COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Malta
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Malta, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, social policy, stability pact, waste management

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 218 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report - Malta Accompanying the document Recommendation for a COUNCIL RECOMMENDATION  on the economic, social, employment, structural and budgetary policies of Malta {COM(2026) 218 final}  
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

Economic growth remains robust, 
despite heightened economic 
uncertainty. 

Malta's  economy  grows  strongly,  driven 
by  robust  domestic  consumption  and 
tourism. This growth is driven by private and 
public  consumption  and  is  further  supported 
by  a  solid  performance  in  key  export  sectors. 
Real  GDP  grew  by  4.0%  in  2025  and  is 
forecast to grow by  3.7% in 2026  (see Graph 
1.1) The contribution of net exports to growth 
is  positive,  resulting  from  large  net  positive 
services 
the  negative 
balance  of  trade  in  goods.  More  pronounced 
effects 
capacity 
constraints, such as in land-use, infrastructure 
bottlenecks,  and  expected  slowdown 
in 
external  demand  are  set  weigh  down  on  the 
growth momentum. Despite these factors and 
the  current  geopolitical  uncertainty,  real  GDP 
growth is set to remain robust. 

trade  outweighing 

shortages, 

labour 

of 

Graph 1.1: Malta - Real GDP growth and 
contributions 

Source: European Commission, Eurostat. 

to 

are 

likely 

Employment growth continues, but labour 
shortages 
persist. 
Employment  growth  is  projected  to  remain 
strong.  It  is  projected  to  have  grown  by  3.9% 
in 2025 and to increase by 3.2% in 2026. Job 
creation  continues  to  rely  heavily  on  foreign 
workers,  although  inflows  are  expected  to 
moderate.  This,  however,  did  not  lead  to 
decreasing labour shortages, as vacancy rates 
continued  to  increase,  particularly  in  tourism, 
healthcare,  and  other  service  sectors.  The 
unemployment rate is expected to remain low 
at around 3.2% in 2026. Nominal wage growth 
per  employee  is  projected  to  ease  from  4.2% 
in  2025  to  3.5%  in  2026  and  2.1%  in  2027. 
Thus, real  wage growth is expected to remain 
positive. 

Inflation  set  to  increase  following  the 
global  trends.  Headline  inflation  moderated 
to 2.4% in 2025 and is forecast to increase to 
2.7% in 2026, as the increases in international 
energy  prices  indirectly  drive  up  transport, 
food  and  services  inflation.  The  direct  effect 
on  local  energy  inflation  of  global  energy 
prices  is  neutralised  by  the  measures  of  the 
Maltese authorities to keep retail energy prices 
unchanged. 

Favourable economic conditions 
reduce headline deficit, but strong 
underlying expenditure growth 
persists  

Government deficit fell to 2.2% of GDP in 
2025  and  is  projected  remain  stable  in 
2026.  In  2025,  the  deficit  fell  to  2.2% 
reflecting  a  strong  revenue  growth    driven  by 
favourable economic conditions and significant 
tax windfalls. This more than offsets increased 
expenditure, 
including  from  higher  public 
sector  wages.  In  2026,  the  deficit  is  forecast 

2 

-10-50510152018192021222324252627Net exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
 
  
to  remain  stable  at  2.2%  of  GDP,  largely 
reflecting  lower intakes from personal income 
taxes  and  higher  expenditures  as  a  result  of 
the  increased  cost  of  energy  subsidies.  In 
2027, the deficit is projected to fall marginally 
to  2.1%  of  GDP,  as  revenue  continues  to 
increase  despite  the  moderation  in  economic 
growth.  Fiscal  commitments  made  by  Malta 
under  its  medium-term  fiscal  structural  plan 
(MTFSP)  for  2025-2028  would 
imply  an 
improvement of the structural primary balance 
of  1.4  pps,  from  -2.2%  of  GDP  in  2025  to  -
0.8% in 2028. This would allow to maintain a 
broadly stable public debt ratio of around 46% 
of  GDP.  However,  the  projected  future  growth 
in  health, 
long-term  care  and  pension 
expenditure  could  put  a  strain  on  the  long-
term  fiscal  sustainability  and  adequacy  of 
Malta’s social protection system. 

to 

affecting 

challenges 

Malta’s  tax  system  continues  to  face 
structural 
its 
fairness,  efficiency  and  transparency.  In 
particular,  addressing  aggressive  tax  planning 
risks  remains  the  key  policy  challenge  in 
Malta's tax system, as highlighted in the 2025 
CSR.  Despite  improvements,  certain  features 
of the corporate tax system continue to create 
risks  of  profit  shifting  and  double  non-
taxation.  Malta’s  refund  tax  system  allows 
international  companies 
their 
effective tax rate from 35% (nominal tax rate) 
to  between  5%  and  10%  through  tax  credits 
and  refunds.  The  implementation  of  the  EU 
Minimum  Tax  Directive,  ensuring  a  minimum 
15%  effective  tax  rate  for  large  corporations, 
together  with  the  recent  introduction  of  the 
optional  Final  Income  Tax  Without  Imputation 
regime, may lead to higher effective corporate 
taxation  in  Malta  for  companies  falling  within 
its scope or choosing to opt in. Still, the lack of 
systematic  reporting  on 
tax  expenditures 
undermines  fiscal  transparency  and  makes  it 
difficult  to  evaluate  the  effectiveness  of  tax 
policy measures. 

reduce 

Malta's supplementary pension sector has 
scope for growth to support the adequacy 
of  retirement  income  and  counter  future 
fiscal pressures. While voluntary second and 
third  pillar  pension  schemes  are  available, 
participation  remains  limited.  To  address  this, 
the Maltese government considers introducing 

3 

automatic  enrolment  in  occupational  pension 
schemes  with  an  opt-out  option.  This  could 
help  expand  participation,  ease  the  pension 
adequacy gap and strengthen the role of retail 
and institutional investors.  

Malta’s  defence  expenditure  is  expected 
to remain at very low levels. Malta follows 
a  policy  of  neutrality.  Total  government 
expenditure  on  defence  amounted  to  only 
0.5%  GDP  in  2024  and  is  forecast  by  the 
Commission  to  remain  broadly  unchanged  at 
around that level for 2025-2027. 

Malta faces challenges to its 
competitiveness, long-term growth 
and social cohesion 

Graph 1.2: Relative change in foreign born 
population 2020-2024 (%) 

Source: Eurostat. 

economy 
by 

expanded 
strong 

rapidly, 
Malta's 
accompanied 
population 
growth.  This  expansion  was  powered  by  an 
influx  of  foreign  workers 
in  fast-growing 
tourism, 
volume-based  sectors,  such  as 
construction, and retail. Malta’s population has 
therefore  grown  at  an  unprecedented  rate  in 

-3-11357911ATBECYCZDEDKEEELESFIFRHRHUIEITLTLULVMTNLPLPTROSESISK 
   
recent years (see Graph 1.2). While supporting 
robust  economic  performance,  it  has  led  to 
increased  population  density  and  has  put 
strain  on  infrastructure,  land  use,  natural 
resources, and public services, which highlights 
the difficulty  of sustaining the current growth 
model  (see  Annex  18).  Malta  could  benefit 
from  a  more  balanced  growth  strategy  by 
prioritising  high-productivity  and  knowledge-
intensive  sectors,  which  would  require  greater 
efforts  to  develop,  attract  and  retain  high-
skilled  workers,  as  well  as  to  strengthen  the 
use  of  skills  intelligence  tools  in  economic 
development policy. 

Malta’s  economic  security  is  shaped  by 
its  small  and  highly  open  economy,  the 
current pressure on its natural resources, 
and  infrastructure,  and  its  exposure  to 
in  external  connectivity. 
disruptions 
Limited  external  transport  connectivity  and 
relatively  high  international  transport  costs 
impact  its  supply  chain  resilience  and  can 
constrain diversification of trade and economic 
activities.  In  this  respect,  the  modernisation 
and  expansion  of  its  maritime  infrastructure 
could  improve  Malta’s  economic  resilience. 
towards 
Malta’s  energy  mix 
imported  fossil  fuels,  exposing  it  to  energy 
the  share  of 
supply  shocks. 
Increasing 
renewable  energy  sources  and 
improving 
energy  efficiency  could  boost  the  country’s 
energy  security.  The  country’s  tight  labour 
market  faces  severe  shortages  of  labour  and 
skills, which is worsened by population ageing. 
skills 
Well 
development  and  attracting  foreign  talent  are 
needed  to  address  these  shortages  without 
imposing  additional  strain  on  the  country’s 
scarce natural resources. 

targeted  measures 

is  skewed 

towards 

Malta’s  labour  market  is  thriving,  yet 
there  are  ongoing  challenges.  Significant 
disparities  in  employment  remain  between 
men  and  women  as  well  as  people  with  and 
without disabilities. Job quality, particularly for 
third  country  nationals,  and in  certain  sectors, 
including  workplace  safety, 
is  a  concern, 
aggravated  by  limited  capacity  for  labour 
inspections  and  gaps 
in  social  dialogue. 
Turnover  rates  are  notably  high.  This  makes 
skilled labour shortages systemic, arising from 
education  and  training-related  challenges  in 

4 

the  country,  such  as  low  participation  in 
vocational  education  and 
(VET), 
especially  in  science,  technology,  engineering, 
and  mathematics  (STEM)  areas,  and  in  adult 
learning for the low skilled. 

training 

people 

Malta's social outcomes are uneven, with 
specific  and  persistent  vulnerabilities. 
While  overall  poverty  rates  remained  stable, 
third-country 
with 
nationals, 
disabilities,  people  with  a  low  education  level 
and  older  people,  especially  women,  remain 
particularly  vulnerable.  There  is  room  for 
improvement 
adequacy, 
accessibility,  and  coverage.  The  effectiveness 
of  social  transfers  in  alleviating  monetary 
poverty  ranks  among  the  lowest  in  the  EU. 
While  participation  of  children  under  three  in 
early  childhood  education  and  care  increased 
in recent years, there is a wide gap related to 
poverty risk in participation. 

benefits 

in 

innovation 

Strengthening research and innovation is 
essential  for  Malta  to  move  towards  a 
more  productivity-driven  growth  model. 
Persistent low levels of investment continue to 
constrain 
performance,  with 
research  and  development  (R&D)  intensity 
remaining  among  the  lowest  in  the  EU  (see 
Annex 4). Structural challenges such as limited 
uptake  of  support  schemes,  scientific  and 
links 
digital  skills  shortages,  and  weak 
between  academia  and  businesses,  highlight 
the  need 
innovation 
ecosystem,  improve  access  to  support,  and 
encourage  collaboration  to  unlock  growth  in 
high-potential sectors. 

to  strengthen 

the 

Access  to  external  financing  remains 
limited  for  Maltese  businesses.  Although 
institutions  such  as  the  Malta  Development 
Bank provide instruments to address financing 
gaps, challenges related to accessibility, timing 
and  administrative  procedures  continue  to 
constrain  the  effective  use  of  alternative 
funding  sources.  The  underdeveloped  venture 
ecosystem, 
capital  and 
characterised  by  very  low  investment  levels, 
limits  financing  opportunities  for  high-growth 
firms.  The  limited  uptake  of  public  support 
schemes,  such  as  the  Malta  Venture  Capital 
Fund,  points  to  structural  weaknesses  in  the 
financing landscape and highlights the need to 

private 

equity 

 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Malta  performs  well  (SDGs  4  and  8)  or  is  improving  (SDG  9)  on  SDGs  related  to 
productivity.  However,  it  still  needs  to  step  up  efforts  to  close  the  gap  with  the  EU 
average on industry, innovation and infrastructure (SDG 9). 

Skills shortages in Malta are at risk of rising due to worsening education outcomes, and 
a  very  low  share  of  R&D  workers.  This  further  hampers  economic  growth  and 
competitiveness.  Out  of  the  17  indicators,  7  SDGs  remain  below  the  EU  average. 
Besides  SDG  9  highlighted  above,  the  affected  SDGs  relate  to  environmental 
sustainability  (SDGs  12,  13  and  15),  macroeconomic  sustainability  (SDG  17)  and 
fairness (SDGs 2 and 5) (see Annex 17). 

strengthen  access  to  risk  capital  and  improve 
the effectiveness of existing initiatives. 

Scope  remains  to  improve  the  efficiency 
of  Malta’s  justice  system.  Lengthy  judicial 
proceedings  continue  to  be  made  worse  by 
structural  constraints  such  as  limited  judicial 
resources,  including  a  low  number  of  judges 
per  head  resulting  in  a  high  caseload  per 
judge,  as  well  as  staff  shortages  and  limited 
court  premises.  While  Malta  took  steps  to 
improve  performance  through  digitalisation 
including  better 
and 
online  access 
the 
implementation  of  a  national  digital  justice 
strategy  supported  by  the  Recovery  and 
Resilience  Fund  (RRF),  challenges  remain  in 
areas  such  as  the  production  of  machine-
readable  decisions  and  broader  system 
capacity. 

institutional  reforms, 

judgments  and 

to 

to  business  activity, 

Maltese  firms  face  a  relatively  high 
administrative  and  regulatory  burden. 
Barriers 
trade  and 
investment remain above the EU average and 
contribute  to  delays  and  a  less  favourable 
business environment, particularly for licensing 
and  permitting  procedures.  While  efforts  are 
underway  to  streamline  processes  through 
digitalisation,  including  the  introduction  of 
eProcurement  services  based  on  the  ‘once-
only principle’, structural  challenges persist, in 
particular,  the  absence  of  a  centralised  public 
procurement  service  capable  of  supporting 
comprehensive data analytics. 

Sustained  demand  is  accelerating  price 
growth  in  Malta’s  property  and  rental 
markets.  Residential  property  transactions 
reached  new  highs  in  2025  (see  Annex  16), 

5 

continuing  a  long-term  upward  trend.  This 
continues  to  drive  nominal  property  prices, 
which  have  risen  steadily  since  2014  and 
consistently  outpace  EU  average  growth. 
However, with income growth exceeding these 
gains,  the  price-to-income  ratio  has  actually 
declined,  tempering  the  impact  on  overall 
affordability (see Annex 16). Meanwhile, rental 
prices  continue  to  climb,  boosted  by  high 
demand from foreign workers and tourists. 

Vulnerable groups in Malta face housing-
related pressures.  While housing challenges 
affect  the  population  at  large,  their  impact  is 
particularly  acute  for  vulnerable  households, 
including  non-EU  nationals,  children,  single-
parent families and those at risk of poverty. 

and 

Over-crowding  and  energy  poverty  remain 
significant  challenges  for  vulnerable  groups. 
Housing  support,  delivered  by  the  Housing 
Authority,  covers  the  provision  of  social 
housing,  affordability  schemes,  private  rental 
property  management. 
regulation 
Although 
launched 
the  government  has 
credible initiatives and is expanding the social 
housing  stock,  current  provisions  appear 
insufficient  to  meet  demand.  Coverage  and 
adequacy  of  housing  support  remain  limited, 
despite  ongoing  efforts  to  strengthen  existing 
schemes (see Annexes 12 and 16). 

The green transition is progressing 
slowly  

Malta’s  uptake  of  renewable  energy 
sources  is  progressing  slowly.  In  2025, 

 
 
quality  remains  precarious  (see  Annex  18). 
Malta is highly vulnerable to extreme weather 
events, 
floods,  heatwaves  and 
drought  events,  even  as  climate  resilience 
measures begin to improve. 

including 

funding 

instruments 

competitiveness, 

EU 
provide 
considerable  resources  to  Malta.  They 
support investments and structural reforms to 
environmental 
increase 
sustainability,  skills,  social 
fairness  and 
security,  while  helping  to  address  challenges 
identified in the CSRs. Key instruments include 
the  Recovery  and  Resilience  Facility  (see  Box 
2)  and  Cohesion  policy  funds  (see  Box  3).  In 
addition, the Common Agricultural Policy (CAP) 
provides Malta with an EU contribution of EUR 
122  million  under  the  CAP  strategic  plan  for 
2023-2027  (1).  A  further  EUR  144  million  are 
available  under  the  Asylum,  Migration  and 
Integration  Fund  (AMIF),  together  with  the 
Border  Management  and  Visa 
Instrument 
(BMVI)  and  the  Internal  Security  Fund  (ISF). 
support 
Other 
competitiveness in Malta, for instance through 
open  calls  under  Horizon  Europe  and  the 
Connecting Europe Facility. 

programmes 

also 

EU 

is  derived 

this  power 

renewables  accounted  for  only  16.7%  of 
Malta’s  electricity  mix,  which  is  considerably 
below  the  EU  average  of  45%.  Malta  saw  a 
3% year-on-year increase in renewable energy 
sources (RES) installed capacity in 2024. Most 
of 
from  solar 
photovoltaics  and  water  heaters.  Further 
expansions of small-scale RES installations are 
expected to come from solar energy, which are 
beneficial  in  the  short  term.  Plans  to  develop 
large  floating  offshore  wind  and  solar  farms 
are  a  step  in  the  right  direction.  However, 
fossil  fuel  subsidies  are  keeping  retail  energy 
prices  well  below  the  EU  average,  creating  a 
disincentive to adopt energy-saving measures, 
invest  in  renewables,  and  decarbonise  the 
transport sector. 

Rising  transport  emissions  and  traffic 
congestion continue to undermine Malta’s 
economic  competitiveness  and  green 
transition.  The  transport  sector  remains  the 
biggest  source  of  Effort  Sharing  Regulation 
emissions in 2024 (48%), which are projected 
to be well above Malta’s target in 2030. While 
the uptake of zero-emission vehicles has risen 
significantly  above  the  EU  average,  these 
gains are being undermined by low fuel prices, 
which  sustain  a  heavy  reliance  on  private 
internal  combustion  engine  vehicles 
(see 
Annex  8).  Heavy  reliance  on  private  car  use 
congestion, 
leads 
diminishing  the  population's  quality  of  life. 
Despite 
free  public 
introduction  of 
transport,  policy  measures  remain  insufficient 
to  discourage  private  car  use  in  favour  of  an 
efficient  public  transport  system  facilitating 
multimodality. 
active  mobility 
infrastructure  investments  are  largely  absent 
(see Annex 18). 

persistent 

traffic 

Major 

the 

to 

vulnerabilities, 

Rapid  economic  growth,  coupled  with 
climate-related 
puts 
significant  pressure  on  Malta’s  natural 
resources  and  infrastructure.  High  landfill 
rates  and low  recycling  rates  persist in  Malta, 
despite  recent  reforms  and  investments  in 
waste  management  (see  Annex  8).  Increasing 
water  demand  from  the  tourism  sector, 
domestic 
and, 
industrial 
agriculture  irrigation  has  left  much  of  the 
island  water  stressed.  Despite  marginal  gains 
in  water  quality,  surface  and  groundwater 

sectors 

and 

(1)  An overview of Malta’s formally approved strategy to 
implement the EU’s common agricultural policy 
nationally can be found at 
https://agriculture.ec.europa.eu/cap-my-country/cap-
strategic-plans/malta_en 

6 

 
 
 
Box 2 

Key achievements of the recovery and resilience plan 

Malta’s  recovery  and  resilience  plan  (RRP)  represents  a  total  budget  of  EUR  328  million, 
corresponding  to  1.60%  of  GDP.  The  aim  of  the  RRP  is  to  support  reforms  and  investments 
contributing  to  the  green  and  digital  transitions,  strengthening  economic  resilience,  and 
addressing long-standing structural challenges identified in the European Semester. 

As of 27 May 2026, EUR 234 million (around 71% of the total allocation) have been disbursed 
to Malta following the satisfactory fulfilment of 102 milestones and targets. Implementation 
has  progressed  steadily,  with  a  growing  number  of  reforms  and  investments  already  fulfilled 
and delivering real results on the ground.  

Highlights and impact of the plan 

•  Digitalisation. Malta’s plan improves the digital experience for  individuals and businesses 
by  expanding  online  public  services,  strengthening  government 
IT  resilience  and 
cybersecurity,  and  promoting  digital  inclusion  through  equipping  over  1  000  low-income 
individuals with laptops and internet access. 

•  Rule  of  Law.  The  Attorney  General’s  (AG)  Office  was  reinforced  under  Malta’s  plan  by 
doubling the number of officers and transferring the decision to prosecute 30 categories of 
offences from the police force, with more expected to be transferred in the coming year.  

•  Waste  management:  Malta’s  plan  adopts  new  construction  standards,  implements  a 
strategy for construction and demolition waste, and reorganises regional waste collection. 

•  Strengthening  of  the  energy  distribution  network:  Under  the  REPowerEU  component, 
Malta is investing in four distribution centres, a new 132kV distribution feeder line and more 
than 15 km of cables to strengthen its electricity distribution network.   

•  Grant  scheme  for  the  purchase  of  new  electric  vehicles:  Over  10  000  grants  have 
been  awarded  for  the  private  sector  to  purchase  electric  vehicles,  contributing  to  the 
reduction of road transport sector emissions in Malta. 

•  Neonatal  hearing  screening  programme.  Close  to  90%  of  babies  born  in  2023  were 

screened for hearing problems under Malta’s plan.  

• 

• 

The  establishment  of  a  Blood,  Tissue  and  Cell  Centre.  Aims  to  limit  Malta’s 
dependency on other countries for the provision of blood, tissue and cell therapies needed in 
medical interventions, and to support social well-being by offering services locally. 

Literacy  support  programme.  At  least  1  000  young  students  have  benefited  from  the 
Reading Recovery Programme – a literacy support programme to enable children in need to 
reach age-expected levels in basic reading. 

7 

 
 
 
 
Box 3 

Contribution of cohesion policy funds 

EU  cohesion  policy  funding  supports  Malta’s  efforts  to  increase  competitiveness, 
environmental  sustainability  as  well  as  skills  and  social  fairness.  In  the  2021-2027 
programming period, EU cohesion policy funds (2) are providing EUR 773 million (amounting to 
EUR  1  179  million  with  national  co-financing),  or  3.3%  of  2024  GDP,  to  Malta.  This  makes 
cohesion  policy  one  of  the  main  sources  of  public  investment  in  the  country.  The  amount  of 
selected projects corresponds to 80.6% of the total allocation as of March 2026, with additional 
calls in the pipeline. 

• 

Innovation,  business  environment  and  productivity.  Nearly  EUR  74  million  are 
allocated for  research and innovation, digitalisation and SMEs competitiveness.  By the end 
of 2025, around 190 firms have already seen their projects approved.  

•  Decarbonisation,  energy  affordability  and  sustainability.  EUR  397  million  are 
earmarked for clean transition projects, with more than EUR 85 million to drinking water and 
wastewater  treatment  projects.  These  projects  are  expected  to  provide  68 km  of  new  or 
upgraded pipes for the distribution systems of public water supply and improve wastewater 
treatment  facilities  for  104  000  people.  Another  EUR  232  million  will  support  energy 
interconnector  and  related  infrastructure,  energy  storage  solutions,  energy  efficiency  and 
renewable energy interventions.  

•  Skills, quality jobs and social fairness. With a total European Social Fund (ESF+) budget 
of EUR 124.4 million, EUR 53.3 million supports education and training. Around 53 000 adult 
learning  opportunities are  to  be  created  across  nearly  700  SMEs.  EUR  27.7  million  targets 
labour market  integration  of  young  people  and  other vulnerable  groups through  the  ALMA 
initiative, skills development and hiring services. More than EUR 30  million is earmarked for 
social  inclusion,  prioritising  training  and  support  services  for  vulnerable  groups.  EUR  5.5 
million  is  earmarked  for  fighting  child  poverty  while  EUR  4.5  million  provides  material 
assistance, with over 12 500 people expected to benefit from food support. 

The  mid-term  review  (3)  boosted  the  cohesion  policy’s  contribution  to  emerging  strategic 
priorities,  reallocating  nearly  EUR  86  million.  The  mid-term  review  has  strengthened  Malta’s 
energy  transition,  through  further support  to  develop  the  second  electricity  interconnector  with 
Italy, as well as energy interconnectivity and related supporting infrastructure with the island of 
Gozo. Additional investments in sustainable and affordable housing are also expected to ensure 
the  delivery  of  60  affordable  and  sustainable  homes  with  improved  energy  performance.  In 
addition to cohesion policy funding, to mitigate the social impact of climate  change, Malta will 
allocate up to EUR 45 million under the Social Climate Fund for 2026-2032 to help mitigate the 
social impact of the new emissions trading system (ETS2), supporting vulnerable households and 
small businesses. 

(2)  ERDF, ESF+, CF and JTF. 

(3)  The mid-term review is carried out halfway through the 
2021-2027 programming period. It is a formal process 
required under Article 18 of the Common Provisions 
Regulation that aims to assess the implementation of a 
programmes and, where necessary, propose 
adjustments to improve their performance, ensure their 
relevance in light of new and emerging needs and keep 
them aligned with other EU policies. 

8 

 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

of 

the 

(CSRs) 

introduction 

In  2025,  Malta  received  country-specific 
recommendations 
to  address 
remaining  aggressive  tax  planning  risks, 
including 
a 
withholding tax on outbound payments or 
equivalent  defensive  measures  and 
amendments  to  the  rules  governing  non-
domiciled  companies.  Malta  also  received  a 
CSR to promote public and private investment 
in research and innovation (R&I). On defensive 
tax  measures,  further  action  is  needed  to 
address the remaining aggressive tax planning 
risks that identified, including those related to 
targeting  outbound  payments  as  well  as  the 
tax  treatment  of  non-domiciled  companies. 
in 
Limited  progress  has  been  observed 
promoting 
innovation, 
particularly 
the  development  of 
several  government  initiatives  in  this  area. 
However,  both  public  and  private  investments 
in  R&D  remain  persistently  low  compared  to 
policy 
the  EU  average,  and 
instruments 
R&D 
supporting 
investment  appear  insufficient  to  significantly 
strengthen innovation performance. 

research 
through 

existing 
private 

and 

Aggressive tax planning risks 
persist 

Addressing  aggressive  tax  planning  risks 
remain the key policy challenge in Malta's 
tax  system,  as  highlighted  in  the  2025 
CSR.  Certain  features  of  the  Maltese  tax 
system,  including  the  absence  of  withholding 
taxes  on  outbound  interests,  royalties  and 
dividend  payments,  can  create  opportunities 
for  double  non-taxation  and  profit  shifting. 
Indicators  on  the  inward  and  outward  foreign 
direct  investment  (FDI)  held  through  special 
that 
purpose 
companies  use  Malta  for  aggressive  tax 
planning  strategies  (see  Graph  2.1  and  Annex 

suggest 

entities 

(SPEs) 

3).  Malta’s  recovery  and  resilience  plan  (RRP) 
provides  for  a  reform  targeting  the  risks  of 
double  non-taxation  linked  to  inbound  and 
outbound  payments.  However,  no  legislative 
measures have been adopted yet.   

