Tax Credit under the Micro Invest Scheme
Small and medium enterprises investing in their business are entitled to apply for a tax credit amounting to 45% of certain eligible expenditure incurred. The credit is increased to 65% if the investment is made by an undertaking operating from Gozo. The tax credit must be applied for on an annual basis and is currently open for eligible costs incurred in 2017.
Companies which did not employ more than 50 full-time employees and whose turnover did not exceed €10m in 2017 may avail of the Micro Invest Scheme. This is a significant improvement to previous Micro Invest Schemes since previously these Schemes were applicable to companies employing up to 30 employees, with a turnover of not more than €10 million on a group level.
There are some other conditions which must be satisfied for the tax credit to apply, including the following:
- the applicant must employ at least one person on a full-time or part-time basis, on the date of application; and
- unless exempted, applicants should be duly registered with the VAT department.
As from 1 January 2018, for costs incurred in 2017, the maximum aid that may be granted to a single undertaking is €50,000 over a period of three consecutive fiscal years. This capping increased by €20,000, to a total of €70,000 for undertakings which:
- operate from Gozo; or
- are registered as a Family Business; or
- have more than 50% of the ownership attributed to female persons.
Once it is granted, the tax credit can be utilised against the tax due on profits generated from the business activity on which the aid was granted.
The eligible costs on which one may apply for a tax credit can be the following:
- an increase in wage costs that exceeds 3%;
- costs incurred for services rendered for the furbishing, refurbishing and upgrading of business premises by third parties;
- investments in:
- acquiring new machinery, technology, apparatus and instruments
- systems intended to produce alternative energy
- tangible and intangible assets required for digitalisation of the business operation;
- the purchase of a commercial motor vehicle.
The deadline for the electronic submission of applications in respect of eligible expenditure incurred in 2017 is 30 May 2018.