Malta announces accelerated tax deductions for intellectual property

In a 28 December 2023 press release, the Commissioner for Revenue announced new accelerated tax deductions for certain capital expenditures on "Intellectual Property or Intellectual Property Rights."

Details

Beginning with the period covered by the year of assessment 2024, a person who has made a capital expenditure on Intellectual Property or Intellectual Property Rights may choose to fully deduct the expenditure under article 14(1)(m) of the Income Tax Act (Cap. 123 Laws of Malta) in the year incurred or the year in which the Intellectual Property or Intellectual Property Rights are first used or employed in producing the income.

For a capital expenditure on Intellectual Property and Intellectual Property Rights that was incurred before the period covered by the year of assessment 2024, any deductions remaining unclaimed from the year of assessment 2023, may be claimed in full in the year of assessment 2024. Thus, if for example, Intellectual Property was acquired in the year of assessment 2023 and a 33.33% deduction of the expense was claimed in that year of assessment, the person can claim the remaining 66.67% in the year of assessment 2024.

The accelerated deductions described above may only be claimed against income produced through the use or employment of the Intellectual Property or Intellectual Property Rights.

Next steps

The impact of accelerated amortization on Intellectual Property should be assessed by multinational entities (MNEs) with a presence in Malta or by MNEs exploring Malta as an alternative business jurisdiction from which to conduct licensing or similar activities.

Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young (Malta), Msida

• Robert Attard
• Silvio Camilleri

Ernst & Young LLP (United States), Maltese Tax Desk, New York

• Giljan Aquilina

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.