MALTA Law and Practice Contributed by: Donald Vella and Kirsten Debono Huskinson, Camilleri Preziosi Advocates
2.2 Technology Investments The Maltese legislature has introduced certain incen - tives to support companies investing in research and development (R&D) in different areas of science and technology. The aim of these incentives is to encour - age the development of innovative scientific products and solutions. The following regulations are of particular note: • The Research and Development (2024) Regulations assist with industrial research and experimental development activities addressing specific scien - tific or technological uncertainties, leading to the development of innovative products and solutions. This support measure is provided in the form of a tax credit or a cash grant, or a combination thereof, and cannot exceed 80% of the eligible costs. • The Patent Box Deduction Rules, 2019, establish a fiscal regime for income arising from patents, simi - lar intellectual property (IP) rights and copyrighted software. The Rules additionally provide that small companies may utilise the patent box rules in rela - tion to income from any IP based on an invention that could be patented. A taxpayer qualifying for the patent box deduction will be entitled to deduct a percentage of its income from taxable income. This deduction will be adjusted depending on the percentage resulting from dividing the qualifying IP expenditure by the total expenditure related to the particular IP. • The Exploring Research Grant Regulations, 2024, assist companies carrying out feasibility studies to determine technical and commercial challenges and activities that will enable businesses to make informed decisions on the development of intend - ed R&D projects. The Regulations allow for a cash grant of up to EUR100,000 to support the carrying out of a feasibility study. • The Start-up Finance Regulations, 2024, afford financial aid in the form of a repayable advance to start-ups or similar organisations providing ser - vices or products, or utilising processes, which are new or substantially improved compared to similar products on the market, for instance in relation to software development and activities relating to health, biotechnology, pharmaceuticals and life sciences.
• The Invest (2024) Regulations support small to medium-sized enterprises (SMEs) – through a cash grant – in carrying out projects leading to product, process and organisational innovation (through collaboration with research and knowledge-dis - semination organisations, or through innovation advisory services via funding for the secondment of highly qualified personnel, and via access to innovation advisory and support services). The 2026 Malta Budget also announced: (i) the strengthening of the MicroInvest scheme by extend - ing it to investments in digital solutions, while increas - ing tax credits to EUR65,000, covering up to 65% of the eligible expenses; and (ii) the introduction of an accelerated tax depreciation over two years relating to investments made in AI, digitalisation, automation and cybersecurity. Following the 2026 Malta Budget, a new provision in the ITA has introduced a 175% tax deduction on eligible research and innovation spending, aimed at encouraging companies of all sizes to invest in tech - nology knowledge and innovative development. 2.3 Special Incentives The government agency Malta Enterprise has devel - oped various incentives for the promotion and expan - sion of industry and the development of innovative enterprises, including: • investment aid tax credits; • financial assistance to start-ups; • cash grants and/or tax credits available to com - panies requiring industrial space to carry out their business activities or in connection with capital expenditure incurred on machinery, IT, tools and cybersecurity; and • support for SMEs and large undertakings in provid - ing training to their workforce. 2.4 Loss Relief The ITA provides that trading losses that are incurred by a person or company in a certain year, in any trade, business, profession or vocation, can be set off against the income from other trading activities or income streams and capital gains of that person or company in the same year. Trading losses are deduct -
306 CHAMBERS.COM
Powered by FlippingBook