S.L. 123.208 Art. 2Interpretation. Cap. 123.  Cap. 370.  Cap. 371.  Cap. 376.

In these rules, unless the context otherwise requires:

"Act" means the Income Tax Act;

"Commissioner" means the Commissioner for Revenue; "competent entity" means the Malta Investment Management Company Limited;

"connected to the qualifying company" means being:

(a) the investor’s spouse, descendants and ascendants in the direct line and their relative spouses, his brothers or sisters, and their descendants;

(b) a partner in a commercial or civil partnership of the qualifying investor;

(c) a shareholder of the qualifying company in which it invests, including business angels and financial institutions, irrespective of their ownership;

(d) an investor, or any of the persons mentioned in paragraph (a), who is an employee of the qualifying company;

(e) an investor who, prior to the qualifying investment, already holds shares, whether directly or indirectly, in the qualifying company;

(f) an investor who is, upon winding up of the

*These Regulations have been repealed by Legal Notice 45 of 2024. qualifying company, entitled to any of its assets, where such right existed in favour of the said investor prior to the company being granted the status of qualifying company in terms of these rules;

(g) an investor who has advanced to the qualifying company, funds by way of loan the terms of which establish the right of conversion into shares or other similar equity rights in the qualifying company;

"equity shares" shall have the same meaning as assigned to it in the Act sohowever that any such shares shall in all cases not be redeemable;

"excluded activities" means any one of the following activities:

(a) dealing in immovable property, shares, securities and, or other financial instruments;

(b) dealing in goods other than in the normal course of business;

(c) carrying on banking, insurance or any other activity covered by the Investment Services Act, the Banking Act, and the Financial Institutions Act;

(d) providing legal, accounting or other professional services;

(e) activities relating to the development of immovable property;

(f) receiving royalties or licence fees;

(g) operating or managing hotels, hostels, guest houses or residential care homes;

(h) carrying on activities in connection with the generation of electricity and other energy sources;

(i) the holding of shares, whether directly or indirectly, in any company which carries out any of the activities listed in any one or more of paragraphs (a) to (h);

"first commercial sale" shall have the same meaning as is assigned to it in the Regulation, as amended and as may be amended from time to time;

"investment" means the subscription to a fresh issue of fully paid up, non-redeemable equity shares in a qualifying company by a qualifying investor and the term "invest" shall be construed accordingly;

"natural person" means a person, other than a legal entity, who is not an undertaking for the purposes of Article 107(1) of the Treaty on the Functioning of the European Union;

"qualifying activities" means any activity the income derived from which is chargeable under the provisions of article 4(1)(a) of the Act, other than the carrying out of any one of the excluded activities;

"qualifying company" means an SME that satisfies the following cumulative conditions:

(a) is incorporated in Malta or controlled and managed from Malta or has a place of business in Malta;

(b) has been in existence and engaged in carrying out qualifying activities for a period not exceeding three (3) years following its first commercial sale;

(c) is not listed on any recognised stock exchange;

(d) has a maximum of ten (10) employees;

(e) has gross assets of not more than two hundred and fifty thousand euro (€250,000) immediately preceding the issue of equity shares to the qualifying investor, and that has been duly issued with the relative compliance certificate by the competent entity in terms of these rules:

Provided that undertakings in difficulty, undertakings which are subject to an outstanding recovery order, other undertakings which are expressly excluded from receiving such aid in terms of the Regulation, as well as undertakings which, directly or indirectly, hold shares in any company which carries out any excluded activities, do not fall within the scope of this definition;

"qualifying investor" means any natural person who is resident in Malta or who falls within the scope of s u b -p a r a g r a p h s (i) and (ii) to article 56(1)(c) of the Act to the extent that he bears the full risk in respect of his investment, and who has been duly issued with the relative compliance certificate by the competent entity in relation to an investment in a qualifying company in terms of these rules: Provided that undertakings in difficulty, undertakings which are subject to an outstanding recovery order as well as other undertakings expressly excluded from receiving such aid in terms of the Regulation are excluded from this definition;

"Regulation" means Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty as amended and as may be amended from time to time;

"small and, or medium sized enterprise/s" and its abbreviation "SME" shall have the same meaning as is assigned to it in Annex I of the Regulation, as amended and as may be amended from time to time;

"undertakings in difficulty” shall have the same meaning as is assigned to it in the Regulation, as amended and as may be amended from time to time.