2.6%
Deficit in 2026 and planned for 2027, as a share of GDP
2.1% in 2025. The plan then falls to 2.2% in 2028 and 1.8% in 2029.
SourceBudget Speech
MALTA OBSERVER · BUDGET 2027 REVIEW
Budget 2027.
Presented in Parliament on Monday 26 October 2026 by the Minister for Finance, Clyde Caruana. The energy shield stays, families with children get the second year of tax cuts, and visitors, non-EU workers and non-residents are asked to pay more.
THE BUDGET IN NUMBERS
Eight figures that frame it.
From the official Budget Speech and its fiscal tables, Ministry for Finance. Forecasts are the Government’s; the IMF comparison is from the Observer’s edition.
46.8%
Government debt at the end of 2027, as a share of GDP
46.7% at the end of 2026: €13.1bn of debt against a €28.1bn economy in 2027.
SourceBudget Speech
€400m
Energy and fuel subsidies planned for 2027
€392m this year; €1.35bn between 2022 and 2026. The speech puts them at 1.4% of GDP, about half the deficit.
SourceBudget Speech
3.8%
Real growth forecast for 2027
4.1% forecast for 2026 (the IMF’s forecast is 3.7%). Unemployment 3.2%; inflation 2.7%.
SourceBudget Speech; IMF via the Observer edition
€6.41
Cost-of-living increase a week in 2027
The national minimum wage rises by €10.41 a week, COLA included. Inflation was 2.4% in September.
SourceBudget Speech
€10
Weekly rise in pensions from January
The first step of the €50 a week promised for the legislature; the social package is over €121m.
SourceBudget Speech
€1,000
Super Bonus, paid in the first quarter of 2027
Tax-free, for those who earned €12,000 or more from work in 2025; €500 to €925 for incomes from €2,000 to €11,999.
SourceBudget Speech
€324m
New revenue from the measures announced
The speech’s own estimates, added up by the Observer: eco-contribution €182m, non-EU work permits €80m, eligibility changes €46m, ferries €13m, boats €3m.
SourceBudget Speech; sum by the Observer
WHO GETS MORE
Families, pensioners, carers and small firms.
No increase in income tax rates, VAT, social security contributions or the retirement age, the speech says.
- €30,000
Families with children: second year of the tax cut
Married couples with two or more children pay no income tax up to €30,000 in 2027 (€37,000 in 2028); the parent computation rises to €24,000 (€30,000). About €50m a year stays with 68,000 parents.
- €10 a week
Pensioners
Retirement, invalidity, widows’ and age pensions up €10 a week. Widows reach the full two-thirds (7,000+); the pre-1962 maximum pensionable income rises to €28,000; one flat COLA bonus of €21.53 a week; the tax-free pension threshold rises to €37,624.
- 3,200
Married women without a pension
From 2027, contributions can be transferred from a spouse with a pension to one without; the parameters are to be announced. About 3,200 more married women are expected to qualify.
- €200–€1,500
Low and middle incomes
The additional COLA mechanism again, for over 100,000 households; €500 per child in post-secondary education for about 14,000 families.
- €7,500
Carers and vulnerable people
Carers Grant up to €7,500; Carer at Home up to €9,800; adoption refund €13,000; 10 days’ fostering leave; orphans’ allowance to age 25 at €170 a week; therapy costs for disabled children; social security credits for absences due to mental health or domestic violence.
- 25%
Small companies
Companies with turnover up to €1m pay 25% instead of 35% on profits kept or reinvested; dividends still taxed at 35%.
| Computation | 2026 | 2027 | 2028 | Largest saving, 2027 |
|---|---|---|---|---|
| Married, one child | €17,500 | €20,000 | €22,500 | €1,450 |
| Parent, one child | €14,500 | €16,000 | €18,000 | €1,150 each |
| Married, two or more children | €22,500 | €30,000 | €37,000 | €4,050 |
| Parent, two or more children | €18,500 | €24,000 | €30,000 | €3,250 each |
WHO PAYS MORE
Visitors, non-EU workers and non-residents.
Mostly from 1 January 2027. Revenue estimates are the Government’s.
- €8 a night
Eco-contribution, hotels and other collective accommodation
From 1 January, up to €64 a person per stay; €10 a night (up to €80) in short lets. Over-18s only; English-language schools exempted.
Estimated €182m
- €10
Cruise passengers
A new eco-contribution for passengers who disembark and re-embark in Malta; not for cruises that start here.
- €5
Comino
An eco-contribution added to the Blue Lagoon booking system.
- €800 + €400
Work permits for non-EU workers
New applications rise from €600 to €800; an annual €400 infrastructure contribution on new and renewed permits (not for under-18s). Other Identità permit fees also rise.
