Article 14(1)(m)

Accelerated deductions in respect of Intellectual Property and Intellectual Property Rights

Yanika Muscat
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Article 14 (1)(m) remains one of the most important articles within Malta's Income Tax Act, in view of the deduction pertaining to expenditure of a capital nature in relation to Intellectual Property ("IP") or Intellectual Property Rights ("IPR). This insight provides taxpayers with essential options to optimise their tax position while promoting innovation and investment in IP assets.

With effect from the financial period covered by year of assessment 2024, taxpayers have the opportunity to opt for a full deduction of capital expenditure incurred on IP or IPR, used or employed in the production of the income, in the year in which that said expenditure has been incurred or first used

Alternatively, for those who prefer a more gradual approach, the option to spread deductions over a minimum period of three years remain available. To qualify for this option, the IP or IPR must have been utilised or employed in the production of the income during the relevant years. 

Additionally, if a taxpayer has previously claimed deductions under Article 14(1)(m) in prior years of assessment and still has unclaimed deductions following year of assessment 2023, the taxpayer can opt to claim the remaining deductions in full during the year of assessment 2024. 

The decision to avail of accelerated deductions remains at the discretion of the taxpayer. Depending on their specific circumstances, taxpayers can choose the most advantageous approach based on their financial planning and business strategies. 



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