Malta Budget 2025
General
On the 28th of October 2024, Malta’s Finance Minister unveiled the Malta Budget 2025, laying down the Government’s new intended measures to reduce taxes whilst increasing tax deductions, increase the minimum wage and boost pensions.
The Malta Budget 2025 highlighted Malta’s economic performance during 2024, including a 7.5% increase in Gross Domestic Product (GDP) in 2023 and a projected 4.9% increase by end of 2024. The Government deficit decreased to 4% from 4.5% in 2023 and is projected to fall to 3.5% in 2025. Inflation has also fell significantly from 5.6% in 2023 to a projected 2.5% in 2024.
Income Tax
The Malta Budget 2025 unveiled widened income tax bands for single, married and parent tax payers, as illustrated below:
This is complemented by a significant increase in Personal Tax Deductions for parents with children in private schools:
(i) Kindergarten: €3,500 in 2025 from €1,600 in 2024.
(ii) Primary School: €4,600 in 2025 from €1,900 in 2024.
(iii) Secondary School: €6,500 in 2025 from €2,600 in 2024.
Value Added Tax
The Malta Budget 2025 also eliminates all Value Added Taxes (VAT) on female sanitary products and other medical accessories used by female cancer patients.
Purchasers of bicycles and electric scooters will continue to benefit from a full VAT refund in 2025.
Stamp Duty
A reduced stamp duty rate of 1.5% for transfers of businesses to descendants has been extended to 2025.
Salaries
The Government intends to increase the minimum wage by €8.24 per week, in line with its 2023 agreement with workers’ unions. The Cost-of-Living Adjustment (COLA) is set to be €5.24 per week.
Pensions
In order to encourage pensions to continue working beyond retirement age, 80% of pension income will not be considered taxable income. Additionally, elderly pensions will increase by €8 per week in 2025, with the widower’s pension also set to increase by €3 per week.
Government institutions will be enrolling all employees in occupational pension schemes, matching all employees’ contributions up to a maximum of €100 per month per employee.
Private employers are also under a duty to offer each employee the opportunity to contribute to an occupational pension scheme, although they are under no obligation to make contributions.
Energy and Transport
To contribute to Paris Agreement’s Net Zero goal, Malta’s will continue to support the generation of renewable energy through grants for photovoltaic panels (solar panels), battery storage and solar heaters.
Malta will also continue to promote the purchase of electric vehicles. However, the grant for cars and vans has been reduced to €8,000 in 2025 from €11,000 in 2024. On the other hand, electric cars with a range exceeding 50km will be exempt from registration and annual circulation taxes.
Immovable Property
The Malta Budget 2025 renews grants for eligible first-time buyers, who will receive a one-time grant of €15,000 for properties purchased in Malta, or €40,000 for properties purchased in Gozo.
Regulatory Goals
Malta seeks to remain a reputable and attracting jurisdiction, intending to publish innovative frameworks for key sectors such as sustainable finance, family offices, wealth management, aircraft leasing and fintech in 2025. A new residence programme may be introduced targeting professional gamers and streamers.