8.1% between 2019 and 2023 to stand at around 3 million.
Tourism in Malta has evolved, with noticeable shifts in the tourist age profile and spending habits. The youth segment, drawn by Malta’s growing reputation as an entertainment destination, has grown significantly. This group tends to have lower expenditure levels compared to more affluent tourists, affecting the profitability of the hospitality sector, especially luxury hotels.
Consequently, the government has recognised the opportunities and challenges the hotel industry is facing and introduced initiatives in this budget to expand tourists appeal during the winter months, aiming to strengthening the tourism sector while fostering sustainable growth and improved profitability.
The MHRA praised the budget for its focus on social welfare, sustainability, and infrastructure enhancements, which are vital for fostering resilient growth and improving the visitor experience. Notable investments include sustainable infrastructure initiatives, increased funding for the Malta Tourism Authority, expanded marketing efforts, and workforce development programs.
Furthermore, MHRA welcomed the revisions to wage regulations and fiscal discipline, suggesting that higher tax bands could encourage consumer spending. To uphold high standards in tourism, the association stressed the importance of effective enforcement and the efficient rollout of the Skills Pass, which would facilitate growth across various economic sectors. They also highlighted the need for specific wage regulations tailored to the restaurant industry, particularly due to its reliance on weekend business.
This budget is being viewed as a move toward cultivating a high-quality tourism environment that benefits both Malta’s economy and the living standards of its residents. This commitment to sustainable development aims to position Malta as a leading travel destination in an increasingly competitive global tourism market.