Graph 2.1: Outward and inward FDI positions 
for Malta and comparable EU economies (% 
EU total) 

Source: 2024 Eurostat 

scheme 

The  design  of  Malta’s  corporate  tax 
system  results  in  a  large  gap  between 
statutory  and  effective  corporate  tax 
rates.  Malta’s 
can 
refunds 
significantly  reduce  the  effective  tax  burden 
for  companies.  Malta  has  recently  introduced 
the  Final  Income  Tax  Without  Imputation 
(FITWI)  regime,  which  could 
increase  the 
effective  corporate  tax  rate  to  15%  for 
companies that choose to opt in. Reducing the 
current large difference between statutory and 
effective 
tax 
simplification  and  possibly  mitigate  potential 
top-up  taxation  in  other  jurisdictions,  also 
increasing  the  overall  fairness  of  the  Maltese 
tax system.  

promote 

taxation 

could 

Malta's  tax  system  relies  heavily  on 
corporate  taxation  while  the  overall  tax 
revenues  remain  relatively  low.  Malta's 
total  tax-to-GDP  ratio  amounted  to  28.9%  of 
GDP  in  2024,  well  below  the  EU  average  of 

9 

0.01.02.03.04.0Direct investment abroadDirect investment in the reporting economy 
 
   
39.4%,  with  corporate  income  tax  accounting 
for  a  large  share  of  revenues  (see  Annex  3). 
The  tax  mix  diversification  remains  limited. 
Environmental  tax  revenues  are  among  the 
lowest in the EU (1.4% of GDP compared with 
2.1%  in  the  EU-27).  Currently,  Malta  levies 
neither  recurrent  immovable  property  taxes 
nor wealth, inheritance, or gift taxes.  

reporting  on 

The  absence  of 
tax 
expenditures  reduces  fiscal  transparency 
and  government  accountability.  Under  the 
EU  budgetary  framework,  EU  Member  States 
are  expected  to  regularly  report  on  tax 
expenditures  to  boost  transparency.  Malta 
remains  the  only  EU  Member  State  that  does 
not publish such reporting (see Annex 3).  

Malta’s move towards a 
productivity-driven economy 
requires better and more targeted 
R&I support 

Boosting  R&I  is  essential  to  support 
Malta's  transition  towards  a  higher-
productivity  growth  model.  Pressures 
arising  from  Malta's  current  economic  growth 
model indicate the need to shift from volume-
based  growth  towards  a  productivity-driven 
economy  by  increasing  and  re-focusing  R&I 
efforts  to  higher  value-added  activities.  This 
also  includes  improving  efficiency  in  Malta’s 
services sectors, where investment in R&I can 
support 
the  modernisation  of  processes. 
Targeted  reforms  and  investments  in  high 
value-added  sectors  of  the  Maltese  economy 
improve 
could  encourage 
productivity, 
the 
development  of  digital  platforms,  data-driven 
decision-making  and  adoption  of  artificial 
intelligence  (AI).  For  example,  the  information 
and  communication  sector  has  emerged  as  a 
productivity 
strong 
productivity gains, partly reflecting the sector’s 
rapid  digital  transformation  and  increased 
technological investment (see Annex 5).  

innovation  and 

recording 

including 

through 

leader, 

low 

in  R&I 
Persistently 
continues to constrain Malta's innovation 
performance. A 2025 CSR called on Malta to 

investment 

in 

promote both public and private investment in 
R&I.  Nevertheless,  Malta's  overall  R&D 
intensity remains among the lowest in the EU 
(at 0.54% of GDP in 2024 vs the EU average 
of  2.24%),  reflecting  limited  investment  by 
both  the  public  and  the  private  sector  (see 
Annex  4).  Malta  has  announced  new  tax 
incentives  aimed  at  stimulating  private 
including  a  tax 
innovation, 
investment 
deduction of 175% for eligible spending in R&I 
(see  Annex  4).  Ensuring  that  companies  can 
support 
effectively  benefit 
well-functioning 
requires 
schemes 
innovation  ecosystem, 
targeted 
support instruments  which  may  combine  both 
direct  support  (such  as  grants  and  subsidies) 
and indirect measures (such as tax incentives). 
It is also important to facilitate the uptake of 
through 
R&I  support 
administrative 
stronger 
outreach,  better  advisory  services,  and  the 
development  of  entrepreneurial  culture 
in 
general.  

simplification, 

from  public 

is  available 

including 

that 

a 

to 

Low  levels  of  public  R&D  investment 
continue 
limit  Malta's  scientific 
excellence.  Public  R&D  spending  remains 
particularly  low,  reaching  0.16%  of  GDP  in 
2024 compared with an EU average of 0.72% 
of GDP (see Annex  4).  This limits the capacity 
of  research  institutions  to  develop  strong 
scientific capabilities. Malta has taken steps to 
strengthen  the  governance  of  its  R&I  system, 
notably  through  the  establishment  of  Science 
Malta  (Xjenza  Malta).  However,  despite  the 
progress  made  in  R&I  governance,  Malta 
continues to face a shortage of graduates and 
professionals 
technology, 
engineering,  and  mathematics  (STEM)  fields. 
(4)  This  challenge  is  amplified  by  digital  and 
ICT 
limited 
investment  in  digital  upskilling.  Addressing 
these  shortages  will  be  important  to  support 
Malta's  ambitions  in  the  digital  sector  and 
strengthen the country's scientific excellence.  

shortages,  alongside 

science, 

skills 

in 

investment 

Business 
in  R&I  remains 
limited,  impacting  innovation  output  and 
technology  diffusion.  Private  investment  in 

(4)  OECD’s results from TALIS 2024 report training needs 
for Maltese teachers remain high in the use of digital 
technologies and AI.  

10 

 
 
such 

sectors 

expanding 

R&D  remains  well  below  the  EU  average  and 
remains  stable,  reaching  0.38%  of  GDP  in 
2024  against  the  EU  average  of  1.49%. 
Rapidly 
as 
semiconductors  show  potential  for  growth, 
supported  notably  by  public  investment  in  a 
Competence  Centre  for  Semiconductors  and 
broader  initiatives  aimed  at  accelerating  the 
adoption of AI by Maltese companies. Boosting 
better  cooperation  between  academia  and 
businesses  would  contribute  to  encouraging 
stronger private sector innovation efforts (see 
Annex 18). 

including  funding  schemes  provided  by  Malta 
Enterprise  and  Malta  Venture  Capital  Fund. 
However,  the  initial  EUR  10  million  funding 
budget of the Malta Venture Capital Fund was 
not  fully  used  in  2025,  raising  questions  over 
the limited uptake of the schemes designed to 
support Maltese start-ups (5). 

Delays in judicial proceedings 
continue to affect the efficiency of 
Malta’s justice system 

Limited access to financing holds 
back innovative businesses’ scale-
up   

Graph 2.2: Estimated days needed to resolve 
civil and commercial cases at first instance in 
EU Member States between 2016 and 2024 

for 

external 

financing 

limited 
small 

for 
Access 
to 
in  Malta, 
businesses  remains 
innovative 
particularly 
businesses.  Maltese  businesses  make  less 
use  of  external  funding  compared  with  their 
EU peers, reflecting a landscape dominated by 
SMEs  and  microenterprises  that  tend  to  rely 
more  on  internal  funds.  External  funding  is 
often  more  costly  and  less  accessible  for 
smaller  businesses,  which  can  constrain  their 
investment capacity and growth potential. This 
is  particularly  the  case  for  small  businesses, 
which  often  have  limited  collateral  and  face 
difficulties  accessing  credit  in  a  financial 
system that is predominantly bank-based (see 
Annex 6). The Malta Development Bank (MDB) 
aims  to  address  financing  gaps  for  Maltese 
businesses 
financing 
instruments.  However,  additional  challenges 
related to timing and administrative processes 
continue  to  affect  businesses  when  seeking 
alternative sources of financing. 

through 

several 

remains 
the  access 

Venture  capital  and  private  equity 
underdeveloped, 
ecosystem 
for 
to  capital 
limiting 
innovative  and  high-growth  businesses. 
Between  2022  and  2024,  venture  capital 
investments averaged around 0.005% of GDP 
while  private  equity  investments  averaged 
0.008% (see Annex 6). Public initiatives aim to 
support  the  development  of  the  ecosystem, 

11 

Source: 2026 EU Justice Scoreboard, forthcoming 

Concerns  persist  over  the  efficiency  of 
Malta's justice system. The time required to 
reach judicial decisions in civil and commercial 
cases  remains  one  of  the  highest  compared 
with other EU Member States (see Graph 2.2). 
From  2016  to  2024,  the  average  duration  of 
litigious  civil  and  commercial  cases  increased 
from  432  to  491  days.  In  addition  to  lengthy 
proceedings,  structural 
to 
affect  its  efficiency.  Notably,  the  judiciary 
faces  limits  on  resources,  including  a  low 
number of judges per head (third lowest in the 
EU)  and  a  high  caseload  per  judge  for  civil, 

limits  continue 

(5)  According to MDB, financing gaps for start-ups are 

primarily related to limited availability of private equity 
and venture capital rather than loan financing.  

0100200300400500600700800ELITMTHRFIFRESPLSIPTLUDKLVDEEEROSK20162024 
   
 
commercial,  and  administrative  cases,  (6)  as 
well  as  shortages  of  court  staff  and  limited 
court premises. On top of increased resources, 
reforms  to  expedite  court  procedures  could 
also  help  reduce  delays.  Malta’s  legal  system 
could  also  benefit  from  promoting  alternative 
dispute  resolution,  such  as  mediation  and 
arbitration,  to  alleviate  the  burden  on  the 
judiciary  (see  Annex  7).  The  length  of  court 
proceedings has a negative impact on Malta’s 
business environment(7).  

to  published 

Malta  has  taken  some  steps  to  improve 
the  functioning  of  the  justice  system, 
including 
through  digitalisation  and 
institutional  reforms.  However,  the  impact 
of  these  reforms  and  investments  remains  to 
be demonstrated. The country performs well in 
the availability  of digital tools to monitor civil 
and  commercial  proceedings  and  in  providing 
online  access 
judgments. 
However,  challenges  remain  in  other  aspects 
of  digital  justice,  such  as  producing  machine-
readable  judicial  decisions.  Though  delayed, 
the implementation  of Malta's  national  digital 
justice strategy  for 2022-2027, partly funded 
by  the  Recovery  and  Resilience  Facility  (RRF), 
aims to address many of these shortcomings. 
At  the  same  time,  institutional  reforms  under 
the RRP aim to address certain inefficiencies in 
the justice system, including  boosting the role 
and capacity of Malta’s prosecution service.  

Further  efforts  may  be  needed  to 
strengthen  the 
independence  of  the 
justice  system.  While  the  procedure  for  the 
nomination  of  the  Chief  Justice  has  been 
improved under the RRP to require a two-third 
majority  vote  of  the  national  parliament, 

(6)  In 2023, Malta recorded 2 500 first-instance non-

criminal cases and 9.1 judges per 100 000 inhabitants, 
according to the 2025 EU Justice Scoreboard (Figures 1 
and 37), corresponding to an estimated 275 non-
criminal cases per judge.  

(7)  IMF Malta Staff Report, pages 19-20 (2026); IMF ‘The 
Role of the Justice System in Debt Enforcement and 
Insolvency, Malta’, pages 4-5 (2026);  Chemin, M, 
“Judicial efficiency and firm productivity: Evidence from 
a world database of judicial reforms", Review of 
Economics and Statistics, 102(1), pages 49–64 (2020); 
Palumbo, G. et al, “Judicial Performance and its 
Determinants: A Cross-Country Perspective”, OECD 
Economic Policy Papers, No. 5 (2013).  

difficulties  experienced  in  the  appointment  of 
a  candidate  for  the  post  highlights  the  need 
for  further  reforms  to  involve  the  judiciary 
more  directly  in  this  decision.  Reforms  to 
independence  of  specialised 
increase  the 
tribunals  will  be  closely  monitored  under  the 
RRP later this year. 

Regulatory and administrative 
burdens continue to affect Malta’s 
business environment   

for 

high 

administrative 

the  subcomponents 

Maltese  businesses  continue  to  face  a 
and 
relatively 
regulatory  burden,  which  affects  the 
business  environment.  Indicators  suggest 
that  regulatory  barriers  remain  above  the  EU 
average  (see  Annex  5).  In  particular,  Malta 
ranks  among  the  weakest  performers  in  the 
EU 
to 
administrative  and  regulatory  burdens  for 
businesses  and  barriers 
trade  and 
investment.  Obtaining  licences  and  permits 
remains  a  significant  obstacle  for  businesses, 
creating  delays  and  increasing  compliance 
costs for businesses operating in Malta. Survey 
data also points to broader concerns related to 
lack  of  good  governance  and  perceived  levels 
of  corruption  as  key  issues  affecting  the 
business environment (8). 

related 

to 

‘once-only’  principle 
interactions. 

Efforts  are  being  made  to  streamline 
administrative  procedures  and  reduce 
regulatory  barriers,  notably 
through 
digitalisation 
initiatives.  The  Maltese 
authorities are developing a Business Portal, a 
single digital gateway for businesses based on 
for  streamlined 
the 
Also,  Malta’s 
government 
provides 
centralised 
businesses with a single point of access to all 
national 
processes. 
However,  structural  challenges  remain  as 
Malta  currently  lacks  a  dedicated  service  for 
public  procurement  that  can  serve  as  a 
for  government  data 
centralised  source 

eProcurement service 

procurement 

public 

(8)  SME Barometer (Malta Chamber of SMEs, Business 

Performance Survey 2025, page 23). 

12 

 
 
 
additional 

regulations, 

analytics  (see  Annexes  5  and  7).  Besides 
strengthening  internal  controls  and  improving 
tender 
integrity 
measures for politicians and officials, including 
publicly  available  asset  declarations,  and 
comprehensive  lobbying  legislation,  including 
disclosure  requirements,  would  be  key  to 
ensure 
public 
predictable 
supporting 
procurement 
environment for investments (see Annex 7).   

transparent 
a 

and 

fair 

13 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

In  2025,  Malta  received  country-specific 
recommendations  (CSRs)  to  phase  out 
fossil  fuel  subsidies,  accelerate  the 
deployment of renewable energy, improve 
energy  efficiency  in  buildings,  reduce 
emissions  from 
transport  and 
road 
address traffic congestion. Malta has taken 
no  steps  to  phase  out  fossil  fuel  subsidies. 
There  are  plans  in  the  right  direction  to 
increase  the  uptake  of  renewables,  including 
floating  offshore  wind  energy,  and  measures 
are  being  implemented  to  improve  buildings’ 
energy efficiency, but meeting EU-level targets 
calls  for  further  action.  With  only  limited 
improvements 
in  the  efficiency  of  public 
transport  and  investments  in  active  mobility, 
emissions from road transport continue to rise. 
The  number  of  passenger  cars  hit  a  record 
high in 2025.   

Phasing out fossil fuel subsidies to 
promote decarbonisation 

fuel 

continue 

Without  any  phasing  out  plan  in  place, 
to 
subsidies 
fossil 
discourage  the  uptake  of  renewables, 
investment  in  energy  efficiency  and  the 
electrification of transport. In 2025, Malta 
received recommendations to phase out fossil 
fuel  subsidies  and  to  wind  down  emergency 
energy  support  measures.  No  progress  has 
been made in addressing these CSRs. In 2024, 
fossil  fuel  subsidies  accounted  for  1%  of 
Malta’s  GDP,  well  above  the  EU  average  (see 
Annex  9).  Keeping  the  retail  price  of  energy 
low 
generated  by  non-renewable  sources 
discourages  people  and  businesses  from 
investing 
renewable  energy  systems, 
adopting  more  energy-efficient  behaviours 
and electrifying the vehicles’ fleet, while at the 
same  time  creating  significant  fiscal  risks. 
Subsidies  and  measures  that  do  not  address 

in 

energy  poverty  in  a  targeted  way,  do  not 
respond  to  genuine  energy  security  concerns, 
hinder  electrification  and  are  not  crucial  for 
industrial 
be 
considered for priority phase out.  

competitiveness 

should 

Excessive car use stifles efficient 
public transport and increases 
emissions 

Transport  continues  to  be  the  most 
polluting sector in Malta, and its share in 
total  emissions  is  significantly  higher 
than  the  EU  average.  In  terms  of  Malta’s 
effort  sharing  emissions,  transport  had  a 
share  of  48%  in  2024,  with  emissions  up  by 
45% since 2005 (see Graph 3.1 and Annex 8). 
One  factor  contributing  to  this  is  the  high 
proportion  of  old  vehicles  circulating  on 
Maltese  roads,  with  20-year-old  cars  making 
up more than a quarter of the fleet.  

Graph 3.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

Traffic  congestion  continues  to  be  a 
severe problem in Malta. In this regard, the 
2025  CSR  to  reduce  emissions  from  road 
transport  and  address  traffic  congestion  has 
not been addressed in a meaningful  way. The 
is 
economic  cost  of 

traffic  congestion 

14 

00.20.40.60.811.21.41.6200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
     
have  so  far  had  a  limited  impact  (see  Annex 
8).  More  systemic  change  is  needed  to  make 
active  mobility  a  viable  alternative,  and  to 
bring 
life 
improvements. The recently launched National 
Transport  Master  Plan  2030  sets  out  some 
proposals in this regard (see Annex 8).  

associated 

quality 

the 

of 

Promoting renewables and 
increasing energy efficiency gains 
to reach climate goals and ensure 
security of supply  

in 

50 MW 

The  uptake  of  renewable  energy  sources 
in Malta remains one of the lowest in the 
EU,  but  plans  are  moving  in  the  right 
direction.  In  2025,  Malta  received  a  CSR  to 
accelerate 
renewable 
the  deployment  of 
energy.  Positive  steps  have  been  taken  but 
progress  remains  slow.  In  2024,  the  share  of 
renewable  energy  sources  (RES)  in  gross  final 
energy consumption was 17.2%, (below the EU 
average of 25.2%) while in 2025 the share of 
the  electricity  mix  was 16.7% 
RES 
the  EU).  The 
in 
(compared  with  45% 
government  announced  that  a  new  floating 
offshore wind farm with a generation capacity 
of  280  to  320 MW  should  be  operational  by 
2033  and  that  it  is  assessing  the  technology 
readiness to develop a floating solar farm with 
successfully 
a 
important 
implemented,  these  strategically 
projects could more than double installed RES 
capacity  (see  Annex  9).  Malta  also  has  some 
schemes  in  place  to  support  the  uptake  of 
photovoltaic  systems  and  of  solar  water 
heaters, and under its RRP has introduced new 
requirements for renewable energy generation 
in  buildings  (see  Annex  9).  Beyond  this,  the 
second  225 MW  electricity  sub-sea  link  with 
Italy  (to  be  commissioned 
in  2026  and 
supported under cohesion policy funds) should 
allow  for  further  integration  of  renewables 
and  is  also  an  important  step  to  ensure 
security  of  supply. 
in  grid 
flexibility (like promoting energy sharing) could 
further  support  Malta 
in  the  uptake  of 
renewables and in ensuring security of supply 
(see Annex 9). 

Investments 

capacity. 

If 

substantial.  Passenger  cars  still  account  for 
82%  of  passenger  transport  in  Malta  (see 
Annex  8).  The  economic  cost  of  traffic 
congestion  (9)  is  projected  to  reach  EUR  917 
million  per  year  by  2030,  up  from  EUR  770 
million in 2025, unless effective measures are 
put in place (10)  (see Annexes 4 and 8).  Malta 
has  made  some  progress  in  decarbonising  its 
vehicle  fleet.  Support  schemes  have  driven  a 
sharp  increase  in  zero-emission  vehicle  (ZEV) 
uptake. In 2024, 37.7% of new passenger car 
registrations  were  ZEVs.  However,  the  overall 
vehicle  fleet  continues  to  grow  at  a  net 
average rate of 35 motor vehicles per day (11). 

The  quality  of  public  transport  could  be 
improved,  together  with  more  effective 
measures  to  discourage  private  car  use. 
In 2024, 58% of people in Malta reported not 
using any public transport - the eighth highest 
share  among  EU  countries  -  despite  Malta 
having made its bus service effectively free in 
October  2022  for  Tallinja  card  holders  (see 
Annex  8).  Moreover,  policy  actions  have  only 
provided  limited  disincentives  for  private  car 
use.  Measures  such  as  higher  fuel  duties, 
reduced  access  to  congested  areas,  reduced 
parking, or on-street parking charges are in the 
most  part  missing.  While  public  transport  has 
benefited 
fleet  modernisation  and 
digitisation,  challenges  remain  in  reliability, 
journey  times,  user  perception,  as  well  as  in 
the absence of dedicated bus lanes with strict 
enforcement (see Annex 18). There is potential 
for greater use of passenger ferries on certain 
routes,  which  should  be  supported  by  closer 
coordination of ferry and bus timetables.  

from 

Active  mobility 
is  often  unsafe  or 
inconvenient,  with  walking  and  cycling 
routes  largely  absent.  Initiatives  in  this 
area,  such  as  Connections  for  Safer  Active 
Mobility, and the National Strategy for Cyclists, 

(9)  Driven by longer journey times for passengers and 

freight, higher vehicle operating costs (fuel, 
maintenance, drivers), and related impacts. 

(10)  National Transport Master Plan 2030: 
https://infrastructure.gov.mt/wp-
content/uploads/2026/01/NATIONAL-TRANSPORT-
MASTERPLAN-2030.pdf 

(11)  NSO Malta 2026. Motor Vehicles: Q4/2025: 
https://nso.gov.mt/motor-vehicles-q4-2025/. 

15 

 
 
Energy consumption is rising, highlighting 
the  need  for  increased  energy  efficiency 
gains.  Final  energy  consumption  has  risen 
further  between  2023  and  2024,  adding  to  a 
growing trend in most sectors since 2019 (see 
Annex  9).  In  2025,  Malta  received  a  CSR  to 
reduce  energy  demand  by  improving  energy 
efficiency in buildings, where the increase was 
most  pronounced  in  recent  years,  fuelled  by 
population  growth  and  an  increase  in  the 
number  of  dwellings  (12)  (see  Annex  9).  Since 
then,  Malta  has  introduced  a  ‘Renovate  your 
Home’  scheme  to  support  energy  efficiency 
renovations,  and  a  ‘Buy  Sustainable  Property’ 
scheme.  Both  are  a  step  in  the  right  direction 
but  the  former  covers  too  few  dwellings  to 
have a meaningful impact, while the latter has 
no  expected  impact  in  making  the  existent 
building  stock  more  energy  efficient  (see 
Annex  9).  The  upcoming  Social  Climate  Plan, 
currently  under  discussion,  represents  an 
opportunity to retrofit the social housing stock 
and  reduce  the  energy  bill  for  vulnerable 
groups.  Shifting  from  fossil  fuel  subsidies  to 
providing  further  support  to  households  and 
businesses  to  make  the  building  stock  more 
energy  efficient  would  also  be  beneficial  and 
lower energy costs for the broader population. 

Adopting circular practices and 
improving waste management  

Malta  continues  to  show  persistent 
weaknesses  in  waste  reduction  and  is 
falling  short  of  recycling  targets.  Malta 
generates  large  amounts  of  waste.  In  2024, 
municipal  waste  generation  stood  at  621 kg 
per capita, one of the highest levels in the EU 
and  significantly  above  the  EU  average  of 
517 kg  per  capita  (see  Graph  3.2  and  Annex 
8).  In  addition,  the  recycling  rate  of  municipal 
waste  remains  low  at  16.7%  in  2024.  This  is 
far  below the  EU  average  of  48% (see  Annex 
8).  Malta  is  also  on  course  to  miss  the  2025 
target  to  prepare  55%  of  its  municipal  solid 
waste  for  reuse  and  recycling  (see  Annex  8). 

(12)  NSO Malta 2026. Residential Building Permits: Q4 

2025: https://nso.gov.mt/residential-building-permits-
q4-2025/. 

As  part  of  Malta's  Recovery  and  Resilience 
Plan,  (RRP)  several  key  reforms  have  been 
enacted to boost recycling rates. These include 
the  adoption  of  new  construction  standards, 
for 
implementation  of  a  strategy 
the 
construction  and  demolition  waste,  and  the 
reorganisation  of  regional  waste  collection 
systems.  Additionally,  the  2021–2030  Long-
Term Waste Management Plan has introduced 
further measures such as the "Bring Your Own 
Container" initiative, aimed at promoting reuse 
and  recycling,  along  with  the  expansion  of 
reuse infrastructure (see Annex 8). While these 
measures 
impact 
remains  limited.  Stricter  enforcement  of  the 
regulatory  framework  and  better  compliance 
its  obligations  would  achieve  a 
with 
sustainable increase in recycling rates.  

illustrate  progress,  their 

Graph 3.2: Municipal waste treatment 

Source: Eurostat 

significant 

infrastructural 
Despite 
investments  to 
improve  the  circular 
economy,  Malta  remains  heavily  reliant 
on  landfill.  Since  2023,  Malta  constructed 
with  the  support  of  cohesion  policy  funds  the 
Material  and  Multi-Material  Recovery  Facility 
and  introduced  an  automated  glass  sorting 
line  (see  Annex  8).  Still,  the  municipal  waste 
landfill  rate  recorded  only  a  marginal  drop  in 
the  last  decade  and  is  still  high  at  74%  in 
2023  compared  with  an  EU  average  of  22%, 
while the incineration rate remains low at 3% 
(see Annex 8). To achieve the target municipal 

16 

642611618603621010020030040050060070020202021202220232024Kg per capitaMaterial recyclingComposting and digestionLandfill/disposalTotal incineration (incl. energy recovery)Waste treatment unspecifiedEU-27 total waste per capita 
 
   
waste  landfill  rate  of  10%  by  2035,  Malta 
would  benefit  from  accelerating  its  current 
investment 
the 
construction  of  a  waste-to-energy  facility,  an 
organic  waste  processing  plant,  and  a  skip 
management facility. 

include 

These 

plans. 

Climate risks are undermining 
natural resource resilience 

infrastructure 

Malta  continues  to  face  significant 
challenges  linked  to  climate  risks,  which 
negatively  affect  the  country’s  society 
and  economy.  As  one  of  the  EU  Member 
States most exposed to climate risks, such as 
heatwaves, droughts and floods, it falls within 
two of the three regions identified as hotspots 
for such risks – Southern Europe and low-lying 
coastal regions (see Annex 10). In this context, 
Malta  has  made  progress  in  improving  its 
climate  adaptation  strategy  and  policy.  The 
low  carbon  development  strategy 
(LCDS), 
which  updates  Malta’s  adaptation  strategy, 
covers  various  sector-specific  measures  in 
and 
water  management, 
transport,  land  use  and  buildings,  agriculture 
and  fisheries.  In  addition,  Malta  concluded  a 
is  now 
vulnerability  risk  assessment  and 
for  Climate 
preparing  a  National  Plan 
Resilience.  It  has  also  adopted  the  second 
cycle  of  flood  risk  management  plans  for 
2021-2027.    While  Malta  has  advanced  its 
there 
a 
adaptation 
between 
measurable 
current 
resilience 
long-term 
implementation  and 
goals. 
transport 
particular,  Malta’s 
In 
infrastructure  remains  highly  vulnerable  to 
climate-related 
Its  TEN-T  network 
vulnerability index is among the highest in the 
EU  (see  Annex  10).  Moreover,  with  insurance 
penetration  below  50%  for  all  key  perils  (see 
Annex  10),  and  fiscal  instruments  largely 
underused,  the  existing  framework  has  yet  to 
fully 
leverage  available  mechanisms  for 
climate adaptation. 

policies, 
gap 

remains 

risks. 

