Malta’s tech sector continues to show steady growth, driven by agile digital infrastructure, a skilled workforce, and government-backed innovation initiatives. With over 81% of businesses adopting digital technologies and a growing share of ICT professionals in the workforce, Malta is emerging as a competitive hub for tech and digital services within the EU. 

The country also ranks among the top performers in public sector digitalisation and connectivity, having achieved 100% coverage of Very High-Capacity Networks and basic 5G. These developments, combined with a thriving start-up ecosystem contributing over $1.2 billion to GDP and creating 20,000 jobs, make Malta an increasingly attractive base for innovation-led enterprises.

The Maltese authorities have long prioritised innovation and have, over the years, introduced several pro-business incentives to attract tech companies, R&D-driven enterprises, and intellectual property (IP) owners.

Central to this strategy is the Patent Box Regime, introduced in 2019, which provides significant tax benefits for companies generating income from qualifying IP.

A Closer Look at Malta’s Patent Box Regime

The Patent Box Regime (Deduction) Rules, 2019 were designed to stimulate innovation by rewarding companies that develop and commercialize IP in Malta.

Qualifying IP Assets

To benefit from the regime, the income must be derived from qualifying IP, which includes:

• Patents (granted or pending)

• Utility models

• Software protected by copyright

• Plant varieties, orphan drug designations, and other assets protected under national, EU, or international legislation

• For small entities, other non-obvious, useful, and novel IP assets may qualify, subject to certification by Malta Enterprise

Importantly, marketing-related IP such as trademarks, brands, and trade names are excluded from the regime.

Total IP Expenditure and Eligibility

The regime follows a modified nexus approach, ensuring that tax benefits are linked to actual R&D activity.

• Qualifying IP Expenditure includes costs directly related to the development of the IP, such as salaries, subcontracted R&D, and acquisition of third-party IP assets.

• Total IP Expenditure also includes costs from related-party transactions and acquisition costs necessary for developing the qualifying IP.

  
  

Certification and Eligibility

To access the regime, companies must apply to Malta Enterprise for a determination of eligibility. This involves:

• Submitting documentation of R&D activities and qualifying expenditure

• Undergoing a review process, which may include requests for further information

• Receiving a Certificate of Eligibility, valid for up to 5 years (extendable within the IP protection period)

This certification ensures transparency and compliance, while also providing companies with certainty around their tax position.

Tax Benefits

The regime allows for a 95% deduction on qualifying IP income, resulting in an effective corporate tax rate as low as 1.75%. This provides a compelling incentive for businesses engaged in IP creation and commercialisation.

How We Can Help

Malta’s Patent Box Regime is a strategic tool for companies looking to maximize the value of their intellectual property. Whether you’re a software developer, biotech innovator, or R&D-driven enterprise, Malta offers the infrastructure, incentives, and legal certainty to support your growth.

To learn more about Malta’s Patent Box Regime or explore how your business could benefit, please contact either of our Malta Trust and Corporate Services Directors, Janice Copperstone or Josianne Cascun Montebello.