Insight
Malta Budget 2027 introduces several fiscal measures affecting businesses, individuals and property owners. Key announcements include a proposed 25% corporate tax rate for qualifying SMEs, higher income tax-free thresholds for families, changes to VAT rules in the construction sector and revised property duty provisions. This article outlines the principal tax measures and their potential implications.
Malta Budget 2027: Key Fiscal and Tax Measures
The Malta Budget for 2027, presented on 26 October 2026, introduces several fiscal measures aimed at supporting businesses, reducing the tax burden on families and updating certain aspects of Malta's tax framework.
Below, we highlight the principal measures relevant to businesses, individuals and property owners.
1. Corporate Income Tax – Reduced Rate for SMEs
A reduced corporate income tax rate of 25%, compared to the standard 35%, has been announced for qualifying companies with annual turnover not exceeding €1 million.
The reduced rate is intended to apply to retained or reinvested profits, while distributed profits would remain subject to an overall 35% tax burden.
The precise eligibility criteria and interaction with Malta's existing corporate tax and shareholder refund system remain subject to further clarification.
2. Personal Income Tax – Relief for Families
Additional income tax relief has been announced for families with children through increased tax-free thresholds.
Taxpayer category | 2027 | 2028 |
|---|---|---|
Married couples – one child | €20,000 | €22,500 |
Married couples – two or more children | €30,000 | €37,000 |
Parent rates – one child | €16,000 | €18,000 |
Parent rates – two or more children | €24,000 | €30,000 |
Further reforms to the income tax filing system for married couples have also been announced.
3. VAT – Construction Sector and Compliance
The Budget introduces proposed changes to VAT administration, including:
A mandatory domestic reverse-charge mechanism for specified business-to-business construction transactions.
Administrative penalties of up to €500 for non-compliance with fiscal receipt and tax invoice obligations.
Additional guidance on VAT exemptions applicable to food supplies.
The standard VAT rate remains unchanged.
4. Property Taxation – Inherited Residential Property
The reduced 3.5% duty rate applicable to qualifying inherited residential property is proposed to be extended from the first €200,000 to the first €400,000.
Additional measures concerning transfers of airspace and property development transactions have also been announced.
5. Employment and Social Security
The principal employment-related announcements include:
Cost of Living Adjustment (COLA) of €6.41 per week.
Minimum wage increase of €10.41 per week, inclusive of COLA.
A tax-free Super Bonus of up to €1,000 for eligible individuals, including self-employed persons, subject to the applicable conditions.
No increase in social security contribution rates was announced.
6. Pensions and Retirement Income
The annual tax-free pension income threshold is set to increase to €37,624.
Certain retirement pensions will also increase by €10 per week, inclusive of COLA.
7. Tourism and Eco-Contributions
Revised tourism-related charges have been announced, including:
Hotels: €8 per night, capped at €64.
Short-term accommodation: €10 per night, capped at €80.
Cruise passengers: €10 charge for passengers disembarking in Malta.
Comino: €5 visitor charge.
These changes may affect operating costs and pricing considerations across the tourism and hospitality sectors.
8. Third-Country Nationals
Changes to work permit charges include an increase in new application fees from €600 to €800 and an additional annual charge of €400 for work permits and renewals.
Businesses employing third-country nationals should consider the potential impact on employment-related costs.
9. Business Investment Incentives
The Budget also outlines continued support for business investment in digitalisation, automation and higher-value economic activities.
The specific eligibility conditions and implementation mechanisms will require further clarification.
What Does This Mean for Businesses?
The proposed reduction in corporate income tax for qualifying SMEs represents one of the principal business-related announcements.
However, the practical impact will depend on the final eligibility criteria, treatment of distributed profits and interaction with Malta's existing tax refund system.
Businesses should also assess the implications of the proposed VAT changes, revised employment-related charges and any applicable investment incentives.
How Newmetrics Can Help
At Newmetrics we provide corporate tax advisory, tax planning and fractional CFO services to businesses operating in Malta and internationally.
Our team can assist businesses in assessing the potential implications of Budget 2027 measures, reviewing their tax position and evaluating relevant planning opportunities.
Contact Newmetrics to discuss how the announced fiscal measures may affect your business.
Disclaimer: This article summarises selected measures announced in Malta Budget 2027 and is intended for general information purposes only. Certain measures remain subject to legislative enactment, implementing regulations and further clarification. The information should not be construed as tax or legal advice.