While  water  productivity  is  above  the  EU 
average  (see  Annex  10),  Malta  faces  growing 
water  scarcity,  due  to  high  demand  from  the 
agriculture  and  tourism  sectors,  especially 
during  the  summer  months.  This  is  evidenced 
by  the  Seasonal  Water  Exploitation  Index  + 
(WEI+),  which  reached  66.7%  in  Q3  of  2023, 
second highest among EU Member States and 
the  20%  generally 
much  higher 
considered as a sign of scarcity (13).  

than 

While  some  actions  have  been  taken, 
there  is  room  for  further  measures  to 
expand the collection and reuse of water. 
High-density  construction  and  urban  sprawl 
reduce rainwater infiltration in the ground, and 
cause  stormwater  runoff  (see  Annex  10). 
Malta  has  made  efforts  to  strengthen  water 
resilience, including the upgrade of galleries to 
prevent  saline 
improved 
groundwater  abstraction  controls.  However, 
room  for  further  policy  action  include  (i) 
improvement  in  wastewater  treatment  and 
reuse;  (ii)  further  investments  in  rainwater 
harvesting;  and  (iii)  integration  of  nature-
based  solutions  in  urban  environments  to 
reduce  flood  risks  and  improve  groundwater 
recharge (see Annexes 8 and 10).  

infiltration  and 

remains 

degradation 

Nature 
an 
environmental  and  economic  concern. 
Malta’s economy is closely linked to its natural 
capital,  as it  is  among the  EU  Member  States 
with  the  highest  dependency  on  ecosystem 
services.  An  estimated  50%  of  the  gross 
added  value  relies  directly  on  ecosystem 
services,  above  the  EU  average  of  44%.  This 
dependency  is  pronounced  in  the  tourism, 
agriculture,  fisheries,  construction  and  water 
utilities  sectors  (see  Annex  10).  Construction 
places  additional  pressure  on  soil  and  water 
quality  and, 
if  not  well  regulated,  could 
contribute  to  further  deterioration  of  natural 
habitats  and  ecosystems.  Additionally,  illegal 
hunting  and  trapping  of  protected  species 
remain  a  serious  threat  to  wildlife  in  Malta 
(see Annex 10). 

Malta  faces  structural  water  scarcity. 
Rising  temperatures  and  prolonged  droughts, 
interrupted  by  fewer  but  intense  rainstorms, 
negatively impact the natural water cycle and 
weaken the availability of natural fresh water. 

(13)  European Environmental Agency 2025. Water scarcity 

conditions in Europe: 
https://www.eea.europa.eu/en/analysis/indicators/use-
of-freshwater-resources-in-europe-1. 

17 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

technology, 

engineering 

Despite progress, Malta still has scope to 
country-specific 
its 
further  address 
recommendation  (CSR)  on  education  and 
training.  Malta  received  a  2025  CSR  to 
strengthen  the  quality  and 
labour-market 
relevance of education and training. The aim is 
to  address low  educational  outcomes  and the 
severe shortage and mismatch of skills, also in 
and 
science, 
mathematics (STEM)  and the  green  transition. 
This  could  be  achieved  by  improving both  the 
basic  skills  of  students  and  the  initial  and 
continuous  training  of  teachers,  promoting 
enrolment in vocational education and training 
(VET),  and  in  adult  learning  for  people  with 
The  2025  CSR  also 
low-level 
the 
recommended 
inclusiveness  of  education  and  training.  Since 
then, some measures have been implemented 
in  all  areas  but  there  is  still  room  for 
improvement  in  all  of  them,  in  particular  on 
the  inclusiveness  of  education  and  training 
(see Annex 13). 

that  Malta  strengthen 

skills. 

Skills  shortages  and  specific  social  gaps 
could  put  the  labour  market’s  strong 
performance  at  risk.  Malta  records  one  of 
the highest employment rates in the EU, but is 
still  affected  by  skills  mismatches  and 
shortages.  The  skills  supplied  by  the  Maltese 
education and training system do not keep up 
with  the  growth  and  structure  of  labour-
market demand. Fragmented skills governance 
and  forecasting  capacity,  along  with  adults’ 
low  participation 
learning,  especially 
in 
amongst  people  with  low-level  skills,  make  it 
harder  to  adapt  to  evolving  skills  needs. 
Appropriately  skilling  the  labour  force  of  the 
future is hindered by weak basic skills, also as 
a  result  of  teacher  shortages  and  inequalities 
starting  already  in  early  childhood  education 
and care. Finally, job quality is also an ongoing 
challenge,  in  particular  for  low  skilled,  third-
country  nationals  (TCNs)  and  in  some  sectors. 
Despite  narrowing,  gender  and  disability 
employment gaps persist.  

Human capital development needs 
further progress 

has 

and 

literacy 

partial.  Malta 

Teacher  shortages  contribute  to  weak 
basic  skills  and  undermine  early  skills 
development.  Malta  received  a  2025  CSR  to 
strengthen  the  quality  of  education  and 
training,  in  particular  by  improving  students’ 
basic  skills  and  strengthening  the  initial  and 
continuous  training  of  teachers.  Some  steps 
have  been  taken,  yet  their  implementation 
remains 
continued 
implementing the National Education Strategy 
2024-2030 and related initiatives, including a 
peer  learning  cluster  on  basic  skills,  and 
targeted 
early-learning 
interventions. The introduction of a Secondary 
School  Qualification  and  Profile  framework 
(SSQ&P)  integrated  continuous  assessment, 
broadened the skill offer and strengthened the 
connection  between  compulsory  and  post-
(14).  A 
secondary  educational  pathways 
in  2024 
sectorial  agreement  concluded 
improved teachers’ salaries, career progression 
and  working  conditions,  while  continuous 
professional development has been expanded, 
teaching 
in 
including 
inclusive 
and 
methods, 
emerging 
skills 
technologies 
these  efforts, 
evidence continues to point to persistently low 
basic  and  digital  skills  among  students  and 
recurrent  shortages  of  qualified  teachers, 
particularly 
subjects. 
Weaknesses  in  teacher  supply,  professional 
increasingly 
development  and  support  for 
the 
classrooms 
diverse 

training 
digital 

science-related 

(15).  Despite 

limiting 

risks 

in 

(14) European Commission (2025). Education and Training 

Monitor 2025: Malta. 

(15)  European Commission (forthcoming), Directorate-

General for Education, Youth, Sport and Culture. The 
teaching profession in the EU: a comparative analysis 
building upon the TALIS 2024 results. Country profiles – 
Malta 

18 

 
 
 
effectiveness  of  ongoing  reforms  and  the 
capacity  of  the  education  system  to  improve 
learning outcomes. 

Graph 4.1: The share of students enrolled in 
tertiary STEM education, by level (%, 2024) 

in 

to 

the 

introduced 

persistent 

to  strengthen 

Weak  vocational  STEM  pathways  and 
learning  participation 
uneven  adult 
contribute 
skills 
mismatches.  In  the  2025  CSR,  Malta  was 
labour-market 
invited 
relevance  of  education  and  training,  also  in 
STEM  and  the  green  transition  by  promoting 
VET  and  adult  learning  for  the  people  with 
low-level skills. STEM graduates represent only 
13.8%  of  all  post-secondary  graduates, 
significantly  below  the  EU  average  of  25.2%. 
This  share  is  expected  to  drop  further  given 
that  Malta  had  the  lowest  share  of  post-
secondary  students  enrolled  in  STEM  fields  in 
the EU in 2023. Malta has taken several steps 
in  this  direction,  including  the  implementation 
of  the  Digital  Education  Strategy  2025-2030, 
initiatives  to  strengthen  STEM  and  digital 
competences, and actions to boost the role of 
identifying 
the  National  Skills  Council 
emerging  skills  needs.  Measures  have  also 
been 
to  promote  vocational 
pathways, 
including  through  new  applied 
vocational  certificates,  expanded  cooperation 
between education providers and industry, and 
initiatives  supporting  adult  upskilling  and 
reskilling under the National Lifelong Learning 
Strategy.  Yet,  work-based  learning  in  VET 
remains limited as well as enrolment in STEM-
related  VET  programmes,  particularly  among 
women.  Participation  of  adults  in  learning  is 
uneven,  with  significantly  lower  engagement 
among  adults  with  low-level  skills  (16.3%) 
compared  with  the  overall  adult  population 
(39.9%).  These  trends  reflect  the  supply 
constraints  of  vocational  and  STEM-related 
skills,  contributing  to  labour  shortages  in 
technical  and  digital  occupations. 
The 
percentage  of  ICT  specialists  has  stagnated 
job 
throughout  the 
vacancies  reached  4.6%%  in  Q4-2025  while 
women’s participation in ICT careers remained 
the second lowest in the EU. At the same time, 
persistent  overqualification  further  weighs  on 
productivity growth (see Annex 13). 

last  four  years. 

ICT 

Source: Eurostat [educ_uoe_entr03] 

targeted 

in  education  and 

The  limited  inclusiveness  of  education 
and  training  hinders  the  potential  of 
people  in  vulnerable  situations.  The  2025 
to  boost 
called  on  Malta 
CSR  also 
inclusiveness 
training. 
limited  progress  has  been 
However,  only 
observed  so  far.  Malta  has 
implemented 
several  measures  to  support  this  objective, 
including  the  Early  Leaving  from  Education 
and  Training  Strategy, 
literacy 
initiatives  and  additional  support  for  students 
at risk of dropping out. Efforts have also been 
made  to  improve  the  inclusion  of  students 
with  disabilities 
in  mainstream  schools 
through  expanded  support  services,  recovery 
and  resilience  plan  (RRP)-backed  measures  in 
inclusive 
and 
strengthened teacher training on diversity and 
special  educational  needs.  Persistent  gaps  in 
learning  and  employment  outcomes  linked  to 
socio-economic  background  and  school  type 
suggest  that  significant  fairness  challenges 
remain. 
remains 
particularly  high  among  young  people  with 
disabilities,  reaching  36.6% 
in  2024  (EU: 
24.6%), while 45.2% were not in employment, 
education or training.  

environments 

learning 

leaving 

school 

Early 

in 

weaknesses 

Strategic 
skills 
intelligence  remain  a  barrier  to  reducing 
skills  mismatches.  In  the  2025  CSR,  Malta 
was  invited  to  address  the  severe  shortages 
and  mismatch  of  skills.  However,  structural 
challenges  remain.  Initiatives  were  developed 
to assess and anticipate skills needs, including 
labour  force  and  employer  surveys  and 
analyses  of  graduate  outcomes.  Yet,  the 

19 

051015202530354045Bachelor'sMaster'sDoctorateMaltaEU 
   
system  remains  fragmented  and  largely  ad 
hoc, with limited  sectoral analysis and  limited 
integration  across  existing 
institutionalised 
mechanisms to regularly update and integrate 
skills  intelligence  (see  Annex  13).  Enhanced 
labour  demand  anticipation  and 
skills 
intelligence  tools  and  governance  are  still 
lacking.  Due  to  this,  skills  governance  and 
intelligence  still  cannot  sufficiently  contribute 
to  tackling  skills  mismatches  and 
labour 
shortages. 

Quality of jobs is a key challenge 

turnover, 

Third-country  nationals  continue  to  face 
multiple  challenges  affecting  the  quality 
of jobs.  Labour migration  is  one  of the main 
drivers  of  the  recent  demographic  expansion 
of  the  country.  Several  sectors  increasingly 
rely  on  TCN  workers,  such  as  healthcare. 
However, TCN workers in low-skilled jobs often 
face  weaker  labour  conditions  and  low  job 
quality  in  multiple  dimensions:  long  working 
hours,  higher 
restricted  career 
progression prospects, limited rights in case of 
loss  and  worse  health  and  safety 
job 
workplace  conditions  (see  Annex  11).  In-work 
poverty  is  also  disproportionally  impacting 
TCNs 
(17.3%  vs  5.4%  of  native-born 
population).  The  introduction  of  the  Labour 
Migration  Policy  in  2025  and  the  mandatory 
Skill  Pass  aim  to  tackle  this  segmentation  of 
the labour market. However, their impact is yet 
to  be  assessed.  The  recently  published  Malta 
Vision 2050 aims to shift the country’s growth 
model  towards  higher  productivity  and  value 
creation,  reducing  reliance  on  volume-driven 
expansion and focusing instead on innovation, 
skills and higher-value economic activities. The 
transition 
towards  a  higher  productivity 
economy  could  contribute  to  improved  wages 
and  work  conditions,  but  it  is  also  contingent 
on  Malta’s  ability  to  attract  and  retain  high 
skilled  labour  and  making  more  effective  use 
of existing skilled TCNs.  

Uneven  job  quality  hinders  the  retention 
of  workers.  The  share  of  low-paid  jobs  has 
increased,  with  over  10%  of  workers 
remaining  in  low-paid  jobs  for  the  last  four 
years,  disproportionally  affecting  women  and 

labour 

TCNs.  Malta  also  records  a  relatively  high 
In-work 
share  of  atypical  working  hours. 
poverty  among  single  households 
is  the 
highest  in  the  EU.  Labour  inspection  capacity 
increased  but  remains  below  International 
Labour  Organization 
(ILO)  standards  and 
sanctions  for  breaches  are  still  relatively  low. 
High 
turnover,  particularly  among 
foreign workers (both TCNs and EU nationals), 
and  in  some  sectors  like  healthcare,  reflect 
limited  job  attractiveness  (see  Annex  11). 
Malta  faces  one  of  the  highest  job  vacancy 
rates  in  the  EU  (3.3%  vs  EU:  2.1%  in  Q4-
2025),  with  some  sectors,  such  as  services, 
construction, or ICT, particularly hit. Addressing 
quality  job  concerns  and  further  boosting 
inspections  could  have  a  positive 
labour 
impact  on  labour  turnover  and  high  vacancy 
rates.  

among 

foreign 

There  is  further  scope  for  strengthening 
collective  bargaining.  In  2022,  collective 
bargaining coverage was low at 31.0%, mostly 
taking place in the public sector. In the private 
sector,  agreements  were  usually  made  at  the 
company-level  and  typically  covered  only 
workers  represented  by  unions.  Trade  union 
density  was  36.5%  in  2023,  with  low  union 
membership 
workers. 
Inadequate resources for capacity building and 
training  for  social  partners  is  a  barrier  to  full 
social 
and  meaningful 
partners,  which  Malta  aims  to  address  soon. 
Bipartite  social  dialogue  faces  challenges  due 
to 
representation  and  poor 
inclusion  of  non-standard  workers  (see  Annex 
11). Malta could further promote a higher level 
of  coverage  of  collective  bargaining,  enable 
effective collective bargaining at all levels, and 
further  strengthen  the  capacities  of  social 
partners  to  represent  all  workers,  including 
third-country  nationals  and  those  with  non-
standard contracts.  

involvement  of 

fragmented 

Despite  improvements,  wide  employment 
gaps  point  to  persistent  challenges  in 
equal  opportunities.  Despite  a  gradual 
downward  trend  over  time  and  women’s 
employment rate being above EU average, the 
gender  employment  gap  remains  one  of  the 
widest  in  the  EU  (12.4 pps  vs  EU:  9.6 pps), 
especially  impacting  older  women  (55-64). 
This is further  reflected in a very high gender 

20 

 
for 

particularly 

disadvantaged 
chances, 
groups. Malta has published the Social Plan for 
the  Family  2025-2030  and  the  Children's 
Policy  Framework  2024-2030,  which  includes 
measures  to  support  families  in  vulnerable 
situations. The country is also advancing in the 
implementation  of 
the  European  Child 
Guarantee, also via ESF+ funding.  

to 

reduce 

remains 

limited  due 

Despite a comprehensive system, gaps in 
the  social  protection  system  remain.  The 
country offers a broad range of monetary and 
in-kind  benefits.  Nonetheless,  in  2025,  social 
transfers  only  managed 
the 
monetary poverty  rate  by 24.9%,  significantly 
below the EU average of 33.2%. The impact of 
limited 
benefits 
coverage,  insufficient  adequacy,  and  other 
structural  barriers  such  as,  in  some  cases, 
restricted  access  and  short  durations.  In  this 
context,  social  protection  expenditure  remains 
below  the  EU  average  and 
is  unevenly 
distributed.  While  Malta  reports  one  of  the 
lowest  and  decreasing  levels  of  unmet  needs 
for  medical  care  in  the  EU,  out-of-pocket 
healthcare payments are high in the context of 
population  ageing  and  the  prevalence  of 
health risk factors. 

to 

pension  gap  (36.6%  vs  EU:  23.9%).  The 
disability  employment  gap  has  increased  in 
2025  and  is  now  further  above  the  EU 
average,  showing  persistent  barriers  to  the 
integration  of  persons  with  disabilities  in  the 
labour  market.  Closing  these  gaps  through 
targeted policies could enable Malta to exploit 
its existing potential.  

Promoting equal opportunities 

trend.  Some  groups 

Social outcomes showed improvements in 
Malta.  The  overall  poverty  rates  remained 
stable,  and  severe  material  and  social 
deprivation and income inequalities decreased. 
Nonetheless,  in-work  poverty  remains  on  an 
increasing 
remain 
particularly  vulnerable,  including  third-country 
nationals,  people  with  low-level  education, 
persons  with  disabilities,  and  older  people, 
especially  women.  In  this  context,  energy 
but 
poverty 
disproportionately  affects  those  at  risk  of 
poverty,  despite  being  below  EU  levels.  Malta 
adopted  a  National  Poverty  Strategy  in  2025, 
whose impact is yet to be seen (see Annex 12). 

decreased 

slightly 

three 

child 

poverty 

While 
decreased, 
inequalities  persist  in  access  to  early 
childhood  education  and  care  (ECEC). 
Nevertheless,  some  groups  are  more  at  risk, 
including 
single-parent  households,  and 
children  whose  parents  have  low-education 
levels.  In  this  context,  while  participation  of 
children  under 
in  early  childhood 
education and care (ECEC)  increased in recent 
years,  there  is  a  wide  gap  related  to  poverty 
risk  in  participation.  While  48.2%  of  children 
not  at  risk  of  poverty  or  social  exclusion 
(AROPE)  participated  in  more  than  25  hours 
per week in ECEC, only 24.9% of those AROPE 
is  still  not  universal,  mainly 
did.  ECEC 
accessible  to  parents 
in  employment  or 
education  and  relies  partially  on  private  and 
church  provision.  However,  recent  provisions 
expanded  to  some  groups  of  unemployed 
parents. Concerns also remain over the quality 
of  ECEC  as  more  than  one  fifth  of  childcare 
staff  lack  relevant  pedagogical  qualifications, 
which  may  limit  its  potential  to  support  early 
skills  development  and  improve  children’s  life 

21 

 
KEY FINDINGS 

In  areas  covered  by  the  existing  country-
specific  recommendations  (CSRs),  Malta 
would benefit from: 

• 

improving  fairness  in  corporate 
taxation  by  curbing  the  scope  for 
aggressive tax planning; 

labour  market 

skills  shortages  and  mismatches 
by  fostering  the  quality,  inclusiveness 
and 
relevance  of 
education  and  training,  including  VET 
and adult learning for people with low-
level skills. 

In other areas, Malta would benefit from: 

•  strengthening 

research 

and 
innovation (R&I) by increasing public 
research  and  development 
(R&D) 
investment,  encouraging  its  uptake, 
R&D 
and 
investment  to  promote  productivity 
through 
innovative  products  and 
processes; 

stimulating 

private 

•  phasing  out  fossil  fuel  subsidies, 
which  discourage 
in 
renewables,  energy  efficiency  and 
electrification of transport; 

investments 

• 

tackling  the  growing  costs  of 
traffic 
rising 
congestion  and 
transport emissions by discouraging 
car  use,  improving  the  efficiency  of 
public 
facilitating 
multimodality  and  investing  in  active 
mobility 
and 
strengthening the climate resilience of 
transport infrastructure; 

infrastructure; 

transport, 

•  promoting 

the 

uptake 

of 
renewables,  including  by  advancing 
with 
in 
offshore  floating  wind  to  enhance 
economic security; 

the  planned 

investment 

•  promoting 

the 

supplementary 
pension  sector  through  occupational 
pension schemes; 

• 

administrative 

reducing 
and 
regulatory  complexity  to  improve 
the business environment; 

•  strengthening the efficiency of the 
justice 
by 
addressing  the  length  of  proceedings 
and the backlog of cases; 

system, 

notably 

•  stepping up waste management by 
promoting 
circular 
economy practices as well as reducing 
reliance on landfill; 

recycling  and 

• 

improving water management and 
quality  by  expanding  collection  and 
reuse of water while tackling pollution 
of surface water and groundwater; 

attracting 

•  developing, 
retaining 
including  through  skills 
tools; 

high-skilled 

and 
labour, 
intelligence 

• 

improving  energy  efficiency  gains 
in 
by  curbing  energy  consumption 
buildings; 

•  promoting 

human 

capital 
development  by  boosting  basic 
and  STEM  skills  and  addressing 

•  addressing  job  quality concerns in 
low-skill  jobs,  including  for  non-EU 
through 
notably 
nationals, 
strengthened  labour  inspections  and 
social dialogue; 

•  strengthening equal labour market 
participation,  particularly  for  women 
and for people with disabilities; 

22 

 
 
•  promoting  equal  opportunities  by 
improving access to and the quality of 
early  childhood  education  and  care 
(ECEC); 

• 

risks 

poverty 

nationals, 

tackling 
for 
vulnerable groups, including children, 
non-EU 
people  with 
disabilities  and  older  people  by 
promoting  equal  opportunities  and 
addressing  specific  coverage  and 
adequacy gaps in the social protection 
system. 

23 

 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 
29 
Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 
Supplementary pension schemes - Scope for expansion 
Fiscal governance database indicators and public accounting maturity 
Taxation Indicators 
Key innovation indicators 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A3.1. 
A4.1. 

27 

29 

34 

34 

38 

42 

42 

47 

55 

60 

65 

65 

72 

76 

82 

82 

85 

88 

92 

93 

97 

101 

101 

103 

107 

36 
36 
37 
39 
46 

 
 
 
54 
55 
59 
61 
62 
71 
81 
92 
94 
104 
106 

35 
38 
40 
41 
42 
52 
56 
56 
57 
60 
61 
72 
73 
83 
85 
89 
90 
94 
95 
97 
98 
100 
101 
103 

103 
105 
105 
107 

Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 

A5.1. 
A6.1. 
A6.2. 
A7.1.  Malta. Selected indicators on better regulation practices for primary legislation 
A7.2. 
Digital Decade key performance indicators: availability of digital public services 
A8.1. 
Key clean industry and climate mitigation indicators: Malta 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Malta 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources 
A18.2.  Selection of key regional indicators (at NUTS 3 level) for Malta 

LIST OF GRAPHS 

Electricity and gas prices for household and non-household consumers, first half of 2025 

Composition of non-financial corporations funding 
Capital markets and financial intermediaries 
Composition of households' financial assets 
Trust in justice, regional / local authorities and in government 

Primary spending evolution and compositional change 
Tax revenue by economic function in 2024, MT (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
E-filing rates for VAT, CIT and PIT returns in Malta and EU-27, 2018 and 2023 
Public R&D investment as a % of GDP 

A2.1. 
A3.1. 
A3.2. 
A3.3. 
A4.1. 
A5.1.  Manufacturing output: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A9.1. 
A9.2.  Malta’s installed renewable capacity vs electricity generation mix 
A11.1.  Labour shortages (%) and the job vacancy rate (%) in Malta 
A12.1.  Children (0-3) participating in early childhood education and care by duration and risk of poverty or social exclusion (%) 
A13.1.  Attractiveness of the teaching profession, Malta vs EU (2018, 2024) 
A13.2.  Enrolment in STEM fields in initial medium-level VET (%) 
A15.1.  Healthcare infrastructure investment by year 
A15.2.  Out-of-pocket payments: share in healthcare spending and categories, 2023 
A16.1.  House prices, rents and price-to-income evolution in MT and EU27 since 2005s 
A16.2.  House supply indicators in MT since 2005 
A16.3.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Malta 
A18.1.  Productivity per hour worked in Malta (NUTS 3 level): average annual growth 2014-2024 and productivity level in 2024 

LIST OF MAPS 

A18.1.  GDP per head compared with the EU average 
A18.2.  Average annual population change at NUTS 3 level (2015-2024) 
A18.3.  Electric vehicle recharging points, 2025 
A19.1.  TEN-T cross-border & national priority sections in Malta. 

28 

 
 
 
 
 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:   

(Continued on the next page) 

29 

Malta faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs). Malta was recommended, among other things, to address remaining aggressive tax planning risks, promote public and private investment in research and innovation, phase out fossil fuel subsidies, accelerate the deployment of renewable energy, improve energy efficiency in buildings, reduce emissions from road transport and address traffic congestion, strengthen the quality, inclusiveness and labour-market relevance of education and training, address low educational outcomes and the severe shortage and mismatch of skills. The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Malta to date*. To do so, the Commission has taken into account the information provided by Malta in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Malta for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1 Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025.  Total general government defence expenditure in 2026 is projected at 0.6% of GDP, corresponding to an increase of 0.1 ppt. compared to 2024. Total general government defence expenditure in 2027 is projected at 0.6% of GDP, corresponding to an increase of 0.1 ppt. compared to 2024. Limited progress 1.2 Adhere to the maximum growth rates of net expenditure recommended by the Council on 21 January 2025, with a view to bringing an end to the situation of an excessive deficit.  Annual and cumulated deviations in 2025 amounted to -0.1% of GDP and 2.3% of GDP, respectively. Annual and cumulated deviations in 2026 projected at 0.1% of GDP and 2.2% of GDP, respectively. The Commission has proposed to abrogate the EDP.   Substantial progress 1.3 Wind down the emergency energy support measures.  No plans to wind down the emergency energy support measures. Since the start of the Middle East escalation, government has reaffirmed its commitment to maintaining stable energy prices for households and businesses and provide “unlimited energy subsidies” despite ongoing international uncertainty. No plans to wind down the emergency energy support measures.  No progress 1.4 To address remaining aggressive tax planning risks, introduce a withholding tax on outbound payments or equivalent defensive measures, and amend rules on non-domiciled companies. No progress made on the introduction of a withholding tax (or equivalent defensive measures) on outbound payments. No plans to change the rules on non-domiciled companies. No measures announced by the authorities to address the CSR on ATP risks. No progress 3.1 Promote investment in research and innovation,  Main measures fall under National R&I Strategic Plan 2023-2027. Implemented at this stage:  - EUR 4 mn awarded via "Thematic Program Calls"; - Horizon Europe brought over EUR 9 mn in EU funding. - Launch of Innovation for Industry programme;  - Launch of EIT Regional Innovation Booster (by Q1 2026); - IPCEIs on semiconductors and heterogenous manufacturing. Limited progress  
 
 
 
  
 
Table (continued) 

(Continued on the next page) 

30 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  3.2 including by increasing public R&D investment and stimulating private R&D investment, for example through R&D tax incentives. - EUR 10 million of funding to be provided via Malta Venture Capital Fund; - Malta Enterprise assisted 7 beneficiaries for R&D, amounting to a total of EUR 2.7 million via tax credits and cash grants.  - Increasing budget of FUSION Research and Innovation Programme by 10% in 2026; - EUR 8mn investment in MT's Semiconductor Competence Centre; - Announcement of 175% tax reduction eligible expenditure in R&I; - 60% tax credit on eligible capital expenditures and 2-year tax reduction for tech and innovation investments. Limited progress 4.1 Accelerate the deployment of renewable energy by promoting large-scale projects and small-scale investments in direct energy production and consumption. - REWS grant scheme to support the installation of solar water heaters, heat pumps with water heaters and PVs with boilers (launched in December 2025); - REWS feed-in-tariff scheme for PV installations with capacity of 40kWp or lower (launched in January 2026).   - Commissioning of IC2 second Malta-Sicily interconnector (Q4 2026/Q1 2027); - Two utility-scale Battery Energy Storage Systems in Delimara and Marsa (ERDF funding) - in the tendering phase; - Offshore floating wind farm (280-320 MW capacity) - fully operational in 2033. - Offshore floating solar farm (50 MW capacity) - in the incipient phase, no clear timeline of completion. Limited progress  4.2 Reduce energy demand through improved energy efficiency in buildings.  -The five-year Irrinova Derek ('Renovate your Home') grant scheme, providing a grant of up to EUR 15,000 to homeowners for EE renovations (new call for applications published in January 2026); - The Buy Sustainable Property grant scheme, providing a grant of up to EUR 9,000 to those who buy newly built, energy efficient properties (launched in May 2025). - Re-allocated EUR 9.5 mn during the mid-term review of the 2021-2027 ERDF/CF/ESF+/NDICI/IPA programme for the delivery of energy-efficient dwellings (prices 25-40% below market rates) through an Affordable and Sustainable Housing financing model. The aim is to provide affordable and sustainable housing solutions for middle-income households.   Limited progress 4.3 Reduce emissions from road transport and address traffic congestion by promoting quality and efficient public transport, stepping up investments in active mobility infrastructure and discouraging car usage. - - Improvements to the public bus service introduced in April 2025 as part of the Reshaping Our Mobility' initiative (new bus routes, increased frequencies to existing ones, earlier bus departures, new P&R services);  - - RRP EV incentive scheme continued into 2025 with a further 3,000 grants made; - - In January 2026, the first driving license surrender scheme was launched, which applies to persons under 30 years of age. It provides a EUR 25,000 grant for giving up a car licence for five years (given the EUR 5 million annual budget, 1000 driving licenses could be surrendered).  - New ferry landing site in Buġibba (operational in June 2026) and Marsascala (to be completed in Q1 2027). - First phase of the Connections for Safer Active Mobility initiative to be completed by end of Q3 2026. Investments worth EUR 7.4 mn in the first phase (new cycling paths, pedestrian pathways, etc.).   - Measures addressing traffic congestions were announced in March 2025 (spanning an 18-month period of Limited progress  
 
