Micro Invest Tax Credit Application – 5 Top frequently asked questions

Micro Invest Tax Credit Application – 5 Top frequently asked questions

Micro Invest Tax Credit ApplicationTop 5 most frequently asked questions

Microinvest 45% tax Credits

1. Do I qualify to apply for the MicroInvest Tax Credits?

Yes , the Microinvest scheme is mostly open to all businesses such as: 

  • Self-employed both full time and part-time
  • Partnerships
  • Companies

Disqualification happens only if your business classifies as:

  • Large – classified as Employing more than 50 full time employees, Sales or Balance Sheet exceed €10 Million
  • Companies – that do not employ more than 1 person
  • Farmers and Fishermen –  not eligible as they governed by different rules

2. What is a 45% MicroInvest Tax Credit?

Tax Credits work the same as “Credit Notes”  i.e they can be used against a future payment due. 

In our case, a Tax Credit will be used against a future Income Tax payment due on your business profits.

A 45% rate (65% + for Gozo-based undertakings) is used for calculating the value of the tax credit on your business investment.

Example if your business investment amounts to €10,000, then your 45% tax credit would be €4,500 (that is 45% of €10,000).

After a successful application, Malta Enterprise will issue a certificate entitling you to a €4,500 tax credit.

This tax credit may be applied against your final income tax bill on profits generated by the business.

 If the amount of income tax due is less than €4,500, then any remaining tax credits will be carried forward to be used against income tax due in the next few years.

Example – Excess Tax credit carried forward

                    Tax due on Net Profit last year:        €3,000

                    Tax credit available                          (€4,500)

                     Remaining Tax Credit                      (€1,500)

3. So, I won’t be actually given Cash?

In reality YES, just not immediately.  

The Microinvest Tax credit actually keeps the cash from leaving your bank account during tax return submission and payment.

Without the tax credit, you would have to pay tax on your profit. This would result in cash leaving your business to pay the tax department

By using the tax credit against any tax due you will instead legally keep that cash in your business as the tax credit eliminates your tax bill. 

So technically you have been given “cash” as the tax saved will remain as cash in your bank account for you to use as needed.

4. How does the 45% MicroInvest Tax Credit Application work?

In a nutshell…Spend First, Apply for the Tax Credit next year.

Unlike most Grants and other incentives, in the case of Microinvest, you :

  • Invest in your business before applying
  • And apply for the tax credits the year after – for all eligible items purchased throughout the year at a later stage being the first few months in the year after.
  • The deadline in the year after is:

    • March – for sole traders and partnerships
    • May – for companies

    The application is then processed by Malta Enterprise and if successful the Micro Invest Certificate is then issued before your tax return is June for sole traders and partnerships or September for companies. Thereby allowing you to start using your tax credit certificates against any tax due.

    5. What items can I buy that qualify for the 45% MicroInvest  Tax Credits:

    For a whole list of items you can claim and a way forward – kindly Click our link below that will take you to our MicroInvest Page: