Malta, officially known as the Republic of Malta, is a Southern European island country situated in the Mediterranean Sea. It lies south of Sicily, Italy, and consists of three main islands: Malta, Gozo, and Comino. With a total land area of just 316 square kilometers, Malta is one of the world's smallest and most densely populated countries. In 2004, Malta joined the European Union, and in 2008, it adopted the euro as its official currency.
One of the significant recent economic developments in Malta is its recovery from the impact of the COVID-19 pandemic. Like many countries, Malta experienced disruptions in various sectors due to lockdowns and restrictions aimed at curbing the spread of the virus. However, the Maltese government implemented measures to support businesses and individuals affected by the pandemic, including financial aid packages and tax deferrals.
As of the latest updates in early 2024, Malta's economy is expected to continue its robust growth. Following a growth rate of 6.9% in 2022, the GDP growth is forecasted to stabilize at around 4.0% in both 2023 and 2024, and slightly increase to 4.2% in 2025. This trend indicates a strong recovery and sustained momentum after the pandemic-induced slowdown. Inflation, which reached 5.7% in 2023, is projected to slow down to 3.3% in 2024 and further to 3.1% in 2025, due to decreasing pressures on food and industrial goods prices. The unemployment rate, which fell to 2.9% in 2022, is expected to remain stable at 2.7% through 2025
The recovery has been driven by robust performance in sectors such as financial services, gaming, tourism (albeit with some fluctuations due to travel restrictions), and manufacturing. The Maltese government has also been proactive in attracting foreign investment and promoting innovation and technology as part of its economic diversification efforts.
One significant change in Malta's tax legislation is the introduction of amendments to the Income Tax Act, which came into effect on January 1, 2022. These amendments primarily focus on the taxation of remote working arrangements, aiming to provide clarity and certainty for individuals working remotely from Malta.
In 2024, Malta introduced various fiscal measures and tax law changes. These include a maximum tax credit of €500 for donations made by enterprises to NGOs, the extension of schemes like the Seed Investment Scheme and the Rent Subsidy Scheme, and various initiatives to support SMEs. In terms of pensions, a gradual tax exemption introduced in 2022 will continue, with the exempt portion being 60% for 2024. There are also increases in pensions and allowances and changes in the taxation of widows’/widowers’ pensions.
These changes aim to accommodate the growing trend of remote work while maintaining a fair and transparent tax regime. They provide clarity for individuals and businesses operating in Malta's evolving digital economy and contribute to the country's attractiveness as a destination for remote workers and digital nomads.