 
  
 
Table (continued) 

(Continued on the next page) 

31 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  implementation from announcement). The measures include, among others, new P&R services; EUR 1,500 per year over four years for 17-year-olds who drive a scooter and give up their licence; EUR 6,000 grant for giving up a licence and using a scooter for four years; conclusion of the National Strategy for Cyclists.  4.4 Phase out fossil fuel subsidies. No plans to phase out fossil fuels subsidies. Since the start of the Middle East escalation, Malta has reaffirmed its commitment to maintaining stable energy prices for households and businesses and provide “unlimited energy subsidies” despite ongoing international uncertainty.  No plans to phase out fossil fuels subsidies.   No progress 5.1 Strengthen the quality and labour-market relevance of education and training to address low educational outcomes as well as the high shortage and mismatch of skills, also in the area of science, technology, engineering and mathematics (STEM) and the green transition, - Work on a National Skills Strategy has started (OECD/TSI project); - MT government published in 2025 the Digital Education Strategy 2025-2030 which aims to improve education quality, reduce skills mismatches, promote inclusion, strengthen STEM and green skills, and to ensure that learners and workers are equipped for a digital and future-oriented labour market; - New Labour Migration Policy launched in 2025: proposes an array of recommendations to address challenges in labour migration in Malta including a skills-based approach to migration; - RRF-funded Data Warehouse project (2025) provides data that enhances decision-making policies based on evidence and assists in addressing early-school leavers through a general tracking system; - Skills Card requirement (2024): Requires non-EU workers in the tourism sector in Malta to obtain a Skills Card validating their skills and competencies.  National Skills Strategy (draft Q1 2026; final Q3 2026) to strengthen skills governance and adult learning pathways.  Some progress 5.2 in particular by fostering basic skills of students, the initial and continuous training of teachers. - Preparatory work on a curriculum and assessment school reform started end-2025; - National Education Strategy 2024-2030 and early school leaving (ELET) Strategy 2023-2030 under implementation; completed actions include targeted funding by school/social context and literacy access measures for ELET-risk groups; - PISA 2022 Action Plan (with OECD) launched: curriculum reform (see above), combined with targeted literacy/numeracy - TSI application for systemic basic-skills enhancement (2026-2029);  - Continued participation in peer-counselling cluster for Basic Skills Support offered by DG EAC (2026-2027).  Some progress   
 
 
  
 
Table (continued) 

(Continued on the next page) 

32 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  initiatives and improved support for at-risk learners (implementation ongoing); - Data Warehouse (RRP) milestone reached in 2025 to improve evidence-based policy and tracking of early school leaving (also see above);  - Teacher profession measures: 2024 sectoral agreement improved pay/well-being/career progression and expanded CPD (inclusive pedagogy, digital skills/AI, transversal skills); mandatory sustainability training (roll-out to all primary educators over 4 years); - Teacher supply and shortages: approval of a new 3-year bachelor in Primary Education (increasing entrants).  5.3 as well as promoting enrolment in vocational education and training, and in adult learning for the low-skilled. - Work on a National Skills Strategy has started (OECD/TSI project); - Adult learning expansion under National Lifelong Learning Strategy 2023-2030: free basic skills programmes (literacy, numeracy, digital); circa half of deliverables completed by end-2024;  - Jobsplus training offer (ongoing): free training courses pegged to the National Qualifications Framework (NQF); -Youth Guarantee 3.0 (2025, €10m) offers guidance, training, placements (including in emerging green/digital sectors); - VET attractiveness/quality actions: Applied Vocational Certificates (9 areas) as alternative pathways; career guidance strengthened via National Options Fair and 1-to-1 guidance; Bridge2Industry placements for educators; - Malta College of Arts, Science and Technology (MCAST) scale and flexibility: over 200 programmes (MQF 1-8); micro-credentials/modular learning; MQF 1-3 foundation provision; strong WBL/apprenticeships engagement; - Validation of non-formal/informal learning: VNFIL regulations amended (approved 2025).  National Skills Strategy (draft Q1 2026; final Q3 2026) to strengthen skills governance and adult learning pathways.  Some progress  5.4 Strengthen the inclusiveness of education and training. The following measures have been implemented under the RRP: - Two multi-sensory learning rooms and two autism units have been set up in schools, supported by continuous training in inclusive pedagogy for teachers and learning support educators. - The revised Policy on Inclusive Education in Schools has been published. - The Individual Education Plans (IEP) Module has been acquired allowing for the digitalisation of the individual education plans (IEPs) of pupils with disabilities within ECEC equity/quality reforms under preparation: update national standards (0-3), raising minimum qualification requirements for ECEC teachers; discussions on adjusting Free Childcare Scheme eligibility to reduce disadvantage gap are ongoing.  International Early Learning and Child Well-being Study (IELS)-OECD results (expected Limited progress   
 
 
  
 
Table (continued) 

Source:  

33 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  the mainstream education system. - The obligation for State schools to organise events at least once every term that recognise and celebrate diversity has entered into force by means of a circular. - The obligation that State school mission statements include evidence of values of diversity and inclusion has entered into force by means of a circular.  However, still early school leaving among 18–29-year-olds with disabilities is 42.1%, compared with 17.1% among those without disabilities; among 18–24-year-olds with activity limitations, the rate is 36.6% in Malta versus 24.6% in the EU. In 2024, 45.2% of young people aged 15–29 with some or severe activity limitation in Malta were neither in employment nor in education or training (NEET), compared with an EU average of 29.8%. This represents a sharp increase from 2022, when the rate stood at 33.0% in Malta and 28.5% at EU level, indicating a rapidly widening gap.  in 2026) to guide targeted early-years interventions and family support. The study assesses 5-year-olds in four key areas: emergent literacy, emergent numeracy, self-regulation, and social-emotional skills.  The 'I Belong Programme' is expected to support inclusion of third-country nationals (TCNs) through language learning and cultural orientation, facilitating access to education, training, and community life in 2026.    
 
  
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

in 

developments 

This annex discusses selected topics in public 
finance  and 
fiscal-
structural  country-specific  recommendations 
(CSRs) addressed to Malta in July 2025. These 
CSRs include a call to strengthen defence spending 
and  readiness  while  adhering  to  the  maximum 
growth rates of net expenditure recommended by 
the  Council  on  21  January  2025,  with  a  view  to 
bringing an end to the excessive deficit. Malta also 
received  a  recommendation  to  wind  down  its 
emergency energy support measures and address 
remaining  risks  of  aggressive  tax  planning  by 
tax  on  outbound 
introducing  a  withholding 
payments 
defensive 
or 
measures.  

equivalent 

taking 

[ 

On  8  July  2025,  the  Council  adopted  the 
Recommendation  endorsing  Malta’s  medium-
term  fiscal-structural  plan  (16).  The  plan 
includes a fiscal adjustment over four years. At the 
same 
the  Council  also  adopted  a 
recommendation  under  Article  126(7)  TFEU  to 
correct the excessive deficit in Malta (17)(18). 

time 

Developments in the government 
balance debt and public expenditure 
(19) 

Malta’s  government  balance  was  equivalent 
to 2.2% of GDP in 2025, and the government 
debt-to-GDP ratio amounted to 46.4% at the 
end  of  2025.  Based  on  the  Commission  Spring 
2026  Forecast, Malta’s  government  balance  is 
projected  to  remain  stable  at    2.2%  of  GDP  in 
2026 and 2.1% of GDP in 2027. The debt ratio is 
set to stabilise at around 46.2% of GDP by 2027.  

(16)  OJ C, C/2025/649, ELI:EUR-Lex - 32025H00649 - EN - EUR-

Lex. 

(17)  Council Decision of 26 July 2024 on the existence of an 

excessive deficit in Malta (OJ L, 2024/2128, 1.8.2024, ELI: 
http://data.europa.eu/eli/C/2024/2128/oj). 

(18)  Compliance by Malta with the maximum growth rates of net 
expenditure recommended by the Council is assessed in 
COM(2026)200. 

(19)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
SWD(2026)200) providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

the  country 

In 2025 Malta received a CSR to take action 
to  wind  down  its  emergency  energy  support 
measures.  These  emergency  energy  support 
measures were introduced in early 2022, following 
Russia’s invasion of Ukraine, but were kept in place 
despite the significant fall in internal energy prices 
in  subsequent  years.  These 
in 
measures  thereby  became  permanent  fossil-fuel 
subsidies  that  have  reduced  the  incentives  for 
investment 
in  renewable  energy  and  energy 
efficiency.  The  measures  include  cuts  to  indirect 
taxes  on  energy  consumption  and  subsidies  for 
fossil-fuel-based 
Taken 
together, these measures have kept electricity and 
fuel prices in Malta fixed and among the lowest in 
the  EU  (20).  Based  on  the  European  Commission 
Spring  2026  Forecast,  the  net  budgetary  cost  of 
Malta’s  energy  support  measures  is  estimated  at 
0.9% of GDP in 2025 and projected to be 1.4% of 
GDP in 2026.  

producers. 

energy 

The  type  of  expenditure  that  has  a  greater 
impact  on  GDP  had  remained  broadly  stable 
over three decades, although it was higher in 
2024  than  it  was  in  2019.  Zooming  in  on  the 
composition of spending between 2019 and 2024, 
social protection accounts for the largest share of 
total  expenditure  (at  or  above  20%,  followed  by 
economic affairs(21), health, education and general 
public  services  (each  of  which  are  above  10%  of 
total spending). Since 2019, public expenditure on 
other  economic  affairs,  transport  and  culture  has 
increased  strongly  (See  Graph  A2.3).  Spending  on 
public order has risen more modestly. By contrast, 
spending  on  education,  health,  defence  and  R&D 
has  declined  (although  growth-friendly  spending 
has overall increased since 2019, see Graph A2.1). 
This  trend  deserves  attention,  as  these  four 
categories  are  generally  considered  growth-
friendly  spending  categories.  In  particular,  the 

(20)  Eurostat [nrg_pc_204] Electricity prices for household 

consumers - bi-annual data (from 2007 onwards). Weekly 
Oil Bulletin. 

(21)  This refers to the set of government activities, policies, and 

expenditures aimed at regulating, supporting, and developing 
economic activity across major sectors, including general 
economic and labour policies, agriculture and natural 
resources, energy, industry, construction, and other economic 
functions not elsewhere classified. Although transport and 
communication, as well as research and development 
activities, are normally considered part of this function, they 
are treated separately in the graph presented. 

34 

 
 
 
 
 
 
 
in  education  spending 

decline 
is  especially 
educational 
concerning  given 
performance  remains  comparatively  weak  (See 
Annex 13 for further details). 

that  Malta’s 

tax 

revenues  are  projected 

Malta  has  relatively  low  tax  revenues  as  a 
share of GDP and relies heavily on corporate 
income  taxation.  In  2025  Malta’s  total  tax 
revenues  as  a  percentage  of  GDP  (including 
compulsory  social  contributions)  amounted  to 
29.7%,  compared  with  an  EU  average  of 
39.9%. Total 
to 
decrease to an average of 29.5% of GDP in 2026 
and  2027  according 
the  Spring  2026 
Forecast (5). The tax mix in Malta relies heavily on 
corporate income taxation (21% of tax revenue vs 
an  EU  average  of  8%).  The  strong  reliance on 
corporate income taxation, mainly originating from 
foreign-owned  companies,  poses  risks  for  Malta’s 
tax  base  in  the  medium  term.  In  contrast,  some 
tax  types  are  largely  absent  in  the  Maltese  tax 
mix,  such  as  wealth,  inheritance,  estate  or  gift 
taxes (see Annex 3).  

to 

Graph A2.1: Primary spending evolution and 
compositional change 

The costs of ageing 

Total  ageing-related  spending  in  Malta  is 
projected  to  fall  by  about  1  pp.  of  GDP 
between  now  and  2040,  to  around  16%  of 
GDP, but rise thereafter, with an increase of 
9  pps  between  2025  and  2070  (see  Table 
A1.1).  The  overall  increase  is  the  result  of  a 
projected rise in  spending on  pensions, healthcare 
and  long-term  care.  Total  spending  on  ageing-
related items is projected to rise to the EU average 
by 2070. 

Public pension spending as a share of GDP is 
projected  to  decline  by  about  1  pp.  over  the 
coming  decades,  but  increase  by  4.5  pps 
between  2040  and  2070.  Nevertheless,  at 
10.5%  of  GDP  in  2070,  gross  spending  on  public 
pension  benefits  is  forecast  to  still  be  below  the 
projected EU average of 12%. 

of 

the 

uptake 

however, 

Supplementary  pension  schemes  can  make 
the  pension  system  more  resilient  by 
diversifying  retirement  income  sources.  In 
Malta, 
these 
supplementary  schemes  remains  limited.  By  the 
end  of  2024,  participation 
in  supplementary 
schemes covered only around 2% of the working-
age  population  (22).  This  coincides  with  rising 
pressures  on  public  pension  spending  and  a 
projected decrease in the replacement rate  of  0.5 
pps  between  2025  and  2040  (Table  A2.1  and 
A2.2)  (23).  In  June  2025,  the  Maltese  government 
published  a  consultation  document  proposing  the 
creation  of  an  auto-enrolment  occupational 
pension system.  

Note: Based on economic literature, the categories considered 
to have a greater growth impact include education, R&D, 
health, transport and communication (See Barbiero and 
Cournede (2013), Gemmel et al. (2016), Lupu et al. (2018), 
Cepparulo and Mourre (2020) and OECD (2025)).   
Source: Eurostat 

Public healthcare expenditure is projected to 
be  5.1%  of  GDP  in  2025  (below  the  EU 
average of 6.6%) and is expected to increase 
by 0.4 pps between 2025 and 2040 and by a 

(22)  Source:  Government  of  Malta.  Consultation  Document  - 
Proposal  for  an  Auto-Enrolment  Occupational  Pension 
Regime  (June  2025).    Data  on  Malta  on  assets  and 
participation  in  supplementary  schemes  are  available  from 
the  OECD  (Pension  Market  in  Focus  2025).  However,  for 
Malta, they largely relate to non-residents and are, therefore, 
not taken into account. 

(23)  The (gross) replacement rate refers, depending on data 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

35 

510152030354045200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-3.0-2.0-1.00.01.02.03.0SocialprotectionHealthHousingGeneralservicesDefenceR&DEducationInterestspendingEnvironmentCommunicationPublicorderCultureOther economicTransportb) Compositional change 2024-2019 (% of total spending) 
   
 
Table A2.1:  Projected change in ageing-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

Table A2.2:  Supplementary pension schemes - Scope for expansion 

Source: European Commission. 

further 1.8 pps between 2040 and 2070 (24). 
Public  expenditure  on  long-term  care  in  Malta  is 
projected  to  be  1.2%  of  GDP  in  2025  (below  the 
EU  average  of  1.7%)  and  is  expected  to  increase 
by 0.4 pps of GDP between 2025 and 2040 and by 
a further 1.8 pps of GDP between 2040 and 2070 
(25).  These  increases  in  expenditure,  due  to  an 
ageing  population,  pose  a 
fiscal 
risk 
sustainability in Malta in the long term. 

to 

National fiscal framework 

small 

independent 

The Malta Fiscal Advisory Council (MFAC) is a 
relatively 
fiscal 
institution  (IFI)  with  a  narrow  mandate.  It  
focuses  on  endorsing  the  macroeconomic  and 
budgetary  forecasts  of  the  government,  and 
monitoring  the  government’s  compliance  with 
fiscal  rules.  Members  of  the  MFAC  are  appointed 
solely by the Minister of Finance (after consulting 
the  opposition).  The  MFAC  indicates  that  it  needs 
more  resources,  as  its  budget  has  been  frozen  in 
law  since  2015.  On  external 
real  terms  by 

(24)  Key performance characteristics, recent reforms and 

investments of the Maltese healthcare system are discussed 
in Annex 15. 

(25)  The adequacy and quality of the Maltese long-term care 

system are covered in Annex 12. 

36 

communication,  the  MFAC  recently  set  up  social 
media  accounts  to  reach  a  wider  audience.  Both 
the  MFAC’s  policy  dialogue  with  the  government 
and  the  MFAC’s  relations  with  Malta’s  Parliament 
are not fully developed. 

The  practice  of  spending  reviews  is  in  its 
early  stages 
in  Malta.  Technical  support 
instrument  projects  for  spending  reviews  have 
helped  Malta  to:  (i)  design  a  methodology  for 
spending 
relevant 
performance 
governance 
infrastructure  to  improve  the  quality  of  public 
finances through spending reviews is limited. 

reviews;  and 
metrics. 

identify 

The 

(ii) 

Although  the  planning  of  public  investment 
has recently improved in Malta, gaps remain 
in terms of project assessment/selection and 
multiannual  capital  budgeting.  Malta’s  Vision 
2050,  published  in  February  2026,  provides  an 
integrated  long-term  strategic  vision  for  public 
investment,  and  includes  performance  indicators 
to  measure  performance.  This  all  helps  to 
strengthen  Malta’s  planning  of  public  investment. 
However, details on the capital allocations required 
to  achieve  the  vision  are  not  available,  while 
capital  budgeting  continues  to  follow  an  annual 
cycle,  with  little  or  no  protection  of  capital 
availability  beyond  the  budget  year.  Moreover, 
in  Malta  of 
there 
standardised 
selection 
methodologies  for  projects,  although  external 
quality reviews are carried out on ad hoc basis. Ex 

is  no  widespread  use 

assessment 

or 

MT16.6-0.80.30.4-0.4##16.1MTEU24.30.50.30.4-0.30.925.2EUMT16.64.52.12.20.29.025.6MTEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalAssets in 2024 (% GDP)Participation in 2024 (% working-age population)MTn.a.-0.5n.a.MTEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040)  
 
 
 
   
 
 
   
 
Table A2.3:  Fiscal governance database indicators and public accounting maturity 

(1) "The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level 
based on: i) the legal base; ii) how binding the rule is; iii) monitoring bodies; iv) correction mechanisms; and v) resilience to shocks. 
The Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on: i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396)." 
Source: Fiscal Governance Database, European Commission 

post  reviews  are  carried  out  on  a  sampling  basis, 
while asset registers are not maintained. 

also 

support 

sustainability 

Accrual  accounting  improves  transparency  over  a 
public body’s financial position and performance. It 
can 
and 
intergenerational equity. Most (14) Member States 
have  implemented  accrual  accounting  across  the 
general  government  sector  and  a  further  five, 
including  Malta,  are  set  to  do  so  by  2030  (26). 
However,  currently  Malta  still  lags  behind  the  EU 
average  for  the  maturity  of  its  public  accounting 
system (see Table A2.3) (27).  

(26)  Report on public accounting in the EU (COM(2025)746 and 
accompanying Staff Working Document SWD(2025)396). 
Countries with an accounting maturity of 70% or more in 
relation to International Public Accounting Standards are 
deemed to apply accrual accounting. 

(27)  Annexes 3.1 and 3.4 of SWD(2025)396. 

37 

2024MaltaEU AverageCountry Fiscal Rule Strength Index (C-FRSI)13.6014.81Medium-Term Budgetary Framework Index (MTBFI)0.720.722025 Public accounting maturity of general government34%65% 
 
 
  
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview  of  Malta’s  tax  system.  It  includes 
information  on  the  tax  mix,  on  competitiveness 
and  fairness  aspects  of  the  tax  system,  on  tax 
collection  and  compliance,  and  on  aggressive  tax 
planning.  In  the  area  of  taxation,  the  2025  CSRs 
for  Malta  highlighted  the  need  to  address 
aggressive  tax  planning  risks,  by  introducing  a 
tax  on  outbound  payments  or 
withholding 
equivalent  defensive  measures  and  by  amending 
rules  on  non-domiciled  companies.  They  also 
suggested  phasing  out  fossil  fuel  subsidies, 
including  emergency  energy  support  measures 
(see Annex 9). 

Graph A3.1: Tax revenue by economic function in 
2024, MT (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

Malta’s tax system features a relatively low 
tax burden, with a high reliance on corporate 
income  taxation.  Malta’s  total  tax  revenue  in 
2024  represented  28.9%  of  GDP.  This  was  an 
increase of 2.7 percentage points (pps) from 2023, 
but broadly in line with the average figure for the 
last  decade,  compared  with  an  EU  average  of 
39.4%  as  shown  in  Table  A3.1.  The  Maltese  tax 
system continues to display a pronounced reliance 
on  corporate  taxation,  which  is  linked  to  the 
features of its corporate tax system. Revenue from 
corporate  income  taxes  constituted  6.2%  of  GDP 
(21.5% of total tax revenue) in 2024, up from 4% 
in  the  previous  year.  This  figure  is  twice  as  large 
as  the  EU  average,  which  stood  at  3.1%  in  2024 
(7.8%  of total  tax  revenue).  Taxes  on  labour  as a 
percentage of total tax  revenue have significantly 
increased  from  32.9%  in 2015  to  39.2% in  2024 
(versus  respectively  51.9%  and  51.4%  in  the  EU), 
mirroring  the  strong  labour  expansion  of the past 
decade.  By  contrast,  consumption  taxes  as  a 
percentage  of  total  tax  revenue  have  been 
declining (from 37% in 2015 to 29.8% in 2024). In 
fact,  in  2024  the  capital  tax  base  surpassed  the 

38 

consumption  tax  base  for  the  first  time  (see 
Graph A3.1). 

Revenues  from  environmental  taxes  are 
below  the  EU  average.  In  2024  environmental 
tax  revenue  in  Malta  was  equivalent  to  1.4%  of 
GDP, compared to 2.1% in the EU-27. In particular, 
Malta has the second lowest taxation on energy in 
the  EU  (0.68%  of  GDP  compared  with  the  EU 
average  of  1.63%).  This  figure  also  reflects  the 
decline  of  excise  duty  on  fuel  products  (including 
gas  oil)  introduced  by  the  Maltese  government  in 
2021,  to  support  the  post-pandemic  recovery. 
Moreover,  Malta’s  effective  carbon  rate  stood  at 
EUR 75.9/tCO2e in 2023, below the EU average of 
EUR 84.8/tCO2e, indicating limited price signals to 
reduce carbon emissions. 

The  tax  mix  is  characterised  by  the  absence 
of  certain  tax  types.  The  Maltese  tax  system 
does not impose wealth, inheritance, estate, or gift 
taxes  (although  stamp  duty  may  be  due  on 
inheritance  of  certain  assets).  In  addition,  Malta 
does  not  levy  a  recurrent  tax  on  immovable 
property,  and  does  not  currently  have  a  single 
comprehensive national property register. 

As  highlighted  in  previous  CSRs,  tackling 
aggressive tax planning is a key challenge to 
improve  the  efficiency  and  fairness  of 
Malta’s  tax  system.  The  combined  features  of 
Malta’s  tax  system  can  result  in  double  non-
taxation  for  certain  income,  creating  scope  for 
aggressive  tax  planning  and  profit  shifting.  In 
particular,  Malta  currently  has  no  withholding  tax 
royalty  and  dividend 
on  outbound 
payments to prevent firms from shifting profits to 
zero  and  low-tax  jurisdictions.  Furthermore,  the 
treatment  of  resident  non-domiciled  companies 
may  result  in  double  non-taxation  between  Malta 
and most countries with which Malta has bilateral 
tax treaties. 

interest, 

Despite  some  recent  progress,  risks  of 
aggressive tax planning remain a significant 
concern.  The  percentage  of  inward  and  outward 
FDI stock held through special purpose entities, at 
respectively 96% and 97% in 2024, is the highest 
in the EU (28).  This indicator is strongly associated 
with higher risks of aggressive tax planning. Malta 
has  taken  steps  to  address  aggressive  tax 

(28)  Eurostat: EU direct investment positions by country, ultimate 
and immediate counterpart and economic activity (BPM6). 

51.526.821.639.229.831.0Taxes on labourTaxes on consumptionTaxes on capital 
 
  
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, International Survey on Revenue Administration (ISORA). 

steps 

These 

practices. 

include 
planning 
implementing  previously  agreed  international  and 
EU initiatives and fulfilling RRP commitments, such 
as  the  introduction  of  transfer  pricing  legislation 
(which  became  applicable  as  of  January  2024). 
Malta’s  RRP  also  includes  a  milestone  on  the 
adoption of new legislation in the area of interest, 
royalty  and  dividend  payments.  However,  Malta 
has not yet announced any such legislation or any 
other  measure  to  prevent  double  non-taxation  of 
business income. 

The  Maltese  corporate  tax  system  results  in 
a  potentially  large  gap  between  statutory 
and effective tax rates. The statutory corporate 
income  tax  (CIT)  rate  for  domestic  enterprises  is 
35%  (a  flat  rate).  However,  Malta  operates  a  full 
imputation  system  with  a  tax  refund  mechanism, 
which  significantly  reduces  the  effective  tax 
burden. 
receiving 
In  particular,  shareholders 
dividends from a Maltese entity may be entitled to 
a tax refund of part of the tax paid in Malta (based 
on  the  nature  of  the  income to  be  distributed).  In 
practice,  the  design  of  Malta’s  refund  system 
allows most shareholders to claim a refund of 6/7 
of  the  corporate  tax  paid  in  Malta,  reducing  the 
effective  tax  rate  from  35%  to  5%.  Business 
surveys  point  to  corporate  taxation  as  one  of 
Malta’s  biggest  attractiveness  factor,  while  global 

tax  reforms  are  seen  as  a  relevant  -  albeit 
increasingly less important - risk factor (29). 

A  recently  adopted  reform  is  expected  to 
raise  the  effective  corporate  tax  rate  on  an 
elective  basis.  Malta  has  recently  introduced  a 
regulation  on  a  Final 
Income  Tax  Without 
Imputation (FITWI). This provision allows qualifying 
entities to voluntarily elect to pay a 15% corporate 
tax  rate  on  chargeable 
income,  without  the 
application  of  the  imputation  system.  Electing  to 
pay the FITWI requires a minimum commitment of 
five  years.  In  addition,  the  FITWI  liability  must  in 
no case be lower than the net effective tax liability 
the  entity  would  have  had  under  the  standard 
system.  The  EU  Global  Minimum  Tax  Directive, 
by 
expected 
31 December 2029,  establishes  an  effective  tax 
rate  of  minimum  15%  for  multi-national  entities 
with a consolidated financial revenue of more than 
EUR 750 million a year (30). 

in  Malta 

applied 

be 

to 

investment.  A  new  R&D 

incentives  aimed  at 
Malta  offers  tax 
tax 
encouraging 
incentive scheme has been recently announced to 
foster  business 
in  a  context  of 
innovation, 
persisting  weakness  of  the  innovation  ecosystem 

(29)  EY Attractiveness Survey Malta – October 2025. 

