Tax considerations for family businesses

This article presents a professional summary of the key tax considerations explored during the webinar focused on family-owned businesses.

The session was led by Elaine Marie Debono, Senior Tax Manager, and Lorraine Camilleri, Tax Manager, with valuable contributions from Dr Joseph Gerada, Registrar at the Family Business Office.

The webinar opened with a series of questions directed to Dr Gerada, who provided a comprehensive overview of the family business landscape in Malta. He emphasized that family businesses are the backbone of the economy, generating millions in turnover and offering a level of stability unmatched by other types of enterprises. Dr Gerada explained what defines a family business and highlighted the unique challenges they face, particularly those related to longevity, growth, and succession. Dr Gerada also outlined the registration process with the Family Business Office, through which businesses can access a range of benefits and support measures tailored to their needs.

A key focus of the webinar was the tax and stamp duty implications of transferring a family business across generations. Elaine and Lorraine explained the tax exemptions available on donations within the context of family businesses, in relation to shares and immovable property. They also discussed the reduced duty rate applicable on such transfers.

The session further explored additional incentives available to family businesses, including the Micro-Invest Tax Credits Scheme. Eligible expenses under this scheme include upgrades to premises, investment in machinery and technology, vehicle costs, wage increases, and certain certification expenses. The maximum eligible capping is €50,000 over a 3 year period. This may be increased to €70,000 for companies registered as Family Businesses.

Finally, the speakers presented the Family Business Grant, which supports advisory and mediation services for businesses registered with the Family Business Office. They provided an explanation of the application process, helping attendees understand how to access and benefit from this grant.

Article written by Elaine Marie Debono and Lorraine Camilleri