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Financing, investment and government support

Government support

Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?

In October 2017 the government announced that it intends to set up a new blockchain hub, which will enable the government to assist start-ups that are new to investing in this technology. A blockchain lab will also be launched, with good initiatives for start-ups.

More generally, employee share options plans are commonly used by start-ups in order to keep their salary bill low while retaining talent. These agreements between employers and employees allow employees to buy a share in the company once a certain time period has passed. This helps start-ups to attract and retain dedicated employees.

Additionally, Malta offers attractive tax residency rules for highly qualified individuals and high-net-worth individuals. Provided certain conditions are met, a 15% flat rate of income tax on particular income streams may apply to such individuals.

Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?

No. However, at the Unlock Blockchain conference held in Dubai in January 2018, the Maltese parliamentary secretary responsible for financial services, digital economy and innovation announced that Malta is planning to cooperate with Dubai in several projects regarding the use of blockchain technology in a number of industries. The government is simultaneously seeking to establish relationships with other countries in order to mark itself out as the fintech hub of Europe.

Financing and investment

What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?

Fintech start-ups planning to set-up their business in Malta would typically opt for equity financing, such as bank financing or financing from the management or parent company (if it is part of a group of companies). Raising alternative finance through capital markets would be challenging for start-ups, as they would require an established track record and a history of accounting statements. Nevertheless, through the Start-up Finance Regulations 2017 the country’s economic development agency Malta Enterprise has created financing opportunities for innovative undertakings in their early stages of development, supporting small start-up undertakings that demonstrate a viable business concept in the setup and initial growth phases.

Through this initiative, Malta Enterprise provides support linked to private equity, crowd funding and the procurement of machinery and equipment. Depending on the type of support provided, assistance may be up to €100,000 (if linked to crowd-funding campaigns) or €200,000 (if linked to private equity or required to fund the procurement of machinery and equipment).

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