(30)  Council Directive (EU) 2022/2523 of 14 December 2022. 

39 

2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)30.128.126.228.939.939.739.039.4Taxes on labour (% of GDP)10.511.510.911.320.620.119.920.3of which, social security contributions (SSC, % of GDP)4.84.94.64.713.012.712.713.0Taxes on consumption (% of GDP)10.49.68.88.611.210.910.510.6of which, value added taxes (VAT, % of GDP)6.46.66.16.17.17.47.17.1Taxes on capital (% of GDP)9.27.06.68.98.18.78.58.5Personal income taxes (PIT, % of GDP)6.77.77.37.79.69.49.39.6Corporate income taxes (CIT, % of GDP)5.54.54.06.22.63.23.23.1Total property taxes (% of GDP)1.10.80.80.82.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.00.00.00.01.21.00.90.9Environmental taxes (% of GDP)2.41.61.51.42.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana75.9nanana84.8naTax wedge at 50% of average wage (single person) (*)21.622.523.024.321.832.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)30.330.530.831.029.240.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)28.126.225.125.120.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)6.06.35.55.97.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)113.0131.3119.8na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)26.023.724.222.910.57.38.2naEU-27MaltaProgressivity & fairnessTax administration & complianceBy tax baseSome tax types 
 
 
  
 
to 

AI, 

related 

Enterprise 

(see  Annex 4).  Malta’s  2026  Budget  speech  also 
mentioned  a  60%  tax  credit  on  eligible  capital 
expenditures  (machinery,  tools,  IT,  cybersecurity) 
and 
for 
two-year  accelerated  depreciation 
investments 
digitalisation, 
modernisation,  automation,  and  cybersecurity. 
Malta 
economic 
(the 
development agency) administers several schemes 
to  incentivise  investment,  including  by  providing 
tax  credits  to  eligible  undertakings.  For  example, 
the 
investment  grant 
scheme’  supports  industrial  decarbonisation (31). 
Tax  credits  are  also  available  to  support  skills 
development  and  micro  entrepreneurship,  and  to 
help start-ups raise equity finance. 

‘smart  and  sustainable 

national 

The labour tax wedge in Malta is consistently 
below  the  EU  average  across  income  levels. 
The labour tax wedge in Malta in 2025 was 26.6% 
for  a  low-wage  single  worker  (67  %  of  average 
earnings),  compared  with  the  EU  average  of 
35.8%, and is below average across most income 
levels  and  family  types,  including  for  second 
earners (32).  Furthermore,  the  difference  in  tax 
wedge between lower- and higher-income earners 
is  small,  indicating  limited  progressivity  in  labour 
taxation. As Graph A3.2 shows, the tax wedge for 
single  earners  at  167%  of  the  average  wage  is 
even lower than the one at 100% of the average 
wage. This is explained by the regressive impact of 
employer 
security 
employee 
contributions, due to their upper limit. 

social 

and 

The  limited  progressivity  of  the  personal 
income  tax  (PIT)  reduces  the  redistributive 

(31)  See Commission Recommendation C(2025) 4319 final of 2 
July  2025  on  tax  incentives  to  support  the  Clean  Industrial 
Deal  and  in  light  of  the  Clean  Industrial  Deal  State  aid 
Framework. 

employer 

contributions, 

(32)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
calculated  as  the  sum  of  personal  income  tax,  employee 
social-security 
social-security 
contributions and other mandatory contributions, net of cash 
family benefits where relevant, expressed as a percentage of 
total  labour  costs  (composed  of  the  gross  wage  plus 
employer  social-security  contributions).  In  other  words,  the 
tax  wedge  measures  the  gap  between  the  total  cost  of 
employing  a  worker  and  that  worker’s  net  earnings,  as  a 
share  of  total  labour  costs.  Tax  wedge  data  in  the  2026 
country  reports  are  calculated  by  the  Joint  Research  Centre 
of  the  European  Commission  and  based  on  the  EUROMOD 
model, while in the past country reports they were based on 
the  OECD  tax  and  benefit  model.  While  the  underlying 
methodology  is  very  similar,  differences  in  the  assumptions 
can lead to different results between both models.   

impact of the tax and benefit system, which 
is low compared to the EU average. Given the 
relatively  low  level  of  taxation  and  the  modest 
progressivity  of  Malta’s 
the 
contribution  of  Malta’s  tax  and  benefit  system  to 
inequality 
income  redistribution  and 
ensuring 
reduction  is  lower  than  the  EU  average.  In  2024, 
the  tax  and  benefit  system  reduced  the  Gini 
coefficient by 5.9 points on average, while the EU 
average reduction was 7.8 points (33).  

tax  structure, 

Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

Note: The second earner tax wedge shows a household’s tax 
wedge resulting from the wage that a second earner taking 
up a job at 67% of the average wage receives. It does not 
show the total tax wedge of the household. The household is 
assumed to have a first earner at 100% of the average wage 
and no children. For the methodology of the tax wedge for 
second earners, see OECD (2024), Taxing Wages 2024. 
Source: European Commission 

income 

tax-free 

changes 

increasing 

In  2025,  the  government  budget  introduced 
some 
its 
to  PIT 
progressivity. These changes include increases in 
the 
thresholds  as  well  as 
increases  in  the  lower  bounds  of  the  15%  and 
25%  tax  brackets.  EUROMOD  and  EUROLAB 
simulations(34) indicate that this reform will result 
in an average decrease in tax liability that is fairly 
even  across  the  income  distribution,  but  with  
larger  relative  gains  made  by  households  in  the 
lowest deciles (35). The simulations also show that 

(33)  The  Gini  coefficient measures  the  extent  to  which  the 
distribution  of  income  within  a  country  deviates  from  a 
perfectly  equal  distribution.  A  coefficient  of  0  expresses 
perfect equality where everyone has the same income, while 
a coefficient of 100 expresses full inequality where only one 
person has all the income. 

(34)  The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+ 

(35)  See  also  Abela,  G.  and  I.  Debattista  (2025),  The  economic 
impact  of  Malta’s 2025  Personal  Income  Tax  reform,  Policy 
note, Central Bank of Malta, Valletta.  

40 

21.826.629.227.631.92025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - MTSingle earner - EU averageSecond earner -  MTSecond earner -  EU average 
 
  
 
an  increase  in  labour  supply  could  offset  around 
6%  of  the  revenue  loss.  Overall,  the  reform  is 
expected to improve  the  redistributive  capacity  of 
the  tax  system.  The  2026  Budget  included  the 
gradual  introduction  of  new  tax  brackets  (to  be 
implemented over three years), aimed at providing 
tax relief to support families with children. 

the  high 

average  of  30.7%  in  2023 (40).  In  2025,  to  help 
the 
level  of 
tackle 
government  proposed  new  legislation  that  would 
allow  taxpayers  to  avoid  criminal  prosecution  by 
paying substantial fines up to EUR 1 million (41).  

tax  arrears, 

Graph A3.3: E-filing rates for VAT, CIT and PIT 
returns in Malta and EU-27, 2018 and 2023 

Malta  is  the  only  EU  country  that  does  not 
publish  tax  expenditure  reporting.  While  the 
EU’s  budgetary  framework  includes  an  obligation 
to  report  on  tax  expenditures,  currently  the 
tax 
Maltese  authorities  have  no  dedicated 
expenditure  reporting  and  no  plan  to  introduce  it. 
Tax  expenditures  are  an  indirect  form  of  public 
spending  and 
fiscal 
implications,  particularly  in  a  context  of  budget 
constraints (36). 

can  have 

significant 

Available  evidence  suggests  that  there  is  a 
large  potential  to  reduce  tax  compliance 
gaps  in  Malta.  Malta’s  VAT  compliance  gap 
remains large and is among the highest in the EU. 
For 2023, the VAT compliance gap was estimated 
at  EUR 405 million (37),  or  24.2%  of  the  VAT  total 
tax  liability (38),  well  above  the  EU  average  of 
9.5%.  Apart  from  its  involvement  in  the  EU  VAT 
gap  estimation  exercise,  Malta  does  not  produce 
and report tax gap estimation figures, for example 
on  personal  and  corporate  income  taxation.  The 
size  of  the  shadow  economy  in  Malta  is  also 
estimated to be above EU average (39), suggesting 
further scope to strengthen tax compliance. 

recovery  of 

Malta  has  a  comparatively  weak  record  on 
tax  arrears.  Available 
the 
indicators point to some challenges with collection 
efficiency.  The  closing  stock  of  tax  arrears  as  a 
percentage  of  total  revenue  collected  at  year-end 
in  Malta  has  increased  between  2018  and  2023, 
from  98.7%  to  119.8%,  compared  to  the  EU 

Source: International Survey on Revenue Administration 
(ISORA)  

(MTCA)  has 

Progresses  on  digitalisation  of  the  tax 
administration are ongoing. The Malta Tax and 
Customs  Administration 
recently 
adopted  a  number  of  specific  measures  and  IT 
tools  to  enhance  its  technological  capacities  for 
data  management  and  analysis,  and  increase  the 
efficiency  of  tax  collection (42).  In  terms  of  front-
end digitalisation, e-filing rates for CIT and PIT are 
slightly above the EU average, as shown in Figure 
A3.3.  The  MTCA  also  provides  a  variety  of  online 
tools  and  services,  including  pre-filing  for  PIT 
returns, and the level of taxpayers’ satisfaction on 
the  support  for  filing  tax  returns  is  among  the 
highest in the EU (43). 

(36)  See  European  Commission,  Directorate-General  for  Taxation 
and  Customs  Union,  (2025).  Mind  the  gap:  challenges  and 
opportunities for tax compliance and tax expenditures in the 
EU. Full report. Publications Office of the European Union.. 

(37)  See European Commission, Syntesia, Poniatowski, G., Bonch-
Osmolovsky,  M.,  Śmietanka,  A.  et  al.,  VAT  gap  in  Europe  – 
Report  2025,  Publications  Office  of  the  European  Union, 
Luxembourg, 2025. 

(38)  The VAT total tax liability is the theoretical tax revenue that 
would  be  collected  in  a  situation  of  perfect  taxpayer 
compliance, assuming an unchanged net VAT base. 

(39)  European  Parliament  (2022),  Taxation  of  the  informal 

economy in the EU. 

(40)  Source:  International  Survey  on  Revenue  Administration 
(ISORA),  indicators:  ‘Closing  stock  of  arrears  at  year  end  as 
percentage  of  total  revenue  collected’  and  ‘Closing  stock of 
collectable arrears as percentage of closing stock of arrears’. 

(41)  Act  No XXX  of  2025  –  An  Act  to  amend  Various  Revenue 
Laws,  Government  Gazette  of  Malta  No. 21 485  of 
11 August 2025. 

(42)  Malta 

Tax 

and 

Customs  Administration, 

‘Delivery 

Transformation Strategic Plan 2023-2025’. 

(43)  European  Commission,  Directorate-General  for  Taxation  and 
Customs  Union  and  Directorate-General  for  Communication, 
2025: Citizens'  attitudes  towards  taxation  –  Eurobarometer 
report. 

41 

0102030405060708090100201820232018202320182023VATCITPITMaltaEU average 
 
  
 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

Malta's  innovation  potential  is  constrained 
by  persistently  low  R&D  investment  in  both 
the  public  and  private  sectors,  which 
undermines its competitiveness. Total research 
and  development  (R&D)  intensity  is  limited  and 
continues to be on a declining trend (at 0.54% of 
GDP in 2024 vs the EU average of 2.24%).  Malta 
remains  a  ‘moderate  innovator’  according  to  the 
European Innovation Scoreboard(44), performing at 
95%  of  the  EU  average  in  2025.  For  Malta,  the 
2025  country-specific  recommendations  (CSRs) 
highlighted challenges in boosting R&D investment 
and  incentivising  stronger  business  R&D  efforts, 
challenges  which  remain  acute  today.  In  addition 
to  very  low  R&D  investments,  innovation  remains 
hampered  by  a  lack  of  human  resources  for 
research  and  innovation  (R&I)  and  difficulties  in 
access  to  venture  capital  (VC)  for  companies.  By 
announcing the launch of new R&D tax incentives, 
Malta  has  taken  a  first  preparatory  step  towards 
improving  public  support  to  business  R&D,  but 
further  efforts,  such  as  expanding  direct  support 
through  grants  and  subsidies,  are  needed. 
Moreover,  while  science-industry 
linkages  are 
gradually improving, there is considerable scope to 
boost  collaboration  and  knowledge 
transfer 
between  academia  and  the  businss  sector.  In  the 
area  of  digitalisation,  Malta  performs  well  on  the 
adoption  of  digital  and  advanced  technologies  by 
businesses.  

Excellent science  

Persistently  low  and  declining  public  R&D 
investment  remains  a  significant  challenge 
in 
for  Malta,  hindering  advancements 
scientific  excellence.  Public  R&D  spending 
decreased  again,  reaching  the  record  low  level  of 
0.16%  of  GDP  in  2024  against  an  EU  average  of 
0.72%.  Such  underinvestment  undermines  the 
possibilities  to  improve  scientific  excellence.  The 
quality  of  Maltese  scientific  outputs,  as  reflected 
in the proportion of its publications ranked among 

(44)  2025 European Innovation Scoreboard (EIS), country profile: 
Malta. The EIS provides a comparative analysis of innovation 
performance in EU countries, including the relative strengths 
and weaknesses of their national innovation systems (also 
compared to the EU average). 

the top 10% most-cited globally, continues to fall 
short of the EU benchmark (6.50% against an EU 
average  of  9.44%).  Additionally,  the  number  of 
thousand  active  population 
researchers  per 
employed by the public sector remains low (2 per 
thousand  active  individuals  in  2024,  vs  the  EU 
average  of  4.30).  Despite  these  key  challenges, 
Malta’s research landscape benefits from a robust 
international  orientation,  a  critical  factor  given  its 
geographic  constraints.  This  is  evident  in  the 
growing presence of foreign doctoral students and 
collaborative 
a  high 
publications – 67.52% of all publications in 2024, 
exceeding the EU average of 57.24%.  

international 

rate  of 

in  2024  with 

establishment 

The 
of  Science  Malta 
represents  an  important  step  in  reforming 
R&I  governance,  although  its  effects  on  the 
efficiency and functioning of the R&I system 
remain  to  be  assessed.  R&I  governance  was 
reformed 
the  creation  of  a 
government agency, Science Malta (Xjenza Malta), 
with  the  aim  of  ensuring stronger  governance  for 
R&I policy. The government agency brings together 
under  its  responsibility  all  activities  related  to 
research 
policy 
innovation, 
development and implementation, management of 
national,  European  and 
international  financial 
programmes  and  space-related  initiatives.  Such 
reform  has  not  translated  yet  into  the  additional 
public  R&D  investment  urged  by  the  2025  CSRs, 
and its impact on the functioning and efficiency of 
the public research system will have to be closely 
monitored and assessed. 

including 

and 

Graph A4.1: Public R&D investment as a % of GDP 

Source: Eurostat 

42 

00.10.20.30.40.50.60.70.8201020152020202220232024 MaltaEU average 
 
 
 
 
   
 
 
 
Business innovation  

foster  growth  and  innovation  and  create  new 
opportunities for researchers. 

innovation  activities 

Maltese  companies  do  not  invest  enough  in 
R&D  and  innovation  output  remains  limited. 
However,  the  semiconductor  sector  shows 
potential for growth. Private investment in R&D 
remains  well  below 
the  European  average 
(reaching  0.38%  in  2024  against  the  EU  average 
of  1.49%)  and  Malta  innovation  activity  remains 
modest  in  terms  of  product  and  business process 
innovation(45).  The  level  of  intellectual  assets  is 
limited,  with  poor  patenting  activity  and  design 
applications,  pointing  to  limited  activity  in  high-
tech and design-intensive sectors(46). Yet there is a 
good number of trademark applications and high-
tech exports are nevertheless growing(47). A sector 
that  is  emerging  and  has  the  potential  to  expand 
its 
is  the  semiconductor 
sector.  Malta’s  semiconductor-related  exports 
generate  about  EUR 1.2  billion  and  represented 
about  one  third  of  total  good  exports  in  2024(48). 
Moreover in 2025 the country attracted the largest 
foreign  direct  investment  in  its  history  in  this 
field(49). 
has 
demonstrated a commitment to strengthening the 
semiconductor  sector  as  a  key  pillar  of  advanced 
manufacturing. This commitment is reflected in an 
investment  of  EUR 8  million  in  a  competence 
centre  for  semiconductors(50),  cofinanced  by  the 
Chips  Joint  Undertakings  and  established 
in 
partnership with the University of Malta,  the Malta 
College  of  Arts,  Science  and  Technology  (MCAST), 
Malta  Digital  Innovation  Authority  (MDIA)  and 
Silicon  Catalyst  EU  Ltd,  an  early-stage  incubator 
programme for startups. If accompanied by proper 
public  investment  for  research  and  incentives  for 
businesses,  the  initiative  has  the  potential  to 

government 

of  Malta 

The 

(45)  2025 European Innovation Scoreboard, country profile: Malta. 

The EIS provides a comparative analysis of innovation 
performance in EU countries, including the relative strengths 
and weaknesses of their national innovation systems (also 
compared to the EU average). 

(46)  EIS Country Profile Malta 

(47)  Global Innovation Index 2025 – Malta 

(48)  STMicroelectronics Malta facility officially recognised as the 
first advanced manufacturing backend plant in the EU - 
TVMnews.mt 

(49)  Budget-Speech-2026.pdf 

in 

is  well  advanced 

Malta 
terms  of 
digitalisation  of  businesses. In  2025,  83.50% 
of  Maltese  small  and  medium  enterprises 
(SMEs) achieved a  basic  level  of  digital  intensity, 
well above the EU average of 71.39%.  Malta also 
performs above the EU average in relation to cloud 
and artificial intelligence (AI) In contrast, while the 
adoption  of  data  analytics by  Maltese  businesses 
increased  between 2023 and  2025,  it  remains 
around  the EU  average  (39.01%  vs  39.85%). The 
recent realignment of Malta’s national AI strategy 
prioritises  widespread  AI  adoption  by  businesses. 
Adoption  efforts  are  concentrated  in  industries 
critical  to  Malta,  such  as  financial  services,  where 
AI  is  used  for  predictive  maintenance  and  real-
time risk analysis. Furthermore, SMEs and startups 
have access  to  AI,  high-performance  computing, 
and  cloud  computing  through Malta’s  first  high-
(HPCMT),  which  was 
performance  computer 
launched 
the  Digital 
Innovation  Hub.  The  purpose  of  HPCMT is  to 
the  advanced  computational  power 
provide 
necessary  to  accelerate  digital  transformation,  by 
providing  the  infrastructure to SMEs  to  perform 
large-scale data analytics. Furthermore, in October 
2025,  the  Maltese  government  announced  EUR 
100  million  would  be  invested  specifically  in 
accelerating 
emerging 
technologies,  with  a  strong  focus  on  AI  for 
businesses(51).  This 
to  help 
enterprises  implement  AI  systems  to  remove 
manual 
global 
and 
competitiveness.   

in  October  2025,  via 

funding  aims 

strengthen 

processes 

adoption 

the 

of 

New  R&D  tax  incentive  schemes  have  been 
announced  to  boost  business  innovation  but 
additional  support,  such  as  direct  public 
support  instruments,  must  be  ensured.  Public 
support  for  business  R&D  has  declined  over  the 
last decade, from 0.09% of GDP in 2012 to 0.01% 
in 2023, one of the lowest percentages in the EU.  
To tackle this key challenge and in response to the 
2025 
on 
incentivising  stronger  business  R&D  efforts,  the 
government  announced  a  tax  deduction  of  175% 
for 
research  and 
innovation(52)  in  the  2026  budget  speech.  This 

recommendation 

country-specific 

expenditure 

eligible 

in 

(50)  PRESS RELEASE BY THE MINISTRY FOR THE ECONOMY, 
ENTERPRISE, AND STRATEGIC PROJECTS Ekonomija 
b’Saħħitha – Futur għal Uliedna: Malta’s role within Europe’s 
Semiconductor Ecosystem is growing 

(51)  Budget-Speech-2026.pdf 

(52)  Budget-Speech-2026.pdf 

43 

 
 
 
and 

knowledge 

initiative aims to encourage companies to invest in 
innovative 
technology, 
development.  Moreover,  a  two-year  tax  reduction 
will  be  introduced  for  investments  related  to  AI, 
digitalisation,  modernisation,  automation  and 
cybersecurity. While these announcements are first 
steps  in  the  right  direction,  appropriate  public 
support  through  grants  and 
loans,  currently 
limited,  need  to  be  strengthened  to  ensure  an 
efficient  and  well-balanced  policy  mix  capable  of 
fostering stronger business R&D efforts. 

in 

in 

results 

is  a  positive  trend  in  academia-
There 
business 
further 
cooperation,  although 
progress  is  needed.  There  have  been  some 
terms  of  public-private 
positive 
the  steadily 
reflected 
collaboration,  as 
increasing  proportion  of  public-private  scientific 
co-publications, which reached 10.75% of the total 
number  of  publications  in  2024,  above  the  EU 
average  of  7.62%.  Moreover,  the  post-doctoral 
fellowship scheme, allowing PhD graduates to join 
local  businesses  to  conduct  research,  has  been 
renewed  for  the  third  time  in  2025,  indicating  a 
positive uptake of the previous two editions(53). In 
addition, the launch of a transdisciplinary research 
programme(54) has been announced for 2026, with 
the  aim  of  further  fostering  connections  between 
industry,  public  services  and  civil 
academia, 
society.  Despite  these  positive  developments,  the 
proportion of public R&D funded by businesses as 
a  percentage  of  GDP  remains  well  below  EU 
average  (2.62%  in  2023,  compared  to  7.51%  for 
the  EU  average),  pointing  to  a  low  propensity  of 
businesses  to  contract  with  public  research  labs 
and highlighting a key area where policy attention 
is still needed.  

Entrepreneurial dynamism  

The  Maltese  business  ecosystem  is  quite 
dynamic with a good birth rate and different 
public initiatives in place to support startups. 
Malta  scores  quite  well  in  the  speed  of  startup 
creation(55).  The  startup  sector  is  supported  by 
different  government  initiatives  such  as  ‘Start  in 

five-year 

Malta’,  aimed  at  enhancing  the  Maltese  startup 
ecosystem.  It  focuses  on  attracting  innovative 
business  investments  and  providing  support  for 
startups  through  different  schemes,  including  the 
Malta  startup 
residence  programme,  startup 
finance  for  reimbursable  loans  or  business  start 
for seed capital. The residence programme grants 
a  three-year  residence  permit,  extendable  for  an 
additional 
during  which 
beneficiaries  are  able  to  reside  in  Malta  while 
launching their startup(56). Moreover, the University 
of Malta offers support to spin-offs that originate 
from  research  and  innovation  carried  out  at  the 
the  TAKEOFF(57)  business 
university, 
incubator  and  the  Malta  University  Innovation 
Portfolio Ltd.(58), a private limited liability company 
wholly  owned  by  the  University  of  Malta  that 
provides  support  through  equity.  In  total,  five 
unicorn companies have been created in Malta.(59) 

through 

period, 

The availability of venture capital remains a 
challenge.  VC  has  been  declining  over  the  last 
decade (0.01% of GDP in 2024, down from 0.03% 
in 2014 and well below the EU average of 0.06%). 
In  2024,  Malta  set  up  Malta  Venture  Capital;  a 
fund  aimed  at  providing  equity  investment  in 
startup 
innovative 
technologies.  The  initial  funding  has  been  EUR 10 
million.  The  first  investments  were  in  startups 
active  in  the  health,  technology,  gaming  and 
financial software sectors.  Moving forward, it will 
be  important  to  assess  the  uptake  and  impact  of 
such a scheme on Maltese businesses. 

companies 

focused 

on 

the  2024  EU 

There is significant room for improvement in 
public  procurement  for  innovation.  According 
to 
Innovation  Procurement 
Observatory  report,  Malta  ranks  24th  out  of  30 
European  countries,  with  an  overall  score  of 
18.35%,  well  below  the  European  average  of 
33.05%.  While  the  legal  framework  allows  for 
innovation  procurement, 
is  no  official 
definition  for  it.  Horizontal  policies  such  as  the 
national  research  and  innovation  strategic  plan 
2023–2027 and the smart  specialisation strategy 
2021–2027  recognise  innovation  procurement  as 
a  tool  but  lack  actionable  plans  or  sector-specific 
strategies.  Challenges  include  the  absence  of  an 

there 

(53)  Post-Doctoral Fellowship Scheme Relaunched for the Third 

(56)  Schemes - Start in Malta 

Time - Newspoint 

(54)  Budget-Speech-2026.pdf 

(55)  sns-report-2024-5.pdf 

(57)  Start your own Enterprise - TAKEOFF The Enterprise Campus 

(58)  University of Malta’s Annual Report  

(59)  Unicorns | Dealroom.co 

44 

 
 
 
innovation 

and 
strategic  plan  2023–2027 
emphasises the role of entrepreneurship education 
in  fostering  an  innovation  culture  among  youth. 
However,  Malta  still 
lacks  a  comprehensive 
strategy  covering  entrepreneurship  education 
across  educational  levels,  including  clear  learning 
outcomes,  progression  pathways  and  systematic 
monitoring  of  students’  competences.  European 
comparative  evidence  suggests 
limited 
assessment  tools,  teacher  training  requirements, 
and  evaluation  mechanisms  may  reduce  the 
effectiveness  of  entrepreneurship  education  in 
translating  skills development into  innovation  and 
entrepreneurial 
Strengthening 
activity. 
coordination  and  improving  data  collection  on 
learning outcomes would help strengthen the role 
in  Malta’s 
education 
of 
innovation-to-business ecosystem. 

entrepreneurship 

that 

action  plan,  spending  targets,  monitoring  systems 
and incentives for public procurers(60). 

The availability of human resources with the 
right  skills  remains  a  key  concern  for  the 
faces  severe 
Maltese  economy,  which 
shortages.  The  number  of  new  graduates  in 
science  and  engineering  per  thousand  population 
remains  critically  low,  at  4.87  in  2024,  which  is 
well  below  the  EU  average  of  16.82.  The  number 
of  graduates  in  the  field  of  computing  are  closer 
to the EU average but on a declining trend, (5.87 in 
2014  while  it decreased to  2.56  in  2024,  against 
an  EU  average  of  3.84).  New  graduates 
in 
scientific  fields  and  computing  are  vital  to 
achieving  Malta’s  ambitions  in  the  digital  sector 
(see Annex 13). Some scholarships schemes are in 
place  to  incentives  postgraduate  studies,  such  as 
the  ENDEAVOUR  II  scholarships  scheme(61)  or 
Reach  High  II(62),  which  provides  post-doctoral 
research  grants.  Moreover,  a  dedicated  tax-credit 
scheme,  called  Get  Qualified(63),  is  available  to 
support 
of 
individuals  seeking  to  obtain  industry-relevant 
qualifications and certifications. The incentive aims 
to 
the  national  workforce  by 
encouraging  the  pursuit  of  higher  education  and 
the  acquisition  of 
in-demand  skills,  offering 
financial  support  of  up  to  70%  reimbursement 
through  tax  credits.  In  future,  it  will  remain 
essential  to  promote  science  and  engineering 
studies, through targeted grants and incentives, to 
ensure  an  adequate  supply  of  skilled  talent  for 
innovation. 

development 

professional 

strengthen 

the 

its  contribution  to 

Entrepreneurship education is present across 
different levels of Malta’s education system, 
but 
innovation  and 
business  creation  remains  constrained  by 
limited  evidence  on 
fragmentation  and 
outcomes.  Entrepreneurship  competences  are 
treated  as  transversal  skills  within  compulsory 
education, 
the  European  key 
policy 
competence 
developments  have  reinforced  this  focus:  Malta’s 
national education strategy 2024–2030 promotes 
an  entrepreneurial  mindset  under  its  growth  and 
empowerment  pillar,  while  the  national  research 

line  with 
framework. 

