In order to foster further partnership between Malta's corporate and cultural sectors, the Maltese government has recently announced a number of tax incentives through Subsidiary legislation 123.102. Such incentives shall be applicable to companies that grant cash donations to various cultural organisations.  

The Incentive

Through this incentive, companies that give such donations may claim the amount donated at 150% against the income for the year of assessment when the donation was made. The maximum tax deduction for culture however is capped at €50,000.  

Applicable Donors

In order to benefit from such an incentive, the donor must be treated as a "company" in terms of the Income Tax Act, thus including:  

  • Limited Liability Companies
  • Partnerships that are registered to be treated as a company.

Beneficiaries

The legislation stipulates three beneficiaries of such donations namely:  

  • Non-profit Cultural Organisations that are registered as a Voluntary Organisation or a Non-Governmental Organisation
  • Public Cultural Organisations
  • Arts Council Malta- provided that the donation is granted for the purposes of achieving the Council's strategies and objectives or as an intermediary for a pre-approved third party project.

Application Procedure

All applications for any donations given between the 1st of January and the 31st of December 2016 must be submitted to the Arts Council Malta together with:  

  • A copy of an eligible Donation Agreement between the donor company and the beneficiary organisation which includes details on the donation amount and the activity that is being supported
  • Proof of Transaction documentation that is certified by either the Bank used in such donation or a Certified Public Accountant

Approval and Submission

Once all documentation is submitted to the Council, the donor shall receive an Incentive Certificate (IEC), which shall be submitted to the Inland Revenue Department during the compilation of the donor company's annual tax return.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.