The Malta Enterprise MicroInvest Scheme
In December 2013, Malta Enterprise re-launched the MicroInvest Scheme, with the publication of revised incentive guidelines intended to assist the development of small enterprises in Malta and Gozo. This scheme applied in respect of eligible costs incurred in 2013, and for which applications were being received until March 2014. In June 2014, new regulations and guidelines have been issued in respect of eligible costs incurred/to be incurred between 1 January 2014 and 31 December 2020.
This article is intended to provide an overview of these updated regulations and guidelines, whilst highlighting the differences from the previous scheme.
Objective of the MicroInvest Scheme
The objective of the MicroInvest Scheme is to encourage undertakings to invest in their business, to innovate, expand and implement compliance directives or to develop their operations. Such undertakings may include self-employed persons. Undertakings will be supported through a tax credit, representing a percentage of the eligible expenditure and wages of newly recruited employees and/or apprentices.
Tax credits under the MicroInvest Scheme
The Tax Credits for Micro Enterprises and the Self-Employed Regulations 2014 (S.L. 463.09) provide for a tax credit of 45% (65% for undertakings operating from Gozo) on eligible costs incurred by an eligible undertaking. Under the previous scheme, these credits amounted to 40% (60% for undertakings operating from Gozo) of the eligible costs. Another improvement on the previous scheme relates to the capping of these credits, which was previously €25,000 and has now been increased to €30,000, which shall be available over any period of three consecutive years, starting from any tax credits granted in 2013. Thus, any credits granted under the 2013 scheme shall be deducted from the total available capping for 2014 and 2015. Start-up companies established in Gozo may be granted a total amount of tax credits not exceeding €50,000 over any period of three consecutive years, starting from tax credits granted in 2014.
Tax credits granted under this scheme may be utilised in the year of assessment relevant to the period in which the costs are incurred (thus credits granted in relation to 2014 costs may be used in the year of assessment 2015 tax return), with any unutilised credits being available for the following two consecutive years. Credits granted to start-up undertakings may be availed of in the relevant year of assessment plus the following three consecutive years of assessment.
Under the current regulations and guidelines, this incentive is available to undertakings which, on the application date, satisfy all the following criteria:
The applicant must be a single undertaking that for the year in which the costs were incurred did not employ more than 30 persons (Full Time Equivalent) and had a turnover that did not exceed €10 million.1
The applicant must employ at least 1 person (on full or part time basis) at date of application. The person employed may be the applicant himself in the case of self-employed persons. In any case such employment must be registered with the Employment and Training Corporation (ETC).
Only undertakings registered with the VAT department are eligible.
Applicants must not be defaulting on VAT, Income Tax and Social Security.
Undertakings must be engaged in carrying out a trade or business.
Qualifying costs must be incurred and paid for between 1st January and 31st December of the year preceding the year in which the claim is submitted. As a result, for a claim to be submitted in 2015, the costs claimed must have been incurred in 2014. Qualifying costs relate to the following:
Costs subcontracted to third parties in relation to furbishing, refurbishing and upgrading of business premises including extensions or modifications to premises. Items related to furbishing, refurbishing and upgrading of business premises that are not included in a receipt issued by the subcontractor providing the services will not be accepted.
Investment in acquiring new (or first time used in Malta) machinery, technology, apparatus or instruments which enhance the operations, including systems which help to save energy or to produce alternative energy.
Capital Investment in Information Technology.
Over a period of 3 years, investment in one new motor vehicle (or first time used in Malta) as long as such vehicle is involved in the carrying of goods (category N1, N2 or N3 motor vehicle), and Special Purpose Motor Vehicles (category E) as established in the Motor Vehicle Registration and Licensing Act (Cap. 368).
Wages costs covering a 12-month period pertaining to new full-time jobs created as from 1st January (of the year in respect of which the claim is being made) as long as this constitutes a net increase in the total number of full-time employees of the applicant when compared to the employment figure of the previous years.2
Part-time employment is eligible when such employment required the employee to work in excess of 20 hours per week.
Ineligible costs include purchase of land and/or property; individual invoice items having a value of less than €200 and costs that are assisted, even partly, through other incentive measures.
Applications in respect of the costs incurred in 2014 shall be received between 2 January and 31 March 2015. Such applications may be downloaded from the Malta Enterprise website. The Regulations provide that the final date by when applications shall be received (in respect of costs incurred in 2020) is 31 March 2015.
- 1 For the purpose of the scheme, ‘single undertaking’ shall be defined as per Commission Regulation EU No 1407/2013 of 18 December 2013 on the Application of Articles 107 and 108 TFEU to de minimis aid. This incentive is in line with the said Regulation and any tax credits granted shall constitute de minimis aid, which aid cannot exceed the amount of €200,000 over any period of three consecutive fiscal years.
- 2 With regards to claims for employment commencing after January, where costs overrun to the following year, the residual months of the 12-month period (which have not been claimed for) could be included in the following year’s application form.