Recent 

in 

(60)  COUNTRY PROFILE – Benchmarking of national policy, Malta. 

(61)  Endeavour II - The Department 

(62)  Reach High II - The Department 

(63)  Get Qualified 2017-2025 (Students Form) 

45 

 
 
 
Table A4.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the highest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard. 

46 

R&D intensity (gross domestic expenditure on R&D as % of GDP)0.580.700.600.580.580.54:2.243.44Public expenditure on R&D as % of GDP0.230.340.220.220.210.16:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 5.627.588.116.50:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population1.401.701.82.002.002.00:4.3:International co-publications as % of total number of publications46.8956.3458.3963.8568.8467.52:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP0.360.360.380.360.370.38:1.492.69Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.260.290.340.290.31::0.470.30Researchers employed by business per thousand active population2.002.302.002.202.002.40:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)1.021.132.091.15:::2.812.20Employment share of high-growth enterprises measured in employment (%)::::1.501.17:0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::76.49:83.5071.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::35.59:39.0139.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::58.19:64.9346.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::13.1717.3021.5619.95:Public-private scientific co-publications as % of total number of publications5.255.116.187.928.4310.75:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0.000.000.000.010.01::0.060.02Total public sector support for BERD as % of GDP0.040.050.010.010.01::0.21:R&D tax incentives: foregone revenues as % of GDP0.030.020.000.000.00::0.10:BERD financed by the public sector (national and abroad) as % of GDP 0.010.030.010.010.01::0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.010.010.010.010.000.01:0.06:Seed stage funding share (% of GDP)0.000.000.000.000.000.00:0.01:Start-up stage funding share (% of GDP)0.010.010.000.010.000.00:0.03:Later stage funding share (as % of GDP)0.000.000.000.000.000.01:0.03:New graduates in science & engineering per thousand population aged 25-34:9.615.435.785.34.87:16.82:Graduates in the field of computing per thousand population aged 25-34:4.993.293.443.042.56:3.84:Innovative talentR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovationScience and innovative ecosystemsMalta2010201520202022202320242025EU average (1)USHeadline indicator 
 
 
 
  
 
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

it 

to 

face 

business 

continues 

environment 

Malta’s 
is 
characterised  by  strong  entrepreneurial 
dynamics  and broadly favourable  conditions, 
but 
structural 
constraints  that  weigh  on  productivity, 
investment  and  business  growth.  For  Malta, 
the  2025  Country  Specific  Recommendations 
(CSRs)  in  the  business  environment  highlighted 
challenges  in  local  mobility  (CSR  4)  as  well  as  in 
available  skills  and  enrolment 
in  vocational 
education  and  training  (VET)  (CSR  5).  While 
business  creation  and  churn  rates  are  above  the 
EU average, the country’s small size also results in 
relatively  volatile  business  dynamics.  Constraints 
in internal and external connectivity weigh on local 
businesses  but  also  on  the  attractiveness  of  the 
island for foreign investors. Under its Recovery and 
Resilience plan (RRP), with the support of Cohesion 
Policy funds and additional policy measures, Malta 
is continuing to take some steps to address traffic 
congestion  and  improved  mobility.  However,  cars 
remain the preferred means of transport, resulting 
in bottlenecks and impacting the attractiveness of 
the  island  and  its  long-term  business  investment. 
Skill  mismatches  and  shortage  of  skilled  labour 
are 
The 
government  aims  to  address  these  with  VET 
other  measures,  while 
programmes 
businesses  invest  in  automation  and  attracting 
workers from outside the EU. Additionally, despite 
a  high  degree  of  digitalisation  in  public  services, 
the  still  missing  integration  of  these  services 
creates administrative burden for businesses.   

constraints. 

investment 

further 

and 

Business dynamics 

In  2023, 

The  business  sector  in  Malta  is  relatively 
dynamic  but  also  volatile. 
the 
enterprise  birth  rate  (17.1%)  was  much  higher 
than the EU average (10.5%), while the death rate 
(6.6%)  was  lower  than  the  EU  average  (8.5%), 
resulting in a higher business churn rate of 23.7% 
against  19%  in  the  EU  (64).  This  overall  rate  is 
declining  during  last  years.  However,  business 
registrations  and  bankruptcies  show  no  clear 
pattern.  While  business  registrations  are  rather 
subdued, the development of bankruptcies is very 
volatile.  The  sectors  with  the  highest  birth  rates 
were  among  services  related  to  tourism,  film 

(64)  Eurostat, bd_size. 

production, gaming and education. By contrast, the 
utilities  sectors  (electricity  and  water)  had  the 
lowest  enterprise  birth  rates  in  2024.  Changes  in 
Malta’s  insolvency  legislation  in  2022  came  into 
force  in  2024.  These  were  aimed  at  improving 
the  Maltese 
long-standing  shortcomings 
insolvency  and  restructuring  procedures.  Besides 
revising 
the  bankruptcy  procedure,  an  early 
warning  mechanism  was  introduced,  and  the 
supporting  role  of  ‘insolvency  practitioner’  was 
defined. 

in 

SMEs  are  developing  strongly  in  terms  of 
value  added  and  employment.  SMEs  in  Malta 
represent 72.8% of total gross value added (GVA) 
and  76.1%  of  employment,  against  the  EU 
average  of  53.6%  and  65.1%,  respectively  (65). 
Micro  firms  are  the  largest  group  of  businesses 
among  SMEs.  In  2024,  real  GVA  and  employment 
continued  to  increase  strongly  by  8.6%  and  5.8% 
respectively. Concerning 2025, SMEs are expected 
to continue thriving, with employment projected to 
increase  by  4.9%  and  inflation-adjusted  value 
added anticipated to rise by 7.3%. However, large 
firms  are  predicted  to  outpace  SMEs,  showing 
growth rates of 9.5% in employment and 10.3% in 
value added.  

growth 

employment 

level  show  mixed 

Employment  and  GVA  growth  of  SMEs  at 
branch 
results  and 
projections  (66).  Retail  demonstrated  the  most 
in  2024, 
substantial 
increasing  by  9.6%.  In  contrast,  textile  was  the 
only  sector  to  decline,  dropping  by  3.5%.  Four 
ecosystems  recorded  double-digit  growth  in  real 
value  added:  tourism  at  15.4%,  aerospace  and 
defence  at  13.8%,  proximity,  social  economy  and 
civil  security  at  11.8%,  and  mobility  -  transport  – 
automotive  at  11.7%.  Meanwhile,  digital,  cultural 
and  creative  industries  and  energy-renewables 
declined slightly. In 2025, the digital ecosystem is 
in  both 
expected 
to  perform  exceptionally 
employment  and  value-added 
indicators.  SME 
employment and value added are forecast to grow 
strongly by 7.3% and 8.6% respectively. 

Labour  productivity  in  Malta,  measured  by 
exhibits 
real 
significant  sectoral  variations,  reflecting 

productivity 

hour, 

per 

(65)  European Commission, Annual report on European SMEs, 

Malta, 05/2025. 

(66)  European Commission, Annual report on European SMEs, 

Malta, 05/2025. 

47 

 
 
 
 
 
 
diverse  recovery  and  growth  trends  across 
industries.  The  manufacturing  sector  (excluding 
construction)  has  shown  remarkable  resilience 
with  a  steady  improvement  in  productivity,  most 
likely  reflecting  increased  efficiency  in  industrial 
processes. Conversely, the construction sector has 
faced  persistent  productivity  declines,  dropping 
from an index (2015=100) of 102 in 2021 to 88. 
in  2024,  which  highlights  potential  weaknesses 
and  reduced  output  relative  to  inputs  within  the 
sector. Conversely, the wholesale, retail, transport, 
and  accommodation  sector,  which  was  heavily 
impacted  by  the  COVID-19  pandemic  disruptions, 
rebounded  significantly  post-2020.  The  sector 
peaked  at  102 
(2015=100)  and 
in  2022 
experienced  a  pronounced  decline  in  2023  and 
2024  by  about  -7%  annually.  This  suggests  that 
demand  stabilisation  and  normalisation  are 
underway,  solidifying  its  recovery  trajectory.  The 
information  and  communication  sector  emerged 
as  a  productivity  leader  with  sharp  productivity 
gains, exhibiting productivity growth rates of 17% 
and 4.5% in 2023 and 2024. (67)  This growth can 
be  attributed  to  the  sector's  substantial  digital 
technological 
transformation 
investment(68).  

increased 

and 

the  highest 

Public  investment  and  business  investment 
are relatively low, yet the outlook is positive. 
Public  investment  as  a  share  of  Malta’s  GDP  has 
reached  its  lowest  level  in  five  years,  3.2%  in 
2024,  below  the  EU  average  of  3.7%.  Business 
investment  stood  at  11.4%  of  GDP  in  2024  (vs 
17.4% in 2022 – the highest share in the last five 
years),  also  below  the  EU  average  of  12.6%. 
Investment  in  intellectual  property  products  and 
construction  display 
investment 
growth  rates  since  2020,  while  investment  in 
ICT 
machinery  and  equipment  as  well  as 
(69). 
increased  more  modestly 
equipment 
is  strongly 
Generally,  the  investment  outlook 
positive  with,  on  balance,  37%  of 
firms, 
specifically  medium/large  firms  in  manufacturing, 
expected to increase investment, far above the EU 
average  of  4%.  Firms  prioritise  future  investment 
in  the  areas  of  capacity  expansion  (52%)  and 
innovation  (23%).  Most  of  the  investment,  68%, 
will  go  towards  tangible  assets,  while  also,  to  a 
lesser extent, to intangibles such as R&D, software 

(67)  Eurostat, nama_10_lp_a. 

(68)  Productivity report 2024. 

(69)  Eurostat. 

and  training  to  support  growth  and  development. 
(70) 

investment  concerns  with 

Lack  of  skilled  staff,  energy  costs  and 
uncertainty are highlighted by firms as main 
investment obstacles. Maltese companies share 
similar 
their  EU 
counterparts, with skills shortages being the most 
reported  issue,  affecting  93%  of  firms  (up  from 
90% in 2024), and a significant 76% considering it 
a major barrier, compared to 52% in the EU. Other 
significant  barriers to investment in  Malta include 
high  energy  costs,  cited  by  84%  of  firms,  and 
uncertainty  about  the  future,  mentioned  by  77%, 
highlighting key challenges to business growth (71). 
Regarding  energy  cost,  despite  the  increase  in  its 
overall importance, for only 12% of firms this is a 
major  concern  compared  to  41%  of  firms  on 
average  in  the  EU.  This  can  be  explained  by  the 
current  government  energy  subsidies,  which  keep 
the energy prices stable.  

Business environment 

(72).  Especially 

(67%  vs  69%) 

Maltese  businesses 
face  administrative 
pressure and regulatory burdens. In 2025, the 
proportion  of  firms  that  cite  business  regulations 
as an obstacle to investment was close to the EU 
average 
the 
construction  sector  sees  business  regulation  as  a 
long-term barrier. However, 17% of all firms deem 
them a major obstacle, well below the EU average 
34%.  Additionally,  while  the  majority  of  firms  in 
Malta cite labour market regulations to be an issue 
(62%  vs.  64%  in  the  EU),  it  is  a  major  issue  for 
only  15%  (vs.  27%  in  the  EU),  specifically  for 
micro-  and  small  firms.  The  share  of  firms 
employing  more  than  10%  of  staff  to  handle 
regulatory requirements is, at around 15%, above 
the  EU  average 
the 
manufacturing sector and for micro/small firms.(73) 
Despite an improvement between 2018 and 2023, 
compared to other OECD countries, the regulatory 
and administrative burden is higher in Malta than 

(11%),  specifically 

in 

(70)  European Investment Bank, EIB Investment Survey 2025.. 

(71)  European Investment Bank, EIB Investment Survey 2025. 

(72)  European Investment Bank, EIB Investment Survey data 

dashboard.  

(73)  European Investment Bank, EIB Investment Survey, Malta, 

12/2025. 

48 

 
 
 
the  average  (1.81 vs  1.74)  (74).  The country  ranks 
lowest for the PMR subcomponents ‘administrative 
(for  businesses)  and 
and  regulatory  burden’ 
‘barriers  to  trade  and 
investment’.  Obtaining 
licences and permits represent a major barrier for 
businesses  according  to  the  survey.  In  order  to 
simplify  obtaining  licenses,  Malta’s  government  is 
requirements  and 
streamlining 
current 
(75) 
simplifying  business  starting  procedures. 
Additionally,  the  Maltese  authorities  are  currently 
establishing a Business Portal, which will integrate 
the  ‘once-only  principle’  (also  see  the  Single 
Market section). 

the 

in 

impact.  According 

Overpopulation 
infrastructure 
and 
constraints  impact  business  activities  and 
investment  to  a  greater  extent  than  in  the 
rest  of 
local 
the  EU.  Shortcomings 
infrastructure and traffic congestion have a major 
impact on business activities. A significant majority 
of businesses in Malta (71% vs the EU average of 
45%)  see  transport  infrastructure  as  an  obstacle 
to investment; for 40% this is a major issue (15% 
of  EU  firms).  This  share  is  one  of  the  highest  in 
Europe,  together  with  Greece  and  Cyprus  (76). 
Especially  for  firms 
the  services  sector, 
in 
constraints  in  the  transport  infrastructure  have  a 
negative 
“National 
Transport Master Plan 2030” the economic cost of 
traffic congestion is estimated to EUR 770 million 
(in 2025). Without effective measures, this cost is 
projected  to  reach  EUR  917  million  in  2030  (77). 
The  rapidly  increasing  population  and  continuous 
reliance on private cars for travel lead to recurrent 
traffic  congestion,  which  requires  political  action 
such  as  urban  planning  initiatives,  investment  in 
sustainable 
and 
enforceable measures. As part of its recovery and 
resilience plan (RRP), Malta has been improving the 
sustainability of transport through measures such 
as  providing  free  public  transport  and  increasing 
the number of electric private vehicles (see Annex 
8).  Cohesion  policy  funds  support  Malta  by 
sustainable,  multimodal  urban 
investing 
mobility,  with  the  aim  of  facilitating  a  shift 

infrastructure 

transport 

to  the 

in 

(74)  OECD, Product Market Regulation indicators, Medium level 

indicator: administrative and regulatory burden. 

(75)  Part of the barriers highlighted in the 2025 Single Market 
Strategy (“Terrible 10”), COM(2025) 500, 21/05/2025. 

(76)  EIB Investment survey, 2025. 

towards  cleaner,  greener  and  active  modes  of 
transport (see Annex 19). 

Malta  is  well  advanced  in  terms  of  digital 
connectivity  infrastructure.  In  Malta,  fibre-to-
the-premises  (FTTP)  coverage  reached  86.2%  in 
2024,  increasing  from  69.6%  in  2023,  and  well 
above the EU average in 2024 (69.2%). Regarding 
the  coverage  of  very  high-capacity  networks 
(VHCN)  and  5G,  Malta  is  at  100%  for  VHCN  and 
5G,  thus  already  reaching  the  Digital  Decade 
targets. However, in terms of coverage in the 3.4-
3.8  GHz  band,  especially  relevant  for  industrial 
applications, Malta remains below the EU average 
of  67.7%  with  40.0%,  even  though 
it  has 
increased  from  24.7%  in  2023.  In  October  2025, 
the government published for public consultation a 
draft  bill 
the  EU’s  Gigabit 
Infrastructure  Act  (GIA),  which  aims  to  facilitate 
and  stimulate  the  rollout  of  very  high-capacity 
networks.  Furthermore,  private  sector  investment 
is ongoing to increase the fibre coverage. 

implement 

to 

to 

by 

sector. 

According 

Access  to  finance  constraints  have  slightly 
relaxed,  although  the  extent  of  the  easing 
differs 
the 
Eurobarometer  survey  557  (78)  61%  of  firms  are 
stating that access to finance, including credits, is 
the biggest problem when doing business in Malta. 
Moreover, 54% of firms see the non-availability of 
finance  as  a  long-term  barrier  to  investment, 
which  is  above  the  EU  average  of  45%.  However, 
the  share  of  finance-constrained  firms  has 
decreased  from  15.2%  in  2023  to  3.7%  in  2025, 
below  the  EU  average  of  6.1%  (79).  The  firms 
facing such constraints are all micro or small firms 
and  businesses  within  the  services  sector  (see 
Annex 6). 

Late  payments  represent  a  challenge  for 
firms,  in  particular  SMEs,  although  to  a 
declining extent. In 2024, 68% of companies in 
Malta  (52%  EU  average)  reported  experiencing 
issues  related  to  late  payments,  which  is  an  8 
percentage points decrease from 2023 when 76% 
of  companies  faced  such problems.  However,  due 
to  data  challenges  related  to  the  limited  size  and 
representativeness  of  the  sample,  the  results 
should  be  interpreted  with  caution  (80).  According 

(78)  https://europa.eu/eurobarometer/surveys/detail/3382  

(79)  European Investment Bank, EIB Investment Survey, Malta, 

(77)  Ministry of Transport, Malta, 2025, National Transport Master 

12/2025.  

Plan 2030, Consultation Document,  

(80)  EU Payment Observatory, Annual Report 2025, p.100.  

49 

 
 
 
to  the  Malta  Association  of  Credit  Management, 
in  Malta  has 
the  average  payment  period 
decreased to 79 days in 2024, although remaining 
above pre-2020  levels.  Despite  this  improvement, 
39%  of  companies  in  Malta  (31%  within  the  EU) 
reported  that  delayed  payments  affected  their 
payments  to  suppliers,  highlighting  the  trickle-
down  effect  on  the  supply  chain.  But  there  are 
positive  trends,  with  decreasing  spillover  effects 
on  production,  financing  and  investment,  at  21%, 
12% and 12% respectively, in line with EU trends. 
The  latest  SME  barometer  for  Q3  2025  shows  a 
steady decline  in the issue’s  significance  over  the 
past four quarters (15% in Q3 2025 vs. 22% in Q4 
2024).(81)  For  SMEs  in  sectors  with  small  profit 
margins,  late  payments  are  a  leading  cause  of 
business  failure.  By  disrupting  firms’  cash  flows, 
late  payments  may  also  impact  firms’  ability  to 
undertake  new  investment  or  recruit  staff,  thus 
harming their growth potential. 

Single Market and barriers  

Malta  is  relatively  well  integrated  in  the 
Single  Market,  especially  in  services  trade. 
Malta’s  trade  integration  in  services  amounts  to 
51.4%  of  GDP  in  2025,  well  above  the  weighted 
EU  average  of  7.6%,  while  goods  trade  activities 
are  structurally  low  with  12.6%  (EU  average  of 
18.7%). Tourism-related services represented 48% 
of services exports in 2025, followed by transport 
services (20.4%) and ‘other business services’ such 
as  management  and  consulting  services  (15.6%). 
The  island  has  strong  economic  ties  in  trade  and 
investment  to  Italy  and  Germany  but  also  to  the 
United  Kingdom  and  Asian  countries  such  as 
Japan(82).  However,  challenges  in  transport 
links,  transport  costs  and  administrative 
barriers  weigh  on 
trade  opportunities. 
According to the ‘international trade’ component of 
the World Bank B-READY Report (83), Malta scores 
higher  than  peer  countries  (e.g.  Greece,  Italy,  and 
Cyprus) in the 2nd pillar “Quality of public services” 
and the 3rd pillar “Operational efficiency”. However, 
in  the  1st  pillar  “Quality  of  regulations  for 
international 
remains  behind, 
specifically  regarding  trade  in  services  and  digital 

trade”  Malta 

(81)  Malta Chamber of SMEs. 

(82)  https://wits.worldbank.org/  

(83)  B-READY, 2026, Malta Economy Profile. 

business 

Additionally, 

trade. 
associations 
emphasise the potential of simplification of formal 
procedures  and  providing  transparent  information 
to improve the efficiency of border activities. This 
seems especially needed for procedures within the 
customs  department,  where  an  updated  system 
could 
lead  to  substantial  savings  for  both, 
economic  operators  and  public  administration  (84). 
An RRP measure is underway to implement such a 
system by  2026.  Additionally,  via  an international 
logistics  hub 
land 
transport,  administrative  processes  could  be 
efficiently combined and adjusted. 

integrating  air,  sea  and 

transposed  by  Malta 

Malta  performs  well  on  Single  Market 
indicators.  In  2025,  the  share  of  Single  Market 
(the 
directives  not 
‘transposition deficit’ (85)) is with 0.6% (slightly up 
from  0.5%  in  2024)  below  the  EU  average  of 
1.1% 86). The country transposed only 0.7% of the 
Single Market directives incorrectly (87), better than 
the  EU  average  of  1.1%. 
It  has  17  open 
infringements,  against  an  EU  average  of  25.  In 
2024, Malta ranked second among Member States 
for  the  shortest  average  duration  to  solve  Single 
Market  infringement  proceedings  at  28.2  months, 
well  below  the  EU  average  at  45.8  months. 
In 2025,  Malta  resolved  88.9%  of  the  SOLVIT 
cases  it  handled  as  lead  centre  (EU  average  of 
84.6%). 

surveillance 

Compliance  of  products circulating  in  the 
Single  Market(88)  is  key  to  ensuring  a  level-
playing  field  for  law-abiding  companies  and 
the  safety  of  consumers. In Malta,  the  number 
has 
of  market 
increased  compared  with  2019.  In  2025,  national 
authorities  reported  in  the  EU  system  for  market 
surveillance 
total 
of 628.6 investigations per one million inhabitants, 
which  is higher than  the  EU median  of  136.2.  The 
number 
in 
absolute  terms,  which  may  also  be  the  result  of 

notifications remains limited 

investigations 

(ICSMS) 

of 

a 

(84)  Malta Chamber. 

(85)  Part of the barriers highlighted in the 2025 Single Market 
Strategy (“Terrible 10”), COM(2025) 500, 21/05/2025. 

(86)  European Commission, Single Market and Competitiveness 

Scoreboard. 

(87)  Part of the barriers highlighted in the 2025 Single Market 
Strategy (“Terrible 10”), COM(2025) 500, 21/05/2025. 

(88)  Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

50 

 
 
 
insufficient  IT  national  interoperability  to  the 
ICSMS  system.  The  upcoming  revision  of  the 
Market Surveillance Regulation will upgrade ICSMS 
to a fully interoperable EU digital platform.  

An  efficient  standardisation  system  is  a 
prerequisite  for  ensuring  Malta’s  industry 
benefit  from  easy  access  to  the  Single 
Market  and  foster  their  competitiveness.  To 
this end, L-Awtorita’ ta’ Malta għall-Kompetizzjoni 
u  għall-Affarijiet  tal-Konsumatur  would  benefit 
from 
its 
transitioning  toward  a  digitalised  standardisation 
authority.  This  would  allow  for  faster,  more 
efficient  and  more 
inclusive  standardisation. 
Moreover,  with  additional  resources  and  capacity 
Maltese experts could effectively participate in the 
European  Standardisation  System,  notably  in  new 
critical sectors such as AI and quantum. 

strengthened 

to  ensure 

support 

there  are  barriers 

in  Malta’s  public 
In  2025,  competition 
procurement  functions  relatively  well  as 
evidenced  by  several  indicators,  but  the 
process  could  be 
improved.  The  rate  of 
negotiated procedures without publication stood at 
7.8% in 2025, which is similar to the EU median of 
6%;  and  the  share  of  single  bids(89)  with  18.6% 
was  the  third  lowest  after  Finland  and  Germany 
(EU  median:  27%).  Authorities  are  encouraged  to 
use the so called “Best Price Quality Ratio” (BPQR). 
Especially  for  SMEs, 
to 
participating  in  public  procurement  procedures, 
such  as  initial  payment  requests  or  large  tender 
projects.  Dividing  tenders  into  lots  would  help 
SMEs  to  participate  in  public  procurement.  “Malta 
reform 
Chambers”  provides  additional 
proposals for a more efficient and attractive public 
procurement  system  such  as  publication  of  a 
forward  planning  of  tenders,  allow  for  a  certain 
based 
introduce 
price 
whitelisting 
for 
blacklisting 
transparency (90). Additionally, in a national survey 
among  SMEs,  unfair  competition  was  mentioned 
by  24%  of  respondents  as  the  second  most 
common concern businesses face. Businesses also 
raised concerns about good governance issues and 
corruption (91).  

flexibility, 
and 

systems 

criteria 

ten 

experience 

that  have 

In  Malta,  65%  of  companies 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
average. 
(EU 
average: 51%) consider collusive bidding in public 
procurement  procedures,  and  63%  (EU  average: 
53%) conflicts of interest in the evaluation of bids, 
'fairly  widespread'  practice.  Among 
'very'  or 
companies 
in  and 
participated  in  a  public  procurement  procedure, 
38%  think  that  corruption  has  prevented  them 
from  winning  a  public 
tender  or  a  public 
procurement  contract  in  practice  (EU  average: 
25%)(92)  70%  of  businesses  perceive  the  level  of 
independence  of  the  public  procurement  review 
body  (Public  Contracts  Review  Board)  as  ‘very’  or 
‘fairly  good’  when 
reviewing  public 
it 
procurement  cases.(93)  The  National  Audit  Office 
indicated  weaknesses  in  the  use  of  public  funds, 
also  by  municipal  authorities,  including  instances 
of bypassing public procurement regulations.(94)  

is 

the  need 

and barriers 

creating complexity 

issues  highlight 

cross-border  procurement, 

Malta’s  eProcurement  landscape  and  data 
quality 
for 
interoperable  systems,  common  standards, 
and  stronger  data  governance.  Malta’s 
centralised  eProcurement service  allows  economic 
operators  to  use  a  single  system  to  access  all 
national  public  procurement  procedures.  However, 
issues 
concerning 
remain, 
to 
participation  for firms from other Member States. 
This  is  specifically  relevant  for  the  high  rate  of 
foreign  economic  operators  registered  in  the 
service(95). This 
country’s 
fragmentation  underscores  the  need  to  introduce 
interoperability and common standards. The once-
only  principle  is  only  partially  implemented  at 
national level (see Annex 7), and buyers across the 
EU  still  lack  digital  access  to  relevant  evidence, 
such as tax registration or criminal records.  Malta 
does  not  have  a  dedicated  service  for  public 
procurement data to serve as a centralised source 
for  government  data  analytics.  Therefore,  the 
Maltese  system  would benefit from a  dedicated 
public  procurement  data  collection  and  analysis 

eSubmission 

(89)  This represents the share of procedures where the contract 

(92)  Flash Eurobarometer 557, p.133. 

was awarded to the sole bidder. 

(93)  Justice Scoreboard (2025), p. 53; Flash Eurobarometer 555. 

(90)  Malta Chamber. 

(91)  Chamber of SMEs. 

(94)  Rule of Law Report- Country Chapter Malta (2025), p. 10. 

(95)  38%, as reported in the eProcurement matrix. 

51 

 
 
 
service within  the  government to  support  data-
driven oversight of the procurement lifecycle(96). 

Graph A5.1: Manufacturing output: total and 
selected sector, index (2021=100), 2015-2024 

to 

Malta is providing digital public services and 
e-government,  which  is  beneficial  for  doing 
the 
cross-border  business.  According 
eGovernment Benchmark analysis(97) Malta scores 
high on the availability of services to both national 
and  cross-national  users,  with  a  maximum  100 
points (EU 86 points for national and 76 points for 
cross-national  users).  This  implies  that  online 
information  about  a  service  for  national/cross-
national  users  is  available  and  that  this  service 
the  Effective 
can  be  completed 
Framework  Conditions  Annex).  Despite 
this, 
business  associations  point  to  the  missing  and 
uneven  integration  of  digital  public  services.  This 
creates  unpredictable  procedures,  long  waiting 
times and duplication of efforts. Further improving 
digital  government  services  by  advancing  the 
creation  of  a  single  government  interface  would 
reduce the administrative burden for businesses. 

