Investment Aid 2021 Scheme (Scheme has been closed)

Malta Enterprise has launched the Investment Aid 2021 Scheme that aims “to sustain the regional industrial and economic development of Malta. This measure facilitates initial investments by encouraging the setting up of new establishments as well as the expansion and development of existing businesses.
Supported initiatives should lead to new opportunities, additional employment, increased competitiveness or widening market reach.
This document summarises the guidelines as published and reproduces the core essence of them in order to present a summarised, high level description of the scheme.

Investment Aid 2021 Eligibility Criteria

  • SMEs as well as large undertakings;
  • Undertaking needs to operate from Malta and be incorporated in Malta;
  • The investment shall result in the: development; expansion; diversification or a fundamental change in the carrying out of a Qualifying Economic Activity.
  • Gambling and Financial Services are excluded.
  • Aid for research, energy generation, distribution and infrastructure are excluded.
  • Qualifying activities (Section 3.5) are below. Some restrictions could apply so the guidelines should be referred to:
  • Manufacturing – products are clearly distinct from the materials utilised;
  • Maintenance, Repair and Overhaul of watercraft (not covered by the shipbuilding definition), aircraft, industrial engines or electromechanical equipment.
  • Industrial Services analogous to manufacturing including industrial laundering and dry cleaning services.
  • Computer Programming;
  • Data Processing and Hosting Facilities;
  • Call Centre Activities;
  • Research, Development and Design Activities – investment here must be solely for the beneficiary’s own purposes;
  • Operation of Environmental Solutions that significantly prevent, reduce or reverse the negative impacts of human activities on the environment;
  • Activities related to Life Sciences;
  • Pharmaceutical Activities under a Good Manufacturing Practice Certificate issued by the Medicines Authority of Malta;
  • Audio-visual productions (some restrictions apply in the guidelines);
  • Audio recording activities;
  • Digital Video Games design and development;
  • Education and Tuition organised by licenced institutions that lead to recognised qualifications and certifications;
  • Operation of immovable structures providing human inpatient and/or day care services;
  • Freeport Operations;
  • Operation of Logistics Facility of at least 2000 square metres;
  • Industrial Packaging facilities using automation;
  • Operation of Hotels and Guest Houses;
  • Provision of Knowledge Intensive Services that rely on proprietary IT solutions where 60% of the persons engaged are required to hold a degree at MQF6 of higher;
  • Restoration and/or preservation of works of art and antiques;
  • The operation of temporary or permanent facilities used for cultural events, trade shows, concerts, festivals, exhibitions or sporting activities and film projection.

Eligible Projects for SMEs

Aid shall be granted in respect of an initial investment in tangible and intangible assets resulting in:
  • setting up a new establishment;
  • extending capacity of an existing establishment;
  • a fundamental change in the overall production process of an existing establishment;
  • diversification of the output of an establishment into products not previously produced in the establishment;
  • Acquisition of assets belonging to an establishment that has closed is acceptable;
  • Acquisition of shares is excluded.

Eligible Projects for Large Enterprises

Investment aid shall be awarded to large enterprises in rest of ‘initial investments in favour of a new economic activity or activities‘ which must consist of:
  • Investment in tangible/intangible assets relating to setting up a new establishment or diversifying the activity so long as the new activity is not similar to the previous activity;
  • Acquisition of assets belonging to an establishment that has closed so long as the new activity is not similar to the previous activity and so long as the seller is unrelated to the investor.
An investment can be made if the activity is similar to the previous activity so long as the resulting establishment is independent and stand alone with its own management setup.

Eligible Project Expenditure

  • Acquisition of qualifying tangible/intangible assets required for the implementation of an initial investment project or the estimated wage costs arising from job creation as a result of an initial investment;
  • Taxes or Government charges are excluded;
  • Incidental costs to the project like shipping costs are included provided they are directly related to the project and sufficiently evidenced.

Qualifying Tangible Assets

  • Assets consisting of land, buildings (including fixtures and fittings), plant, machinery and equipment;
  • Assets shall be new except for SMEs where assets cannot have been used in Malta. They still need to be compliant to latest environmental standards;
  • Section 4.1 of the guidelines gives more detail on the eligibility criteria.

Qualifying Intangible Assets

  • Assets that do not have a physical or financial embodiment such as patents, licences, know-how or other Intellectual Property;
  • They need to be used exclusively in the undertaking receiving aid;
  • Assets need to be amortisable, purchased under market conditions unrelated to the buyer;
  • Assets need to be included in the assets register of the undertaking receiving aid for at least 3 years (SMEs) or 5 years (large enterprises).

Calculating investment value on the basis of jobs created

  • When opting to calculate qualifying expenditure by considering wage costs the beneficiary is still required to implement an investment project through acquisition of tangible/intangible assets;
  • Qualifying wage costs cover new employment created within 3 years from the completion of investment;
  • Value of the aid shall be wage costs arising calculated over a 2 year period.

Aid Awarded

  • Investment Aid awarded is calculated as a percentage of qualifying expenditure.
  • Aid may take the form of cash grants or tax credits
  • Aid shall not exceed the lower applicable intensity specified below:
  • 30% of expenditure for ‘Small’ undertakings;
  • 20% of expenditure for ‘Medium-sized’ undertakings;
  • 15% of initial investment project in the case of ‘Small’ and ‘Medium-Sized’ undertakings in the development of hotels, guest houses as licenced by the MTA;
  • 10% of expenditure for ‘Large’ undertakings;
  • For projects exceeding €50 million the guidelines provide a separate aid intensity calculation formula.
CMG Consulta are advisors who carry out business consultancy with SMEs and family businesses. We can assist you with reviewing your business model, internationalising, reviewing your product portfolio, improving operational performance, re-engineering business processes and transforming your business. Please get in touch to explore actual opportunities.
This document was prepared based on the Malta Enterprise Incentive Guidelines for the Investment Aid 2021 Scheme as accessed on the Malta Enterprise Website on the date of publishing.