Malta offers an array of attractive incentive schemes for undertakings operating in Malta which are engaged in qualifying activities targeted by the Maltese Government. For the purposes of tax incentives, qualifying activities include the design and development of digital video games including the running of multiuser platforms for such games, software development activities, and development of digital service and systems (including video games and entertainment systems) intended for international markets. The incentives provide undertakings with aid in the form of cash grants, loans at beneficial interest rates, and tax credits.
Investment projects embarked upon by undertakings in certain regions in Malta may be assisted by Investment Tax Credits based on a percentage (depending on the entity’s size) of the project’s eligible expenditure, generally wage costs of employees, reducing the undertaking’s effective tax charge, potentially even to 0%. For undertakings that are beneficially owned by non-resident and non-domiciled individuals, the interplay between the Investment Tax Credits and the Maltese tax refund system may generally result in an effective tax of between 0% to a maximum of 5%, whilst increasing the longevity of the tax credits.
Schemes offering tax credits and/or cash grants of up to €200,000 in a three year period, are available to support existing companies embarking on new investment projects, companies seeking to relocate their business or companies seeking to set up their operations in Malta. In the case of start-up undertakings, there is also the possibility to benefit from repayable assistance ranging between €400,000 and €800,000, repayable when the start-up becomes profitable and at beneficial interest rates.
Fiscal incentives for highly qualified and skilled foreign workers in target industries such as the development of digital video games are also available for roles which are not addressed by the local labour market, including a flat rate of 15% tax on employment income.
Various incentives are also offered to stimulate innovative enterprises which engage in research and development. Research and development tax credits and/or grants aim to provide assistance to companies that carry out industrial research and experimental development of innovative products and solutions. In addition, the drive for innovation is also assisted through tax credits in respect of loaning highly qualified personnel and the employment of doctorate personnel in science, IT and engineering.
Given the array of incentives available to undertakings engaged in video games development, understanding, identifying and prioritising the right incentive for your business can be challenging but is of utmost importance to secure the highest benefit. The KPMG Malta Domestic Incentives Team is a dedicated team mainly focused on advising domestic and international clients on incentive legislation. This specialised team is particularly involved in providing advice and assistance throughout the process of embarking on investment projects in Malta. The team is organised such that different individuals focus on specific industries thus harnessing the firm’s knowledge of these businesses for the benefit of our clients, one area of focus being video games and software development, where the team has developed deep knowledge of such businesses and thus is able to provide clients informed perspectives on the issues they face through the entire process. As part of routine services, the team can assist throughout the whole process including:
- Choosing the most beneficial scheme for your business;
- Identifying the best structure to benefit from the chosen incentives as well as the general tax system;
- Assist with regards the company set up and provide assistance with the application process to secure the highest tax benefit in Malta;
- Act as liaison with Malta Enterprise; and
- Provide assistance in relation to any financial projections that would need to be provided as part of the application for tax incentives.