(see  also 

Industry and economic security  

Malta  is  making  progress  in  electrification 
and  sustainable  energy  generation.  The 
country’s  economic  structure  is  largely  dominated 
by services. Manufacturing generates just 6.6% of 
total  gross  value  added  (GVA),  largely  related  to 
the  island’s  size  and  location.  In  2024,  Malta’s 
energy-intensive industries represented  only 0.8% 
of  total  GVA,  with  a  decreasing  trend.  The  most 
significant  industry  is  the  manufacturing  of  other 
non-metallic  mineral  products  as  well  as  rubber 
and plastic products, with both 0.3% of total GVA. 
Due  to  this  economic  structure,  at  66.5%  the 
electrification  rate  in  the  industry  sector  (98)  was 
the  highest  among  EU  Member  States  (32.7%  in 
2023) (99). (see also Annex 9) 

(96)  European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 
2021, 2023, Special report 28/2023: Public procurement in 
the EU 

(97)  European Commission, 2025, eGovernment Benchmark. 

(98)  Measured with electricity as a share of final energy 

consumption. 

(99)  Eurostat. 

(1) Detailed data on energy-intensive industry branches is not 
publicly available for Malta. 
Source: Eurostat 

is  currently  no 

Net-Zero  manufacturing  is  not  developed. 
There 
identifiable  net-zero 
in  Malta(100).  General 
manufacturing  output 
permitting  for  new  industrial  production  facilities 
ranges from six to eleven months. Malta has some 
potential  to  develop  high-quality  production  of 
for  net-zero 
electronic  components 
industries, 
the 
to 
STMicroelectronics  assembly  and testing  plant  for 
semiconductors.  Additionally,  planned  offshore 
wind  and  floating  solar  projects  could  stimulate 
local  manufacturing  and  maintenance  capacity  in 
this area(101).  

required 
the  presence  of 

thanks 

Malta is currently implementing the Net-Zero 
Industry  Act  (NZIA).  It  has  designated  a  single 
point of contact and established a national contact 
point  for  net-zero  strategic  project  applications. 
While 
it  has  engaged  stakeholders  to  raise 
awareness  of  NZIA  opportunities,  no  applications 
have yet been received. 

Production  depends  on  imports  of  (critical 
raw)  materials.  Reflecting  the  small  size  of  the 
island  and  its  lack  of  natural  resources,  Malta’s 
material import dependency is among the highest 
in the EU (73.6% in 2024, against an EU average 

(100) European Commission, The net-zero manufacturing industry 
landscape across the Member States. Annex 2, Country 
fiches,.  

(101) ibd. 

52 

4555657585951051151252015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture; manufacture ofarticles of straw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
   
 
raw  material 

of  22.4%)(102).  This  dependency  ranges  across  all 
areas:  biomass,  metal  ores,  non-metalIic minerals 
and  fossil  energy  materials.  In  2023,  the  main 
critical 
imported  from  non-EU 
countries  was  helium  (103)  (mainly  from  Algeria 
and  Qatar)(104).  Key  non-food,  non-fuel  raw 
material 
imports  are  construction  materials 
(mainly  Portland  cement  from  Tunisia)  and  wood 
(primarily  from  China,  Turkey  and  the  USA). 
Imports from some countries might be affected by 
geopolitical  instability.  Since  2018,  circularity  has 
improved  considerably,  and  its  circular  material 
use  rate  was  above  the  EU  average  in  2024 
(18.6% vs 12.2%) (105).  

(102) Eurostat, env_ac_mid. 

(103) This is used e.g. in the food and beverage industry, metal 

fabrication, ship building and semiconductor manufacturing. 

(104) European Commission, Raw material information system. 

Malta. 

(105) Eurostat, env_ac_cur.  

53 

 
 
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations.  

54 

POLICY AREA20212022202320242025EU-27 average83.779.382.082.380.2100.012.717.411.711.4-12.63.73.33.53.2-3.9Business environment and simplification15.714.214.916.917.034.00.450.770.180.59-0.430.050.070.110.07-0.19-----17.4-----13.6from private entities in the previous or current quarter---63.182.047.1from public entities in the previous or current quarter---22.338.115.959.870.166.863.964.040.7-----0.050101417-192719125861.10.40.60.50.6110.60.40.60.71.193.7586.79077.888.984.6191513151725-----0.146260.258.566.5--32.712.614.015.417.2-25.272.572.567.773.6-22.418.420.419.518.6-12.2MaltaINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW- - Electrolyzer, GW- - Heat pump assembly - - Battery, GW- 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation).  End-2024. 

financing.  The 

financial  sector 

Malta ranks in the mid-range of EU Member States 
as  measured  by  the  main  indicators  on  meeting 
the  policy  goals  of  the  Savings  and  Investment 
Union  (see  Table  A6.1).  Companies  in  Malta  rely 
primarily on internal funds to finance investments, 
while  bank  funding  remains  the  main  source  of 
is 
external 
predominantly  bank-driven.  There  is  scope  for 
capital  markets  and  institutional  investors  to  play 
a  larger  role in  providing finance  to  the  economy, 
as  well  as  for  retail  investors  to  increase  their 
participation  in  financial  markets.  Malta’s  banking 
sector  remains  robust  and  resilient,  supported  by 
strong 
The 
supplementary  pension  sector  remains  under-
developed,  as  do  domestic  venture  capital  and 
private equity ecosystem. 

liquidity  buffers. 

capital  and 

Business landscape and company 
funding 

in  Malta  make 

Companies 
less  use  of 
external  funding  than  their  EU  peers.  Total 
non-financial  corporation (NFC) financing stood at 
150.9%  of  GDP,  well  below  the  EU  average  of 
226.2%  (Graph  A6.1).  This  reflect  a  business 
and 
landscape 
microenterprises,  which  tend  to  rely  more  heavily 
on 
is 
internal  funds,  as  external  financing 
generally  more  costly  and  less  accessible  for 
smaller firms (see Annex 5 for more details). This 

dominated 

SMEs 

by 

in  Malta 

in  2025,  with  75%  of 
persisted 
companies’ 
investment  needs  being  financed 
internally,  compared  with  an  EU  average  of  66% 
(106). For companies  that did use external  funding, 
bank loans were the main source, reaching 57.2% 
of  GDP  in  2024,  broadly  in  line  with  the  EU 
average  of  60.8%.  The  biggest  divergence  from 
the  average  EU  structure  is  the  limited  use  of 
listed equity, which reached the equivalent of just 
4.0% of GDP in Malta in 2024, compared with the 
EU average of 42.5%. In line with limited presence 
of large companies, funding via bond issues is very 
limited in Malta. 

(106) EIB Investment Survey 2025: Malta overview. 

55 

Main featuresRelative EU positioningAssets at 38.2% of GDP (32.3% in the EU)10-year real return of 1.3 (1.4% in the EU)High level of pension assets.EUR 78 761 per capita (EUR 85 090 in the EU)o/w 16.2% in listed shares and bonds (7.6% in the EU)o/w 4.7% in investment funds (11.0% in the EU)o/w 6.8% in life insurance (13.4% in the EU)o/w 0.1% in  pension claims (13.6% in the EU)Household wealth close to the EU average. Half of wealth held in currency and deposits and significant allocation to bonds, suggesting a conservative approach to managing wealth. Almost no allocation to pension funds. Malta has no dedicated savings & investment account.VC at 0.005% of GDP (0.064% in the EU)PE at 0.008% of GDP (0.487% in the EU)Very low venture capital and very low private equity investments.Capital gains tax for individuals of 35% but exemptions exist on certain transfers of shares listed on the Malta Stock Exchange and selected foreign stock exchanges. No CGT tax is levied on investments that yield a fixed rate of return.Dividends are taxed at the standard progressive rates of tax applicable to individuals but deductions apply for Maltese based companies.A 2% stamp duty tax is chargeable on the transfer of marketable securities, but with many exemptions, including shares listed on Malta Stock Exchange.Very favorable capital gains tax framework when exemptions are taken into account.1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
 
     
 
Graph A6.1: Composition of non-financial 
corporations funding 

the  country’s  only 

firms.  Stock  market  capitalisation  declined  to 
35.9% of GDP in September 2025, well below the 
EU average of 70%, with banks dominating as the 
largest segment. The Malta Stock Exchange (MSE) 
is 
regulated  exchange, 
facilitating  equity  and  bond  trading  and  providing 
clearing, settlement, depository and other security-
related  services.  Trading  volumes  on  the  MSE  are 
modest,  amounting  to  EUR 393 million  in  2025, 
with  government  bonds  accounting  for  more  than 
half  of  total  turnover  and  corporate  bonds  for 
additional 28%. 

Graph A6.2: Capital markets and financial 
intermediaries 

Source: Eurostat. End-2024. 

While the proportion of Maltese NFC funding 
from  unlisted  equity  is  similar  to  their  euro 
area peers (53.7% vs 55.5% of GDP), there is 
a  sizeable  difference  in  the  proportion  of 
funding from listed equity. This suggests that a 
large  portion  of  corporate  ownership  remains 
private  and that many  businesses  do  not  need  or 
want to access capital by going public. 

Size and structure of the financial 
sector 

Source: ECB, EIOPA, EMACO. End-2024. 

Banks continue to dominate Malta’s financial 
sector.  In  September  2025,  banks’  total  assets 
stood at of 186.6% of GDP, below the EU average 
of  246.1%  (Graph  A6.2).  The  core  domestic 
relevant  banking  sector  is  highly  concentrated, 
with  the  bulk  of  assets  held  by  few  banks.  While 
non-bank  financial  intermediaries  have  significant 
size, most are only registered in Malta and conduct 
limited  or  no  business  domestically.  For  instance, 
investment  funds  had  total  assets  equivalent  to 
135.1% of GDP in 2024, yet domestically relevant 
investment funds were equivalent to just 7.0% of 
GDP  in  June  2025(107).  Similarly,  in  the  insurance 
sector,  domestically  relevant  insurers  held  assets 
equal  to  16.5%  of  GDP  in  June  2025,  compared 
with 64.2% for the sector as a whole. 

Malta’s  capital  markets  remain  shallow  and 
play  a  limited  role  in  financing  domestic 

(107) CBM Interim Financial Stability Report 2025. 

Households’ participation in capital 
markets 

to 

tend 

households 

larger  share  of  their  assets 

Maltese 
favour 
conservative financial asset allocations, with 
a  preference  for  deposits  and  bonds. 
Compared  with  the  EU  average,  they  hold  a 
significantly 
in 
currency and deposits (40% of GDP vs 26.9%) and 
in  bonds  (8.9%  vs  2.4%)  (Graph  A6.3).  This 
composition  suggests  a  cautious  approach  to 
wealth management. The second-largest exposure 
is to unlisted shares (16.4% of GDP), reflecting the 
presence of private and family-owned businesses. 
By contrast, Maltese households allocate a smaller 
share  of  their  financial  assets  to  insurance  and 
pension funds than the average EU households. 

There  is  significant  scope  to  expand  direct 
and 
indirect  retail  investment  in  Malta. 
Household  financial  assets  are  concentrated  in 

56 

050100150200250MTEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equityNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds050100150200250   Listed equity               Bonds                        Assets by sector% of GDP 
   
 
   
deposits,  with  cash  and  deposits  per  capita 
exceeding  the  EU  average  both  in  absolute  and 
relative terms. This creates an opportunity to shift 
part  of  household  savings  towards  alternative 
investment vehicles that may offer higher returns. 
Maltese  households  have  already  shown  some 
engagement in  this  direction  through  investments 
in  bonds,  and  there  is  a  relatively  well-developed 
domestic bond market in which primary issuances 
tax 
frequently 
environment  is  generally  favourable  to  retail 
investment,  as  numerous  exemptions  mean  that 
capital gains from equity investment on regulated 
markets  are  effectively  tax-free.  Malta  currently 
does not have a targeted savings and investment 
account 
instrument 
recommended by the European Commission (108). 

investors.  The 

comparable 

target 

retail 

the 

to 

Graph A6.3: Composition of households' financial 
assets 

Source: Eurostat. End-2024. 

Financial  literacy  in  Malta  is  above  the  EU 
average,  and  the  government  has  put  in 
place  actions  to  strengthen  it  further.  In 
2024,  Malta’s  overall  financial-literacy  indicator 
stood  at  48.5,  three  percentage  points  above  the 
EU  average (109).  The  authorities  have  adopted  a 
strategy  to  promote  financial  literacy  through 
ĠEMMA  platform  (110)  in  collaboration  with  the 
Malta  Financial  Services  Authority  (MFSA).  Key 

(108) Tax-advantaged 

‘Savings  and 

Investment  Account’  as 
proposed in Commission’s SWD on increasing the availability 
of  Savings  and  Investment  Accounts  with  simplified  and 
advantageous tax treatment. 

focus  areas  include  budgeting,  managing  debt, 
savings  and  retirement  planning,  with  tailored 
initiatives for youth, seniors and the general public 
aimed at enhancing overall economic resilience.  

The banking sector: resilience and 
financing of the economy 

to 

improve,  as 

The  Maltese  banking  sector  remains  robust 
and resilient, supported by strong capital and 
liquidity buffers, and is thus not constrained 
in  its  role  of  providing  funding  for  the 
economy. The Common Equity Tier 1 (CET1) ratio 
remained  high  at  20.7% (111)  in  September  2025, 
well above the EU average of 16.8%. The liquidity 
coverage  ratio  remained  at  a  very  high  level, 
amounting  to  367%  in  September  2025.  Asset 
the  non-
quality  continued 
performing  loan  (NPL)  ratio  declined  to  1.7%  in 
September 2025, slightly below the EU average of 
1.9%.  The  sector’s  return-on-equity  ratio  of  8.2% 
in September 2025 remained below corresponding 
EU average (Table A6.2). Stress tests conducted by 
the  Central  Bank  of  Malta  indicate  that  core 
domestic banks hold sufficient capital and liquidity 
to  withstand  even  severe  shocks.  The  main 
systemic  vulnerability  remains  the  large  exposure 
to  real  estate.  International  banks  (that  do  not 
operate  locally)  have  significantly  reduced  their 
presence  in  Malta  over  the  years,  from  holding 
58%  of  total  bank  assets  in  2017  to  22%  as  of 
June 2025.  

Credit  growth  remained  robust  in  2025, 
in 
driven  by  stronger  expansion 
the 
household  sector.  Lending 
to  households 
continued to  grow at high  rates, reaching 8.9% in 
June  2025,  compared  with  2.2%  in  the  EU,  while 
loans  to  NFCs  increased  by  2.8%  (EU  average: 
2.1%).  While  the  banks  have  abundant  liquidity 
and  are  well  positioned  to  provide  funding  to  the 
economy,  credit  demand  comes  primarily  from 
households.  As  a  result,  outstanding  loans  to 
households  are  roughly  twice the  size  of  loans  to 
companies. 

(109) See Indicator 27(c) Average Score of Commission staff 

working document: Monitoring progress towards a capital 
markets union: a toolkit of indicators - 2024. 

(110) Financial Capability Strategy 2022-2025. 

(111) Sources: ECB Consolidated banking data and EBA. 

57 

050100150200250020406080100MTEUMTEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
   
 
 
Role of non-bank financial 
intermediaries 

data  for  June  2025,  around  40%  of  assets  were 
held  as  technical  reserves,  33%  were  placed  in 
investment funds and 21% in equities.  

life 

relatively 

small  asset  base  of 
The 
domestically  relevant  institutional  investors 
limits their capacity to finance the economy. 
The  combined  assets  of  domestically  relevant 
insurance  companies  and  investment  funds  stood 
at  23.5%  of  GDP  in  June  2025.  In  the  insurance 
sector,  only  10  companies  insure  risks  located  in 
Malta  (out  of  69  insurance  undertakings),  holding 
assets  of  EUR 3.9 billion,  equivalent  to  16.5%  of 
GDP.  The  bulk  of  these  assets  (EUR 3.2  bn)  are 
held  by 
insurers.  Assets  of  the  overall 
domestically  relevant  insurers  were  mainly  in 
investment  fund  units  (35.9%),  bond  holdings 
(34.8%)  and  equity  (14.2%).  In  the  investment 
fund  sector,  37  domestically  relevant  sub-funds 
managed assets totalling EUR 1.7 bn, equivalent to 
7.0%  of  GDP  in  June  2025.  Fund  assets  were 
predominantly  placed  in  bond  holdings  (63.4%) 
and  equity  and participations  in  investment  funds 
(32.8%),  pointing  to  a  conservative  investment 
profile,  suggesting  a 
in  funding 
domestic  NFCs.  Significant  links  exist  between 
investment  funds  and  the  broader  financial 
system.  Many  domestically  relevant  investment 
funds  are  owned  by  core  domestic  banks  while 
11.5%  of  the  funds’  total  assets  are  exposed  to 
issued  by  key  domestic 
bonds  and  equities 
financial institutions. 

limited  role 

Venture capital ecosystem 

in  Malta  averaged 

The  domestic  VC  and  PE  ecosystem  remains 
under-developed.  Over  2022–2024,  VC  (venture 
capital) 
just 
investments 
0.005%  of  GDP,  while  PE 
(private  equity) 
investments  averaged  0.008%  of  GDP,  both  the 
lowest  levels  in  the  EU  (114).  On  the  public  side, 
there  is  sufficient  support.  Malta  Enterprise,  the 
national economic development agency, provides a 
range  of  support  programmes  (including  grants), 
from  early  seed  funding  for  small  start-ups  to 
larger support schemes for business development. 
The  government  has  also  established  the  Malta 
Venture  Capital  Fund  to  support  high-potential 
innovative 
initial 
EUR 10 million funding envelope (which authorities 
are  ready  to  expand)  has  not  been  fully  utilised 
during 2025. The persistent absence of private VC 
and  PE  investors  cannot  be  offset  by  existing 
public initiatives (see Annex 4). 

start-ups; 

however, 

the 

pension 

supplementary 

Malta’s 
sector 
remains  under-developed.  While  voluntary 
second-  and  third-pillar  pension  schemes  are 
available,  participation  remains  limited.  At  end-
2024,  voluntary  occupational  pension  schemes 
had  an  estimated  4 667  members,  which 
represents around 2% of the population aged 18-
60. Third-pillar pension funds are more developed, 
although around 85% of their members were non-
residents (2023 data). The Maltese government is 
considering  the  introduction  of  auto-enrolment  in 
occupational  pension  schemes  (112),  with  an  opt-
out  option  (113).  Total  pension  funds  amounted  to 
36.8%  of  GDP  at  end-2024,  exceeding  the  EU 
average  of  32.3%  but  more  than  four  fifths  of 
these are held by non-residents. According to ECB 

(112) Auto-Enrolment Principal Document. 

(113) Budget-Speech-2026.pdf. 

(114) Differences in VC/PE indicators across annexes reflect the 

use of distinct data sources. This Annex uses CMU Dashboard 
data for consistency across CMU indicators, while Annex 4 
uses InvestEurope data, which is disaggregated by 
investment stage. Variations in reported figures are therefore 
due to underlying source definitions. 

58 

 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

59 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP324.7283.8281.1255.2233.4205.1204.1186.6246.1Common equity Tier 1 ratio18.920.221.320.619.720.720.820.716.8Total capital adequacy ratio22.323.425.124.523.924.925.526.520.2Overall NPL ratio, % of all loans3.13.23.63.02.32.01.91.71.9NPL ratio, loans to NFCs5.65.97.16.54.53.73.32.93.5NPL ratio, loans to HHs3.93.33.53.02.31.92.01.92.1Return on equity ratio15.26.00.33.54.310.68.48.29.6Loans to NFCs, % of GDP25.825.127.924.124.122.620.921.029.3Loans to HHs, % of GDP42.443.446.443.544.341.140.540.643.6NFC credit growth rate, %4.85.18.90.37.310.21.74.52.5HH credit growth rate, %7.18.25.29.28.88.18.89.02.6Stock market capitalisation, % of GDP51.847.453.750.345.740.539.735.969.9Initial public offerings, % of GDP0.640.770.001.060.320.020.00-0.06Market funding ratio30.732.429.831.929.728.527.6-49.7Private equity, % of GDP0.7290.3710.0060.0060.0080.0080.008-0.487Venture capital, % of GDP0.0050.0060.0060.0060.0050.0050.005-0.064Financial literacy, composite index-----48.5--45.5Bonds, % of HHs' financial assets11.110.39.18.08.010.511.3-2.8Listed shares, % of HHs' financial assets5.04.84.44.64.95.14.9-4.8Investment funds, % of HHs' financial assets7.27.06.26.24.64.64.7-11.0Insurance/pension funds, % of HHs' financial assets9.810.810.610.38.57.67.3-27.8Total assets of insurers, % of GDP68.987.491.482.868.071.965.055.853.9Pension assets, bn EUR---7.96.78.18.8-5813.8Pension assets, % of GDP---47.237.538.738.2-32.310y real return average of pension assets, %-----0.71.3-1.4Pension funds assets, ECB (% of GDP)-47.249.452.643.937.236.934.723.01-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
   
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public  trust  built  on  integrity,  quality  legislation, 
regulatory  simplification  and  efficient  services  for 
people and businesses. 

Public trust 

Graph A7.1: Trust in justice, regional / local 
authorities and in government 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys 

Public  trust  in  government  and  regional 
authorities in Malta is above the EU average 
(Graph  A7.1).  Businesses  and  the  general  public’s 
confidence in the public administration’s ability to 
handle  their  data  securely  and  responsibility  is 
above  the  EU  average(115).  However,  trust  in  the 
judiciary has decreased in recent years and is now 
far  below  the  EU  average,  due  to  slow  judicial 
procedures. 

Quality of lawmaking and 
implementation 

Malta's  rules  for  lawmaking  could  be  better 
aligned  with  best  practice 
reduce 
regulatory  burdens  and  ensure  effective 
implementation (Table A7.1). Malta improved its 
approach  to  regulatory  impact  assessment  of 
included 
primary 

in  2021.  This 

legislation 

to 

regulation  and 

assessing a range of aspects,  such as the effects 
on  competition,  small  businesses  or  regions. 
However,  legislators  are  not  required  to  assess 
non-regulatory  options  that  could  help  reduce  the 
number  of  unnecessary  new  regulations  without 
compromising policy objectives. There is no explicit 
requirement for periodic ex post evaluation. People 
and  businesses  can  raise  issues  with  existing 
regulation through the servizz.gov.mt online portal. 
The  Office  of  the  Principal  Permanent  Secretary 
provides  central  co-ordination  and  guidance  on 
better 
for 
administrative  simplification.  Within  the  Office  of 
the  Prime  Minister,  the  Parliamentary  Secretariat 
for  Social  Dialogue  is  responsible  for  quality 
control  of  stakeholder  engagement.  The  Cabinet 
Office provides central  oversight  of the quality of 
regulatory  impact  assessments.  However,  there  is 
no  independent  body  to  review  the  quality  of  ex 
post  evaluations,  and  assessments  of 
the 
effectiveness  of  regulatory  impact  assessments 
and improvements to the existing regulatory stock 
are  not  published.  There  is  scope  to  further 
improve  the  mechanisms  to  simplify  regulation 
(see Annex 5). 

responsible 

is 

 A 

are 

feedback. 

demanding 

stakeholders’ 

Stakeholders 
regular 
consultations  on  legislative  proposals.  There 
is still no to be structured and predictable, as they 
are seen to lack coherent structure and not always 
capture 
formal 
framework for public participation in the legislative 
process, despite recent efforts such as the creation 
of a Department of Public Consultation within the 
Office  of  the  Prime  Minister.   Stakeholders  raised 
the issue of approval of legislation that was tabled 
in 
by  the  government  and  quickly  adopted 
Parliament  without 
public 
consultation,  such  as  the  reform  of  magisterial 
inquiries  (Bill  125)  and  the  constitutional  reform 
package (Bill 134). 

previous 

any 

Public service delivery and digitalisation 

Malta has advanced with the digitalisation of 
its  public  services  but  can  improve  further 
their user friendliness. Overall satisfaction with 
is  higher  than  the  EU 
public  administration 
average  (Malta:  56%;  EU  45%  for  people  and 
Malta:  62%;  EU  42%  for  businesses)(116).  At  the 
same  time,  39%  of  citizens,  indicated  that  the 

(115) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(116) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

60 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringSpringAutumnWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system MTRegional or local public authorities EU-27Regional or local public authorities MTGovernment  EU-27Government  MT 
 
   
 
 
 
 
Table A7.1:  Malta. Selected indicators on better regulation practices for primary legislation 

Source: OECD (2025), Regulatory Policy Outlook 2025 and Better Regulation across the European Union 2025  

time  and  effort  to  obtain  a  service  should  be 
reduced.  For  citizens,  the  most  time-consuming 
task is the waiting time for responses (40%), while 
for businesses, the use of application forms (35%) 
(Graph A7.2). 42% of citizens say that more user-
improve  their 
friendly  digital  services  would 
interaction  with  the  public  administration  overall. 
Potential  areas  for  improvement  are  simplified 
service  design,  more  interactive  help  and  mobile 
access.  53%  of  citizens  want  clearer  information 
about procedures and services. 

Graph A7.2: Most time-consuming aspects of 
service delivery 

Source: European Commission, 2026, Flash Eurobarometer 
surveys 567 and 568 on satisfaction with administrative 
services. 

All  digital  public  services  for  people  and 
businesses  are  available  online  (Table  A7.2). 
Malta  is  also  among  the  frontrunners  in  ensuring 
access  to  electronic  health  records.  (See  Annex 
15).  Both  people  (Malta:  75%;  EU  67%;)  and 
companies  (Malta:  80%;  EU73%)  find  that  digital 

services  save time  and  effort  (117).  The  proportion 
of  pre-filled  forms  for  key  life  events  under  the 
Digital Decade is very high (Malta: 93; EU 71)(118) . 

In  2025,  Malta  moved  company  registration 
fully online, through its Business Automation 
Registry  Online  System.  Malta’s  Planning 
Authority operates one of the EU's longest-running 
fully  digital  permit  systems,  which  provides  end-
to-end  digital  services(119).  Environmental  permits 
are  also  managed  through  a  central  platform(120). 
In both areas, however, services experience delays 
that 
due 
digitalisation  alone  cannot  address  existing 
constraints.  The  permit  landscape  for  renewables 
involves  multiple  authorities  for  energy  licensing, 
environmental 
development 
screening,  with  no  formal  one-stop  shop. 
In 
addition,  Malta 
transpose  permit 
permissions under the Renewable Energy Directive. 

resources,  suggesting 

permits 

limited 

failed 

and 

to 

to 

Malta has enabled the cross-border exchange 
of  data  and  documents  between  authorities 
technical 
through 
EU 
system(121).  When 
become 

once-only 
services(122) 

the 

(117) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(118) European Commission, 2025, Digital Decade: eGovernment 

Benchmark. 

(119) https://eapps.pa.org.mt.  

(120) https://era.org.mt/era-topic-categories/environmental-

permitting/.  

