SHELTONS INTERNATIONAL GROUP
Malta has introduced a set of significant tax reforms aimed at supporting the creative industry. Through Legal Notice 137 of 2025, the Income from Artistic Activity Rules have been amended to provide a more equitable and transparent tax regime for artists and creative professionals. These changes will take effect from the Year of Assessment (YA) 2026, based on income earned in 2025.
The update aligns Malta’s tax treatment of artistic income with broader income tax principles, and is designed to encourage sustainability and professionalism within the sector.
Who Can Benefit?
This revised scheme is open to individuals who derive income from artistic and creative activities—including but not limited to visual artists, musicians, performers, writers, filmmakers, designers, and digital content creators.
The goal is to offer these professionals the same tax treatment afforded to other self-employed individuals, while still maintaining a preferential tax rate as recognition of the unique nature of artistic work.
What Has Changed?
1. From Gross to Net Basis
Under the previous regime, the reduced tax rate of 7.5% (Article 56(26A) of the Income Tax Act) applied to gross receipts, without allowing any deductions.
Under the new rules, this 7.5% reduced rate now applies to net income, meaning eligible taxpayers can deduct allowable business expenses in line with Article 14 of the Income Tax Act. This brings creative income in line with general income tax principles and removes the disincentive to invest in one’s practice or career.
2. Simplified Treatment of Excess Income
Previously, if gross receipts exceeded €50,000, only the excess was declared in the tax return, with deductions permitted solely against that portion.
With the updated framework, if an individual’s net income exceeds €50,000, only the excess will be taxed at the standard progressive rates. This not only simplifies reporting obligations but also integrates artistic earnings more clearly into Malta’s overall income tax system.
3. Removal of the Presumption of the Option
Previously, Rule 6 of the Income from Artistic Activity Rules presumed that if a creative practitioner did not submit the prescribed form, they were automatically considered to have opted for the reduced tax rate. This presumption has now been removed.
Starting from Year of Assessment 2026, taxpayers must explicitly opt in to benefit from the reduced rate and must comply with the relevant reporting requirements. This amendment enhances procedural clarity and ensures that the preferential rate is applied only to those who actively choose it through the appropriate declaration.
Why This Matters
These reforms are a structural improvement for Malta’s creative sector. They promote fairness, flexibility, and professional recognition for artists and creative practitioners who often face irregular income and high operational costs.
The changes also signal Malta’s broader support for the cultural and creative industries, which are increasingly seen as key contributors to both economic growth and national identity.
Remember, compliance is key; consult professionals for assistance and guidance. For personalised guidance, reach out to our tax team at Sheltons Malta or write to us on [email protected].
Disclaimer: This article provides general information and should not be considered professional advice. Always consult a tax professional for personalised guidance.
