Important tax change Ar 14(1) (M) Intellectual Property Deductions

The Commissioner for Tax and Customs hereby notifies that, with effect from the period covered by the year of assessment 2024, any expenditure of a capital nature incurred on Intellectual Property or Intellectual Property Rights may, at the option of the person that has incurred such expenditure, be deducted in full in terms of article 14(1)(m) of the Income Tax Act (Cap. 123 Laws of Malta) in the year that the said expenditure has been incurred or in the year in which the Intellectual Property or Intellectual Property Rights are first used or employed in producing the income.

With respect to expenditure of a capital nature on Intellectual Property and Intellectual Property Rights that was incurred before the period covered by the year of assessment 2024, any deductions that were yet unclaimed as at the year of assessment 2023, may be claimed in full in the year of assessment 2024. Thus, if, for example, Intellectual Property was acquired in the year of assessment 2023 and a 33.33% deduction of the expense was claimed in that year of assessment, the person can claim the remaining 66.67% in the year of assessment 2024.

The accelerated deductions being notified above may only be claimed against income produced through the use or employment of the Intellectual Property or Intellectual Property Rights.