Estimated €80m
- From January
Free services narrowed
Free public transport, the atypical-work cheque and free childcare (for new users) limited to Maltese and EU citizens resident here and long-term residents. Non-EU driving licences valid for 12 months; an €83-a-month fee on some B and B1 licences.
Estimated €46m a year, savings and revenue
- +€3
Fast ferries and the Gozo ferry, for non-residents
Tourist fast-ferry fares rise by €3 a trip. Gozo ferry, non-resident adult €4.65 → €11; child €1.15 → €7; car and driver €15.70 → €22.
Estimated €13m
- €300–€2,600
Pleasure boats from 10 to 24 metres
Higher annual registration fees by length, to offset part of the fuel subsidy (fuel subsidies rose from €40m to €85m). Professional fishers and boats under 10 m exempt.
Estimated €3m
THE FISCAL PATH
Deficit and debt, 2025 to 2029.
Revenue in 2027: €10.1bn (€9.0bn from taxes). Spending: €9.4bn recurrent and almost €1.5bn capital, of which about €390m from EU funds.
Sales of air space
Fuller disclosure and valuation, so property is taxed on its real value; applies prospectively, after consultation.
VAT in construction
A reverse-charge mechanism: the buying business accounts for the VAT, closing room for fraud and fictitious refunds.
Receipts and invoices
Administrative penalties of €100, €200, €400 and €500 for repeated failures within 24 months, in place of criminal proceedings.
VAT on prepared food
Guidelines so supermarkets, shops and restaurants apply the food exemption the same way.
Separate tax returns
A project for each spouse to file individually, with joint filing kept as an option.
THE STARTING POINT · ECONOMIC SURVEY 2026
Where the economy stands as the Budget begins.
From the Economic Survey 2026, Ministry for Finance, published on 26 October 2026: where the economy is, not forecasts. Its figures are provisional and subject to revision.
4.4%
Real growth, first half of 2026
EU 1.2%. Nominal growth 6.9%.
SourceEconomic Survey 2026
−0.2%
Labour productivity, first half of 2026
While employment grew 4.6%: more people at work, slightly less output per person.
SourceEconomic Survey 2026
2.0%
Inflation, EU measure (HICP), August 2026
Euro area 3.2%. The Retail Price Index averaged 2.6% from January to August.
SourceEconomic Survey 2026
3.3%
Unemployment rate, second quarter of 2026
EU 6.0%. 0.4 points higher than a year earlier.
SourceEconomic Survey 2026
40.6%
Foreign workers’ share of employment, April 2026
Up 2.5 points in a year. Net migration was 13,906 in 2025.
SourceEconomic Survey 2026
5.5%
Government deficit, first half of 2026, share of GDP
€698.5m, against €313.2m in the first half of 2025.
SourceEconomic Survey 2026
Growth from more people, not more output per person
THE DIRECTION
The Malta Observer’s read of Budget 2027.
Our interpretation, built on the official speech and the Economic Survey 2026: analysis, not part of the Budget.
01
From volume to value
The Government presents the Budget as the first step in changing how Malta grows: pricing growth by numbers and rewarding firms that invest in technology, skills and productivity before hiring more people.
Economic Survey 2026In the first half of 2026 employment grew 4.6% while output per worker fell 0.2%: the problem the Budget sets out to change.
02
A shift in who carries the cost
The new revenue comes almost all from visitors, non-EU workers and non-residents. Residents are shielded: no rise in income tax rates, VAT, social security contributions or the retirement age.
03
Protection first, consolidation later
The energy shield, about €400m a year, is about half the deficit. The deficit holds in 2027 and falls only from 2028; debt stays near 46.8% of GDP, below the EU’s 60% reference.
Economic Survey 2026The first-half deficit was €698.5m, more than twice the €313.2m of a year earlier, and 5.5% of that half’s output. Measured against the whole year’s output, that is already close to the 2.6% the Budget estimates for 2026: the second half would need to run near balance (the Observer’s arithmetic).
04
Investment where the pressure is
Also: the second interconnector with Sicily, studies for a 300 MW offshore wind farm, a 135-bed mental health unit, and airline incentives turned toward the shoulder and winter months.
05
A growth forecast above the IMF’s
IMF forecast, 2026 Government forecast, 2026 NSO actual, Q2 2026 on a year earlier
The Government expects 4.1% in 2026 and 3.8% in 2027. NSO’s latest quarter showed 4.5% on a year earlier: within reach, not assured.
Economic Survey 2026Growth in the first half was 4.4% (EU 1.2%), carried mainly by public consumption (+12.8%) and investment (+8.2%); private consumption rose 3.4%.
06
What is still to come
- The parameters of the pension contribution transfer
- The legal notices for the eligibility changes from 1 January
- Who pays the €400 permit contribution: employer or worker
- A strategic partner for KM Malta Airlines
- The European Commission’s opinion on the draft budgetary plan
The Observer will update this read as each is published.