Tax Credits for Students

By way of Legal Notice 175 of 2017 entitled ‘Deductions and Tax Credits (Relevant Qualifications for Industry) Rules, issued by the Government of Malta, a tax credit of up to 70% of the study costs paid by a student during the time period within which he got a qualification has been provided. The qualification needs to be a degree or post-graduate degree previously approved by the Ministry for Education. The study costs mentioned in the legal notice include the fees paid by the student to the University, or any other institution, with regard to the admission and attendance to the educational course as well as for the sitting of examinations.

The tax credit shall apply for applications received on or after the 1st of January 2017 and it shall be deducted against the student’s tax liability on his chargeable income for the year of assessment commencing in the year following that in which the student obtained the relevant qualifications. It is worth noting that the beneficiary of the said tax credit could be either the student or else the parents (this shall include any person who has the care and custody of the student). Any amount of tax credit not utilized by the beneficiary in that year of assessment may be carried forward and be set against his respective tax liability within the subsequent ten (10) years of assessment.

On presenting the first claim for tax credit, one has to submit the following said documentation along with the tax return of the first year of assessment during which the credit was claimed:

1. A declaration from the person applying for the said credit that he has not been entitled from any source to any reimbursement or compensation for the costs on which the credit has been claimed;

2. A copy of the certificate issued by the university/institution which proves the completion of the chosen course; and

3. A copy of the tax credit certificate issued by the Department of Education to substantiate that the qualification obtained is a relevant one. The student would have to apply personally for such certificate.

The tax credit shall remain effective until 31st December 2020, thus applications submitted after the said date shall not be considered for the tax credit. Also, students who submit tax credit applications two years after the obtainment of the qualifications, shall have their application rejected.

This tax credit is considered as an incentive so as to support the personal development of individuals who aim to achieve qualifications required by the desired industry.