Tourists visiting Malta will face higher eco-contributions on accommodation, cruise liner visits and trips to Comino under measures announced by Finance Minister Clyde Caruana in his Budget 2027 speech on Monday. The changes, which include increased nightly rates for hotels and short lets, as well as new fees for cruise passengers and visitors to the Blue Lagoon, are expected to generate additional revenue while contributing to the government's efforts to manage tourism.
As of the 1st of January, the eco-contribution payable by those staying in collective accommodation will be €8 per night, up to a maximum of €64 per person. For those staying in apartments - commonly referred to as 'short lets' - the eco-contribution rate will be €10 per night, up to a maximum of €80 per person. The revenue generated from these adjustments is expected to reach approximately €182 million. That being said, from next year, the requirement to pay the eco-contribution for accommodation provided by English language schools will be eliminated.
An eco-contribution will also be introduced for passengers visiting Malta on board cruise liners. A nominal fee of €10 will apply to tourists who disembark and re-embark on the same cruise liner while in Malta. However, this contribution will not apply to passengers who begin their cruise from Malta.
Moreover, the government will introduce a €5 fee for tourists visiting Comino, which will also serve as an eco-contribution. This will form part of the government's project launched in the summer of 2025 to enhance the experience of those visiting the Blue Lagoon.
Turning to the labour market, Caruana announced an increase in the work permit fee for workers arriving from outside the European Union. The fee for a new application will increase by €200, rising from €600 to €800 per person. Additionally, there will be a €400 infrastructure contribution fee, payable by both new applicants and those renewing their permits. This additional fee is to be paid annually; however, it does not apply to minors. Moreover, the fees for many of the permits issued by Identità will be revised upwards. This increase in work permit fees is expected to generate around €80 million.
From next January, free public transport will be limited to Maltese and Gozitan nationals, European Union citizens residing in Malta, and those with Long-Term Resident status.
Visitors holding a driving license issued outside the European Union may continue to drive using that license for up to twelve months from their date of entry into Malta. Individuals granted a residence permit may also drive using their license for this period of time, and this period does not reset if the individual leaves and subsequently re-enters the country. For those who already hold a permit, the time period is calculated from their last entry prior to 1 January 2027. Thereafter, they must possess a Maltese or European license. Drivers holding a residence permit for specific driving-related employment are exempt. An administrative fee of €83 per month will also be introduced for holders of category B and B1 licenses issued or renewed from that date onwards. Citizens of the European Union and the European Economic Area, long-term residents, and their spouses are exempt. Citizens of the United Kingdom, Australia, and the United Arab Emirates, as well as individuals holding a residence permit for specific driving-related employment, are also exempt. The license expires concurrently with the residence permit and will not be renewed if there are any outstanding payments.
From the coming 1 January, the allowance for atypical work will be restricted to Maltese and Gozitan nationals, resident citizens of the European Union, and long-term residents.
Starting next year, eligibility for free childcare will be restricted to Maltese and Gozitan nationals, EU citizens residing in Malta, and those who meet the criteria for Long-Term Resident status. There will be no change in eligibility for those currently using the service, until their children grow up and are no longer eligible.
There will be an increase of €3 per trip for tourists making use of the fast ferry service and the Gozo ferry. There will also be a revision to the Gozo ferry fares for non-residents. Non-resident adult passengers will pay €11, while children will pay €7. At the same time, the fare for a vehicle driven by a non-resident will increase to €22. These increases are expected to generate approximately €13 million in additional revenue.
To offset the fuel subsidy received by certain recreational vessels, the government will be revising the annual registration fees. This will apply to all owners of vessels measuring between 10 and 24 metres - since, under the law, vessels exceeding 24 metres are not eligible for subsidies fuel. Consequently, categories based on vessel length will be introduced, and the revision will be applied according to these categories. This will not apply to professional fishermen, nor to anyone whose vessel is less than 10 metres in length. Revenue from this measure is estimated at around €3 million.
The government will introduce a new framework under which companies with a turnover not exceeding one million euros will be able to benefit from a tax rate of 25%, instead of 35%. The measure will be implemented subject to the conditions and limitations established in the relevant regulations, ensuring it operates clearly and consistently with the existing corporate tax system. This reduction will apply to profits retained or reinvested. If the profits are taken as dividends, the 35% rate will continue to apply.
Last year, in the budget speech, Caruana announced the largest income tax reduction for families and children - amounting to no less than €160 million over three years. In total, approximately 68,000 parents are expected to continue benefiting from this reduction. This means that, from this year until 2028, families with children will retain just over €50 million annually.
In the first quarter of next year, the government will be paying the Super Bonus to all those who are eligible. This will be calculated based on the 2025 base year; in other words, everyone who was employed in 2025 will receive this payment. Those whose income from employment amounted to €12,000 or more will receive a non-taxable payment of €1,000. Meanwhile, those with an income below this threshold will receive a pro-rate payment. The Super Bonus also applies to the self-employed, senior citizens who continue to work, and part-time employees.
As part of ongoing efforts to simplify tax administration and provide greater flexibility to taxpayers, the government will initiate a project aimed at reforming the income tax return framework applicable to married couples. The objective is to establish an approach whereby, as a general rule, each spouse submits an individual tax return regarding their own income and tax affairs. Couples who wish to utilise a joint filing arrangement - where permitted by law - will retain this option through an 'opt-in' mechanism.
Caruana said that the government is determined to ensure that property transactions are taxed in a fair and transparent manner. Arrangements involving the sale of airspace have been identified, which could result in tax being calculated based on only a portion of the actual value of a completed property. Consequently, the government will introduce targeted measures requiring fuller disclosure of the total agreed consideration for such developments, strengthening valuation and verification procedures, and ensuring that transactions are taxed according to their economic substance. The measures will also address structures involving intermediaries or developers who do not appear directly on the deed of transfer.
Another reform the government will be implementing is the introduction of a new mechanism in the construction sector to address potential VAT abuse in this field. For transactions covered by this mechanism, the VAT obligation will shift from the supplier to the purchasing business. This business will be required to calculate and declare the VAT due on its purchase, and will be able to deduct that same VAT, provided it is eligible to do so under law.