The Micro Investment Scheme

The aim of the Micro Invest scheme is to encourage undertakings to invest in their business and thus innovate, develop and expand their operations. Undertakings who opt for such a measure will be supported via a tax credit calculated as a percentage of the eligible expenses and wages.

Any undertaking wishing to use this scheme can only submit one application per calendar year which should comprise of costs incurred in the previous year. Example, any expenses incurred between 1st January 2019 and 31st December 2019, can be claimed in 2020 and the tax credit can be used in the same year, i.e. used in tax return YA 2020.

Malta Enterprise will approve a tax credit which is equivalent to 45% of eligible costs of any undertaking operating in Malta and 65% for any undertakings operating in Gozo. The maximum amount of eligible tax credit for a single undertaking is capped at €50,000 over three consecutive fiscal years. The capping is increased by a further €20,000 for undertakings operating from Gozo, undertakings which are registered as a family business[1] and female-owned undertakings[2]. Another incentive is also given to start-ups[3] whereby the tax credit can be used over a period of five years instead of three years. Hence, if an enterprise has been granted a tax credit of €15,000 in the first year, another €25,000 in the second year, in the third year it can only be granted €10,000 to accumulate a total of €50,000 in three consecutive years.

Below is a table comprising of a summary of some incentives granted.

Entity Incentive
Single undertaking in Malta 45% of eligible costs and tax credit used in 3 years capped at €50,000 in 3 consecutive years
Single undertaking in Gozo 65% of eligible costs and tax credit used in 3 years capped at €70,000 in 3 consecutive years
Start-up in Malta 45% of eligible costs and tax credit used in 5 years capped at €50,000 in 3 consecutive years
Start-up in Gozo 65% of eligible costs and tax credit used in 5 years capped at €70,000 in 3 consecutive years
Female owned business/Family business in Malta 45% of eligible costs and tax credit used in 3 years capped at €70,000 in 3 consecutive years
Female owned Start-up in Malta 45% of eligible costs and tax credit used in 5 years capped at €70,000 in 3 consecutive years

 

For any undertaking to be eligible to opt for the scheme, it must satisfy all of the following criteria:

  1. The enterprise must not have employed more than 50 full-time employees for 3 consecutive months during the year in which the costs were incurred;
  2. Turnover must not exceed €10 million in the year the costs were incurred;
  3. The enterprise should employ at least 1 person on a full or part-time basis at the date of application;
  4. The enterprise must be registered with the VAT department unless he is exempt;
  5. The enterprise must not be engaged in activities specifically excluded under the de minimis regulations;
  6. Applicants who applied for any other investment aid measure during the year cannot apply for this scheme.

The following are a list of all eligible costs which an enterprise can apply for a tax credit:

  1. Increase in wage costs: if the enterprise has increased its wages by 3%, then it is entitled to receive a tax credit on the increase. The increase in wages is calculated by deducting the wages in the current year with the highest wages from the previous two consecutive years.
  2. Furbishing, refurbishing and upgrading of business premises: any expenses incurred, including costs of any material and other costs, in furbishing, refurbishing or upgrading of a business premises are deemed to be eligible costs. If the property is intended to be used for short-term lets, any furbishing or refurbishing costs can be claimed if the property is licensed by the competent authority.
  3. Investment costs:
    1. Machinery, technology, apparatus and instruments which are newly bought or used for the first time in Malta;
    2. Any system which is intended to produce alternative energy;
    3. Tangible or intangible assets required to digitize the operations of the business. The eligible costs include computer hardware, packaged software solutions and development costs for new software systems, website and digital applications.
  4. Motor Vehicles: an undertaking is only allowed to claim the costs incurred for the purchase of one new commercial vehicle or a vehicle registered for the first time in Malta, once every three years.

The following are a list of costs which are not eligible:

  1. Purchase, rent or lease of land or property
  2. Any assets which are not directly related to the trade of the business
  3. Operating costs
  4. VAT and other taxes
  5. Vehicle accessories, upgrades and spare parts
  6. Vehicles which are used for non-business activities
  7. Director fees
  8. Maintenance fees
  9. Promotional material
  10. Web hosting
  11. Uniforms
  12. Intellectual property
  13. Project management fees

It is important to note that any tax credits awarded under this incentive will not give rise to any tax refund. Furthermore any tax credits which are not used by the 3rd year, or the 5th year in the case of start-ups, cannot be recurred further and hence will be lost.

Should you require any further information relating to the Micro Invest scheme, you are kindly requested to send us an e-mail on [email protected]

[1] A family business has to be registered as such and needs to hold a valid certificate issued by the regulator of family businesses.

[2] A female owned undertaking is an enterprise where 50% of the stock is owned by one or more women or a self-employed female person.

[3] A start-up is an undertaking which has been set-up for less than 4 years as determined by the registration date with MFSA or when the person has registered with Jobs plus as self-employed.

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