NEW Seed Investment Scheme rules
NEW Seed Investment Scheme rules
These rules can provide a tax credit equivalent to 35% of the investment made by an investor and shall apply to “qualifying investors” who subscribe to fully paid up equity shares at par in a “qualifying company” on their own behalf. Any company that wishes to obtain the status of a "qualifying company" shall submit an application to the competent entity for a formal determination and for issue of the relative compliance certificate in terms of these rules, which application shall be made on such form or in such manner as the competent entity may require and shall contain the information and documents therein requested.
When is this applicable?
The applicability will be as from 1 January 2022 so they can be used from Year of Assessment 2023 but shall have effect until 31 December 2023 or any other date as published by the minister.
What is a qualifying company?
A "Qualifying company" is defined as an SME that satisfies the following cumulative conditions:
(a) is incorporated in Malta or controlled and managed from Malta or has a place of business in Malta;
(b) has been in existence and engaged in carrying out qualifying activities for a period not exceeding 3 years following its first commercial sale;
(c) is not listed on any recognised stock exchange;
(d) has a maximum of 10 employees;
(e) has gross assets of not more than €250,000 immediately preceding the issue of equity shares to the qualifying investor, and that has been duly issued with the relative compliance certificate by the competent entity in terms of these rules
Provided that undertakings in difficulty, undertakings which are subject to an outstanding recovery order, other undertakings which are expressly excluded from receiving such aid in terms of the Regulation, as well as undertakings which, directly or indirectly, hold shares in any company which carries out any excluded activities, do not fall within the scope of this definition;
What are qualifying investors?
A "qualifying investor" means any natural person who is resident in Malta to the extent that he bears the full risk in respect of his investment, and who has been duly issued with the relative compliance certificate by the competent entity in relation to an investment in a qualifying company
A qualifying investor shall:
(a) continue to hold the investment in the qualifying company for a period of not less than 3 years subsequent to the subscription by the qualifying investor to such equity shares; and
(b) not be connected to the qualifying company prior to the subscription to the equity shares.
How is the tax credit calculated?
Any qualifying investor shall benefit from a tax credit equivalent to a sum amounting to 35% of the aggregate value of the investments made by such investor in one or more qualifying companies, so however that the total tax credit applicable to any such investor shall not exceed €250,000 per annum. Such tax credit shall be set off against the tax due by the qualifying investor in respect of any income or gains brought to charge to tax in the year of assessment immediately following the basis year during which the investment is made.
Can the tax credit be carried forward?
Yes - however any tax credit available in terms of these Rules shall not give rise to a right for any tax refund
Is the process automatic?
No – There is an application process – the application should be filed with the Malta Investment Management Company Limited