The Minister of Finance presented a budget surplus for the third consecutive year. In 2019, the surplus is expected to grow to around €33 million,an increase of 1.1% of the GDP compared to last year (2018 – €16.6 million). The labour market conditions are predicted to be favourable once again with the unemployment rate for 2019 set to be at 4.1%, remaining below the EU average rate. The estimated tax revenue is expected to increase by €0.4 billion, to €4.6 billion by 2019. As at end of 2018, the public debt is expected to amount around 46.8% of the GDP and is expected to reduce to 43.8% of the GDP by 2019. Inflation is set to rise from 1.7% in 2018 to 1.9% in 2019. The cost of living adjustment (COLA) is set to be €2.33 a week a week for the coming year.
Below is a summary of the salient points announced in the Budget speech 2018:


  • Workers will get an additional day off next year, bringing the total number of leave days to 26 days a year.

Fiscal measures

  • Tax refunds between €40 and €68 will be available to employees earning less than €60,000, with the lowest income earners getting the highest amounts.


Single Married Parent
Income (€) Benefit (€) Income (€) Benefit (€) Income (€) Benefit (€)
0 – 15,000 60 0 – 20,000 68 0 – 15,000 64
15,001 – 30,000 50 20,001 – 40,000 56 15,001 – 30,000 52
30,001 – 59,999 40 40,001 – 59,999 44 30,001 – 59,999 40


  • Children of workers on minimum wage will benefit from an increase in children’s allowance. A maximum of €96 per year for every child will be available to such workers as from next year.
  • A reduction of tax will be applicable next year for certain individuals registered as single tax payers deriving income from part-time work.
  • Voluntary organisations whose income does not exceed €10,000 will be exempt from income tax.
  • Reduced stamp duty rate of 1.5% on family business transfers will be extended for another year.


  • Pensions will increase by €2.17 per week (excluding COLA). The amount equivalent to maximum pensions will remain tax free.
  • Pensioners will get an average increase of €11 per week because of a change in assessment on social security pensions for service pensioners.
  • Tax exemption for voluntary third pillar pensions increased to €2,000.

Persons with disability

  • Children with disability will benefit from an allowance increase of €25 per week.


  • A reduced 5% VAT rate will be applicable to electronic publications (including electronic newspapers and magazines).
  • VAT refunds up to €400 will be available on bicycles, electric bicycles, motorcycles and cycle racks.
  • The existing VAT refund on wedding expenses is being increased to €2,000.
  • A grant, equivalent to the VAT element, will be available on the purchase of musical instruments from abroad.


  • Rent subsidies will be increased from €1,600 to €3,600 annually for single persons, and from €2,000 to €5,000 annually for families with 2 or more children.
  • The reduced stamp duty rate for first time and second time buyers will be extended for another year. First time buyers will keep being exempted from stamp duty on first €150,000 up to €5,000. Second time buyers will keep benefitting from a reduction in stamp duty up to €3,000.
  • Buyers of property in Gozo as well as buyers of vacant property in urban conversation areas will continue benefitting from a reduced stamp duty rate.


  • Gozitan students studying and living in Malta will be eligible for housing subsidy.
  • Employers creating new jobs in Gozo with a 3-year contract or more will continue to be eligible for 30% refund on wage, up to a maximum of €6,000.
  • Public sector workers from Gozo using collective transport from Cirkewwa to their place of work will be entitled to €1.50 daily allowance.
  • With effect from 1 January 2019, the ferry ticket fare refund of the ‘Gozitan Works Subsidy’ will be extended to Gozitan employees working in Malta employed with the private sector


  • Free public transport to people between 14 and 20 years of age and to all full-time students who are over 20 years old.
  • Tax refund for independent schools increased by €300 per year.


  2018 2019
Kindergarten €1,300 €1,600
Primary school €1,600 €1,900
Secondary school €2,300 €2,600


  • €100 million will be allocated to the upgrade of road infrastructure.
  • Electric vehicles will continue to be exempted from registration tax.

Anti-avoidance measures

  • The Anti-Tax Avoidance Directive 1 (ATAD 1) shall be implemented into Maltese law as from 1 January 2019. ATAD 1 will introduce the following measures:
    • Interest limitation rules
    • Exit tax rules
    • General anti-avoidance rules
    • Controlled Foreign Company (CFC) rules
  • ATAD 2, which will include provisions on anti-hybrid mismatches, shall replace ATAD 1 and is expected to be implemented into Maltese tax law within the deadlines stipulated in the Directive, these being 1 January 2020 and 1 January 2022.

Other measures

  • MATSEC and SEC examinations will be free of charge.
  • All museum entrances will be free of charge to all students up to secondary level.
  • Refund of up to €70 will be available to households on the purchase and installation of reverse osmosis and equipment to reduce the use of plastic bottles.
  • Persons over 40 years of age will be eligible for equity sharing programme where they will be able to take a mortgage for half the value of property, with the Government paying interest.

Author: William Cassar, Senior Tax Accountant, Tax Compliance Department