(121) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

61 

0%10%20%30%40%50%Time forresponsesServiceidentificationApplicationformsApplicationformsTime forresponsesDocumentspreparationPeopleBusinessesEUTools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 0Regulators are required to identify and quantify the benefits of a new primary law0Regulators are required to identify and assess the impacts of alternative non-regulatory options0Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance1Identify and assess potential enforcement mechanisms1Specify the methodology of measuring progress in achieving the law's goals0Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 1There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 0There are reports on the level of compliance by government department with the requirements of RIA1There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
 
   
 
 
   
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data were collected in the previous year 
Source: European Commission, State of the Digital Decade report 2025 

accessible,  people  and  businesses  will  no  longer 
have  to  search  for  their  data,  download  and 
upload documents manually  across  e-government 
portals in different Member States. Malta still has 
to  identify  the  types  of  documents  and  data  to 
exchange through the system and explore ways to 
shift  from  submitting  documents  to  exchanging 
structured data. 

Civil service 

The  Maltese  government  is  taking  steps  to 
boost  the  skills  and  diversity  of  its  civil 
service  employees.  Malta’s  civil  service  has  one 
of  the  youngest  age  profiles  (73%  of  staff  are 
below  the  age  of  50)(123).  Their  participation  in 
adult learning has  continued  to rise above the EU 
average(124). However, the proportion of employees 
with post-secondary education is still below the EU 
average  for  public  administration  (38.2%  for 
Malta,  compared  to  55% for  the  EU)(125).  Malta  is 
working  to  develop  a  competency  framework 
under  the  Technical  Support  Instrument.  This  will 
support  the  selection,  recruitment,  retention  and 
professional  development  of  civil  servants.  The 

(122) Procedure types under Annex II of the SDGR (2018/1724/EU) 
and directives 2005/36/EC, 2006/123/EC, 2014/24/EU and 
2014/25/EU. 

proportion  of  women 
positions has risen over the last years(126). 

in  senior  civil  service 

Integrity  

Although  the  perception  of  corruption  when 
doing  business  in  Malta  remains  very  high, 
the  reported  level  of  experienced  corruption 
is below the EU average. 69% of companies say 
corruption is widespread (EU: 63%) and 51% see it 
as a problem when  doing business (EU: 35%)(127). 
Yet the percentage believing that overly close links 
between business and politics lead to corruption is 
below  the  EU  average  (Malta:  64%;  EU:  76%), 
suggesting  broader  integrity  and  enforcement 
issues.  Public procurement risks are mostly due to 
weak 
lack  of  standard 
operating  procedures,  and  bypassing  public 
procurement  regulations(128).  (129)  (see  also  Annex 
5).  Despite  relatively  few  firms  reporting  direct 
requests  for  gifts  or  extra  payments  in  dealings 
with  permits,  services  or procurement  (Malta:  8%; 
EU: 10%), confidence in accountability is low, with 
only  27%  believing  those  caught  bribing  senior 
officials are appropriately punished (EU: 33%)(130), 
suggesting concerns over effective enforcement.  

internal  oversight,  a 

Malta  has  taken  some  steps  to  improve 
prevention  and  detection  of  corruption,  but 

(123) European Commission, Eurostat, 2026, European Union 

(126) European Institute for Gender Equality, 2025, Indicator: 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

National administrations: top two tiers of administrators by 
function of government. 

(124) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employees by educational attainment 
level and NACE Rev. 2 activity (2008-2026). 

(125) European Commission, Eurostat, 2026, European Union 
Labour Force Survey, Participation rate of employees in 
education and training (last 4 weeks) by NACE Rev. 2 activity 
(2008-2026). 

(127) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU 

(128) 2024 Report of the National Audit Office of Malta, p 22. 

(129) European Commission, 2025 Rule of Law Report, p. 10. 

(130) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU 

62 

EU-27202320242025202510010010082971001008678889483Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Access to electronic health records (0 to 100)Malta 
 
 
 
  
 
for 

new 

tools 

corruption 

authorities, 

challenges  in  legislation  and  enforcement 
remain. It has continued to implement its national 
anti-fraud  and  corruption  strategy  as  its  strategic 
framework 
prevention. 
Improvements  have  been  reported  across  four 
categories  of  risk:  unlawful  use  of  resources; 
public procurement; conflicts of interest; and other 
fraud(131).  In  2024  and  2025,  no  whistleblower 
reports  concerning  corruption  were  registered  by 
public 
for 
and 
whistleblowing  continue  to  be  developed.  Despite 
ongoing  efforts,  the  integrity  framework  remains 
incomplete,  given  that  key  safeguards  are  still 
missing  from  the  law  –  such  as  comprehensive 
rules on lobbying, codes of ethics (in particular on 
post-employment  restrictions)  and  robust  asset 
stopped 
declaration 
publicly  declaring 
income  after 
2023(132).  This  decision  and the lack  of  disclosure 
requirements  for  lobbying  activities  risks  further 
reducing levels of transparency and accountability 
and making it more difficult to detect conflicts of 
interest in public decision-making, including public 
procurement(133).  The  Permanent  Commission 
Against  Corruption’s  ability  to  achieve  tangible 
results has not yet been demonstrated(134). 

requirements.  Ministers 
their  family 

to 

new 

tools 

developed 

to  criticise 

Malta  has  made  some  efforts  to  improve 
prosecution of corruption, but results are yet 
to  be  demonstrated.  While  the  prosecution 
services  have  increased  their  human  resources 
facilitate 
and 
investigations  and  prosecutions,  stakeholders 
continue 
the  capacity  of  public 
authorities  to  speedily  and  effectively  investigate 
corruption  cases,  accentuating  concerns  over  the 
recent reform, which in their view limits the scope 
for  magisterial  inquiries  prompted  by  the  general 
public.  In  2024,  there  were  57  new  cases  on 
corruption),  20 
(including 
financial 
investigations (2023:  24), and  18  prosecutions.  In 
two  cases  adjudicated (2023:  two),  the  sentences 

crimes 

(131) European Commission, 2025 Rule of Law Report, p. 6-7. 

(132) The Commissioner for Standards in Public Life deemed it ’a 
setback for transparency’ and ’a very negative message.’ 
https://standardscommissioner.mt/commissioner-writes-to-
prime-minister-regarding-asset-declarations-by-ministers.  

(133) European standards on asset declarations and lobbying 
include minimum transparency requirements and 
enforcement in case of breaches, in particular for high-level 
officials, and Malta continues to fall short of these 
standards. See OECD (2023): Public Integrity in Malta.  

were  suspended,  while  one  case 
is  under 
appeal(135).  In  2025,  of  20  initiated  investigations 
for  corruption,  15  are  pending;  two 
led  to 
prosecution.  Meanwhile,  12  ongoing  prosecutions 
for corruption are pending(136). The number of final 
judgments  in  corruption  cases  remains  very  low 
(two  judgments  in  2023,  three  in  2024,  two  in 
2025).  

Justice 

for 

the 

resources 

Serious  concerns  persist  over  the  efficiency 
of the justice system. The time taken to reach a 
decision in civil and commercial court cases at first 
instance increased from 454 days in 2023 to 491 
in  2024.  The  estimated  time  taken  to  resolve 
administrative  cases  at  first  instance  increased 
from 1 350 days in 2023 to 1 681 days in 2024, 
which  remains  the  longest  in  the  EU.  Concerns 
remain  about 
judiciary, 
particularly  the  low  number  of  judges  per  capita 
(the third lowest in the EU), the shortage of  court 
staff  and  available  premises.  Malta  is  performing 
moderately  well  on  digitalising  its  justice  system. 
Improvements  include  introducing  electronic  case 
management for all cases, and the courts and the 
prosecution  service  adopting  secure  electronic 
communication.  Malta  performs  well  in  digital 
solutions  to  initiate  and  follow  proceedings  in 
civil/commercial  and  administrative  cases,  as  well 
as 
in  the  general  public’s  online  access  to 
published judgments. However, it significantly lags 
behind  on  arrangements  for  producing  machine-
readable  judicial  decisions.  The  Recovery  and 
Resilience  Facility  is  partly  funding  the  national 
digital  justice  strategy  for  2022-2027,  which  is 
partly  delayed.  Malta  can  also  benefit  from 
reforms  to  expedite  court  proceedings  in  order  to 
address  delays,  such  as  by 
the 
compilation  of  evidence  (committal  proceedings) 
and  other  court  procedures.  As  part  of  the 
commitments  under  its  recovery  and  resilience 
plan,  Malta  is  also  undertaking  reforms  such  as 
increasing  the  prosecutorial  role  and  capacity  of 
the  Attorney  General’s  office.    To  alleviate  the 
burden on the judiciary, Malta should promote the 

reforming 

(135) Attorney General office (2025), written input, p. 9., quoted in 

the 2025 Rule of Law Report, p.7. 

(136) Maltese government, contribution for the 2026 Rule of Law 

(134) European Commission, 2025 Rule of Law Report, p. 8. 

Report, p. 42. 

63 

 
 
 
the 

use 

alternative 

use  of  alternative  dispute  resolution,  such  as 
arbitration  and  mediation.  Malta  currently  ranks 
the  third  lowest  in  the  EU  regarding  efforts  to 
promote 
dispute 
of 
resolution.(137)  While  the procedure  to  appoint  the 
Chief Justice had improved [in 2020] by including 
Parliament  as  required  by  Malta’s  recovery  and 
resilience plan, difficulties in the appointment of a 
candidate  highlights  the  need  for  further  reforms 
in  the  appointment. 
judiciary 
to 
Regarding 
independence  of  specialised 
tribunals,  the  Commission  will  closely  monitor 
implementation  of  this  key  reform  in  the  final 
payment  request  of  the  Recovery  and  Resilience 
Facility (RRF) later this year (138). 

involve  the 
the 

(137) EU Justice Scoreboard 2025, Fig. 26. 

(138) For  a  more  detailed  analysis  of  the  performance  of  the 
justice  system in  Malta,  see  the  upcoming 2026  EU  Justice 
Scoreboard and the 2025 Rule of Law Report. 

64 

 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

faces 

challenges 

Malta 
in 
significant 
achieving the clean industry transition and in 
mitigating  climate  change.  Slow  progress  on 
renewable energy systems and the high degree of 
dependency on critical raw material imports reflect 
strategic vulnerabilities. Although Malta has made 
progress  on  circular  economy  practices,  it  lags 
behind  on  recycling  rates.  There  is  a  significant 
gap between planned climate policy measures and 
its 2030 climate target, with transport emissions a 
particular  challenge.  For  Malta,  the  2025  CSRs 
highlighted  the  need  to  reduce  emissions  from 
road  transport  and  to  tackle  traffic  congestion  by 
promoting  quality  and  efficient  public  transport. 
This  would  require  greater  investment  in  active 
mobility infrastructure and discouraging car use. 

lacks  specific  sectoral  targets, 

Malta takes an indirect approach to industry 
decarbonisation.  Malta’s  Climate  Action  Act 
commits  to  achieving  climate  neutrality  by  2050, 
including 
but 
targets  for  industry.  Malta’s  'indirect'  industrial 
decarbonisation  strategy  is  based  on  action  to 
electrify  most  energy-consuming  processes  and 
end-uses,  while  exploring  biofuels  and  green 
hydrogen  as  sustainable  sources  of  energy  for 
hard-to-abate  processes  and  sectors.  It  includes 
support  for  technological  innovation  and  research 
to develop new solutions tailored to Malta's unique 
context,  such  as  offshore  wind,  solar  power  and 
battery  storage.  Malta  is  also  investing  in  the 
energy 
infrastructure 
consuming processes to electricity. 

convert 

needed 

to 

Industry decarbonisation 

Greenhouse gas emissions from industry 

Malta’s  industry  is  limited  in  scale,  but  it  is 
taking  action  to  reduce  its  greenhouse  gas 
emissions.  Manufacturing  generates  a  minor 
share  of  Malta’s  overall  greenhouse  gas  (GHG) 
emissions:  about  1%,  the  lowest  share  in  the 
EU (139).  In  2024,  manufacturing  emitted  70 g 
CO2eq of greenhouse gases per unit of gross value 
added (GVA), the second lowest intensity in the EU 
and  less  than  a  third  of  the  EU  average.  Since 
2019, the GHG intensity of manufacturing in Malta 
has  fallen  by  15%.  24%  of  Malta’s  industrial 
greenhouse  emissions  are  generated  by  energy 
use  and  76%  are  non-energy-related  emissions 
related  to industry  processes  and  product  use.  Its 
share  is  the  highest  in  the  EU.  Energy-intensive 
manufacturing sectors only have a minor presence 
in  Malta,  and their  overall  GHG  emission  intensity 
is  low.  The  processing  of  non-metallic  minerals 
has  a  more  pronounced  impact,  generating  some 
7% of manufacturing GVA in 2022.  

(139) Data on the manufacturing sector exclude the NACE division 
C19 – manufacture of coke and refined petroleum products, 
for better match of the sectoral data from Eurostat (gross 
value added) with those from the UNFCCC under the 
Common Reporting Format. Also see further indicators on 
industry decarbonisation, as well as the annotation for 
further information, in table A8.1 at the end of this Annex. 

Policies to promote industry decarbonisation 

Malta’s  net-zero  manufacturing  activities 
are at an early stage, and the installation of 
renewable  systems 
is  advancing  slowly. 
Through  its  recovery  and  resilience  plan  and 
cohesion funds, Malta is investing in its electricity 
distribution network. There is currently no net-zero 
manufacturing output. Malta has some potential to 
develop  high-quality  production  of  electronic 
components 
industries 
thanks  to  the  presence  of  the  STMicroelectronics 
assembly  and  testing  plant  for  semiconductors. 
The  envisaged  offshore  wind  and  floating  solar 
projects  (see  Annex  9)  could  also  stimulate  local 
manufacturing  and  maintenance  capacity  in  this 
area.  Malta  is  also  implementing  the  Net-Zero 
Industry Act, although no applications for net-zero 
strategic  projects  have  been  submitted  to  date 
(see Annex 5).  

for  net-zero 

required 

Reduction of effort sharing emissions 

Compliance  with  effort  sharing  limits  with 
domestic measures 

Malta’s  effort 
sharing  emissions  are 
projected  to  be  above  its  target  in  2030; 
earlier  years’  unused  emission  allocations 
are  not  sufficient  to  cover  the  gap  and 
the  Effort  Sharing 
achieve  compliance  with 

65 

 
 
 
 
 
 
Regulation (140).  In  2024,  greenhouse  gas  (GHG) 
emissions  from  Malta’s  effort  sharing  sectors  are 
expected to  have  been  40.8%  above  2005  levels. 
By  2030,  current  and  planned  policies  and 
measures  are  expected  to  lead  to  a  29.7% 
increase,  leaving  a  gap  of  48.7  percentage  points 
to the 2030 target,  a 19% reduction. Malta could 
bridge  part  of  this  gap  with  own  unused  annual 
emission  allocations  from  earlier  years  but  would 
also  need  transfers  of  allocations  from  other 
Member  States  to  achieve  compliance  with  the 
Effort  Sharing  Regulation.  Progressing  towards 
swift 
climate 
require 
implementation  of 
the  additional  measures 
planned and new measures identified. 

neutrality 

will 

Sustainable transport 

Transport  is  the  dominant  source  of  Malta’s 
effort sharing emissions. It has generated 48% 
of these emissions in 2024 (141), up by 45% since 
2005.  For  Malta,  the  2025  CSRs  highlighted 
challenges  on  emissions  from  road  transport  and 
traffic  congestion,  notably  recommending  action 
on promoting quality and efficient public transport, 
stepping  up 
in  active  mobility 
investments 
infrastructure and discouraging car usage. 

the 

fleet, 

Malta has made progress in decarbonising its 
vehicle 
charging 
though 
infrastructure needed to support this shift is 
still  largely  underdeveloped.  Grant  and  tax 
credit  schemes  have  driven  a  sharp  increase  in 
zero-emission vehicle (ZEV) uptake. In 2024, Malta 
recorded  7 700  new  passenger  car  registrations, 
of  which  37.7%  were  ZEVs  -  a  17.4  percentage 
point increase since 2023 (20.3%) and well above 
the  EU  average  of  13.6%.  For  light  commercial 

(140) The national GHG emission reduction target is set out in 

Regulation (EU) 2018/842 (the Effort Sharing Regulation). It 
applies jointly to buildings (heating and cooling), road 
transport, agriculture, waste and small industry (known as 
the effort sharing sectors). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The final data will be established in 2027 after a 
comprehensive review. Projections about the impact of 
current policies (‘with existing measures’, WEM) and 
additional policies (‘with additional measures’, WAM) as per 
Malta’s 2025 reporting under Article 17 of Regulation (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission (2025), Climate Action Progress Report 2025 – 
Technical Information, Commission staff working document, 
Brussels, Chapter 9 (pp. 111ff.), and in particular Tables 25 
and 26. 

(141) See Table A8.1 at the end of this Annex. 

for 

Significant 

investments 

vehicles,  ZEVs  accounted  for  16.6%  of  new 
registrations,  also  significantly  above  the  EU 
average  of  6.1% (142).  In  the  public  sector,  250 
electric 
the 
vehicles  were  purchased 
government  fleet,  with  an  equivalent  number  of 
vehicles  scrapped:  a  measure  provided  by  the 
Maltese RRP. However, by the end of 2025, Malta 
had  only  installed  around  25%  of  the  electric 
charging  infrastructure  needed  to  meet  its  2030 
truck 
targets. 
infrastructure  are  still  required  as  the  charging 
infrastructure  is  largely  lacking.  The  absence  of 
sufficient  recharging  infrastructure  for  light-duty 
and  heavy-duty  vehicles 
risks  becoming  a 
significant  bottleneck  for  the  uptake  of  zero-
emission  vehicles  in  the  country.  The  remaining 
investment  needs  between  2025  and  2030  to 
achieve 
Infrastructure 
Regulation targets are estimated at EUR 34 million 
for  light-duty  vehicle  infrastructure,  EUR 3 million 
for heavy-duty vehicle infrastructure and EUR 100 
million for onshore power supply in maritime ports. 

the  Alternative  Fuels 

in 

than 

incentives 

Traffic  congestion  remains  a  key  challenge, 
with measures so far focusing predominantly 
on 
demand 
rather 
management  was  the  second  most  congested 
country  in  TomTom’s  worldwide  Annual  Traffic 
Index  in 2025. Private cars accounted  for 82% of 
inland  passenger  transport  in  2023,  with  buses 
and  coaches  transporting  the  remaining  18%. 
Inland freight is transported by road, exacerbating 
pressure  on  the  limited  road  network.  Malta's 
National  Transport  Master  Plan  estimates  the 
economic  cost  of  traffic  congestion  (excluding 
environmental  impacts)  could  reach  EUR €917 
million  per  year  by  2030,  up  from  EUR €770 
million in 2025, unless effective measures are put 
in  place.  Proposals  to  tackle  traffic  congestion 
mainly  focus  on  investments  in  car  parks  and 
junctions,  although  measures  to  increase  parking 
for  motorcycles,  EVs  and  scooters  would  be 
welcome. While the plan does not include  pricing-
based  demand  management  measures  such  as 
road  pricing  or  reduced  parking,  it  does  include 
demand  management  measures 
traffic 
management and modal shift initiatives. However, 
these  have  yet  to  produce  observable  effects  on 
congestion levels or private car use. 

like 

(142) Eurostat 2026. Passenger cars in the EU. 
https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=Passenger_cars_in_the_EU 

66 

 
 
 
 
Malta's  diesel  prices  reflect  both  a  lower 
pre-tax  price  and  relatively  lighter  taxes  on 
diesel  than  the  EU  average,  which  may 
contribute  to  the  high  level  of  private  car 
use.  As  of  23 February  2026,  Malta's  pre-tax 
diesel  price  was  EUR 553.02  per  1 000  litres, 
around  29%  below  the  EU  weighted  average  of 
EUR 781.38  and 
the  euro-area  average  of 
EUR (143).  Diesel  prices  for  consumers  including 
taxes  were  EUR 1 210.00  per  1 000 
litres, 
approximately  24%  below  the  EU  average  of 
EUR 1 594.42 (144). The implied tax burden (i.e. the 
difference  between  the  consumer  price  and  the 
pre-tax  price)  was  EUR 657  per  1 000  litres  in 
Malta, below the EU average of roughly EUR 813. 

increased 

Steps have been taken to encourage the use 
of  public  transport,  multimodal  connectivity 
and  active  mobility,  though  so  far  this  has 
had  a  limited  overall  impact  on  reducing 
reliance  on  private  cars.  Malta  has  expanded 
free  access  to  public  transport  for  all  holders 
of the  Tallinja card  (C2-R2),  it  has  invested  in 
the  number 
transport  apps  and 
of public bus routes as part of the ‘Reshaping Our 
Mobility’  initiative.  Park  and  ride  services  were 
launched  from various  localities  to encourage  the 
use of public transport. However, the effectiveness 
of these measures has been limited. In 2024, 58% 
of  people  in  Malta  reported  never  using  public 
transport,  below  the  EU  average  of  50.6%  (145). 
Malta also has a limited number of dedicated bus 
lanes,  so  buses  face  the  same  congestion  as 
private  cars.  Malta  has  one  urban  node  defined 
under  the  TEN-T  Regulation  and  the  obligation  to 
develop  at  least  one  multimodal  passenger  hub 
until  2030,  equipped  with  charging  infrastructure 
for  buses  and  coaches.  However,  a  study 
conducted  in  2025  found  that  the  one  identified 
facility  requires  further  development  to  improve 
multimodal 
passenger 
services (146)  indicating  that  meaningful  progress 
on this front has yet to be made.  

connection 

and 

to  car 

navigation 

Alternatives 
transport  between 
densely  populated  coastal  areas  remain 
limited. The finalisation of the project for the new 
ferry  landing  site  in  Bugibba  and  the  proposal  to 
increase  ferry  connections  are  welcome  steps, 
reduce 
however.  As  Malta  seeks 
road 
to 
congestion,  the  maritime  sector 
is  becoming 
increasingly  important  as  a  complement  to  road 
transport.  The  supply  of  sustainable  maritime 
fuels will  be  needed  to  ensure  emissions  are  not 
In  2023, 
merely  shifted  from  road  to  sea. 
domestic  maritime 
(excluding 
international  bunkers),  contributed  around  0.1 
million  tonnes  of  CO2,  representing  0.9%  of 
Malta’s  total  CO2  from  transport,  compared  with 
the EU total of around 16.2 million tonnes, and an 
average  share  of  1.6%  in  total  EU  CO2 (147).  In 
terms  of  energy  consumption,  23 765  tonnes  of 
oil  equivalent  (gas  and  diesel  oil)  (148),  compared 
with the EU (149). Malta has scope to use part of its 
EU  ETS  proceeds  and  Fuel  EU  Maritime  penalties 
commercial-scale 
to 
roll-out  of 
sustainable  maritime 
Full 
implementation  of  the  European  Maritime  Single 
Window  environment  is  also  pending.  The  Grand 
Harbour  Regeneration  project  and  the  envisaged 
expansion  of  the  Malta  Freeport  are  welcome 
steps  to  improve  the  resilience,  environmental 
sustainability  and  competitiveness  of  the  port. 
Further  progress  on  multimodal  integration  with 
ITS  –  such  as  synchronising  bus  schedules  with 
ferry  arrivals,  especially to  reach  key  destinations 
like the Mater Dei Hospital and University of Malta 
-  would  improve  accessibility  and  reduce  reliance 
on private cars for coastal commutes. Walking and 
cycling  paths  are  either  lacking  or  unsafe  in 
practice,  despite  completion  of  the  first  phase  of 
the  Connections  for  Safer  Active  Mobility  project 
and  the  National  Strategy  for  Cyclists.  Cohesion 
in  pavements  and 
funds  support 
cycling  lanes,  though  more  systemic  change  is 
needed 
to  make  active  mobility  a  viable 
alternative. 

investment 

(SMF). 

fuels 

fund 

the 

(143)European Commission, Weekly Oil Bulletin, 'Prices without 

taxes - latest prices', 26 February 2026.  

(144) European Commission, Weekly Oil Bulletin, 'Prices with taxes 

- latest prices', 26 February 2026. 

(145) Eurostat, News articles, ‘51% of people didn’t use public 

transport in 2024’, 11 March 2026. 

(146) Multimodal Passenger Hubs concept note. 

(147) Statistical Pocketbook 2025. 

(148) Note: Domestic navigation covers the quantities delivered to 
vessels of all flags not engaged in international navigation 
(see International marine bunkers). The 
domestic/international split is determined by port of 
departure and port of arrival, not by the flag or nationality of 
the ship. 

(149) Eurostat (nrg_bal_c). 

https://ec.europa.eu/eurostat/databrowser/view/nrg_bal_c__c
ustom_20372408/default/table. 

67 

 
 
 
Sustainable industry 

Circular economy 

investments 

Some of Malta’s  circular  economy  indicators 
results.  However,  urgent 
show  strong 
reforms 
in  waste 
and 
management  are  needed  to  reduce  Malta's 
heavy  use  of  landfills  for  waste  disposal. 
Malta  is  currently  working  on  a  national  strategy 
for  the  environment  for  2050,  which  will  set  out 
the  framework  for  a  longer-term  transition  to 
increased  sustainability.  Action  on  the  circular 
economy  includes  more  upstream  measures  on 
the  sustainable  design  of  products  and  initiatives 
empowering  consumers,  reflecting  the  measures 
set out in the EU’s 2020 CEAP. Since 2022, Malta 
has  opened  four  product  reuse  centres  to  reduce 
waste. However, in 2024 the country continues to 
rank  low  on  recycling  rates,  with  only  16.7%  of 
municipal  waste  recycled  against  the  EU  average 
of  48.1%  (150),  and  35.6%  of  plastic  packaging  in 
2023  (151)  below  the  EU  average  of  42%.  By 
contrast,  the  rate  of  recovery  of  construction  and 
demolition  waste  is  100  (152),  above  the  EU 
average  of  89%.  Malta  has  not  filed  any  patents 
related to recycling and secondary raw materials.  

With  a  9%  decrease  in  the  number  of 
persons  employed  in  the  circular  economy 
sector  (153),  the  circular  economy  accounted 
for  2.7%  of  all  employment  in  2023,  down 
from  3.3%  in  2014  but  still  above  the  EU 
average  of  2%.  However,  skills  shortages  are 
particularly acute in emerging areas related to the 
green  transition  (see  Annex  12).  Although  per 
capita  material  consumption  has  decreased  (154) 
over  the  past  five  years  (above  the  EU  average 
decrease  of  7.7%);  resource  productivity  has 
increased by 45% in 2024 (compared with the EU 
average  of  37%)  and  use  of  secondary  materials 
has  increased  from  4.2%  to  18.6%  over  the  past 
(155)  years  (against  the  EU  average  of  12.2%). 

(150) Eurostat, Recycling rate of municipal waste, Link. 

Waste  generation  is  still  high  with  621  kg  per 
person generated in 2024 (compared  with the EU 
average  of  517  kg  per  person)  (156),  underscoring 
persistent reliance on primary resources (157). 

Malta has scope to develop its fiscal tools to 
encourage  circular  practices,  raise  revenue 
and  reduce  waste.  Total  environmental  tax 
revenue  is  lower  than  the  EU  average  (1.4%  of 
GDP in 2024 against the EU average of 2.1%) (see 
Annex 3). In 2023, revenues were primarily derived 
from energy and transport taxes (around 49% and 
41%,  respectively),  with  taxes  on  pollution  and 
resources at 0.18 % (EU average: 0.08 %) 

Landfill  rates  remain  high,  while  recycling 
rates are way below the EU average. Over the 
last  10  years,  Malta  has  brought  its  landfill  rate 
down from 82% to 74%. However, this is still one 
of  the  highest  in  the  EU,  and  well  above  the  EU 
average  of  22%  (2023).  The  incineration  rate  is 
low  at  3%  in  2023  (158).  Malta  has  taken  some 
steps to treat waste and avoid landfilling (e.g. the 
Material  and  the  Multi-Material  Recovery  Facility). 
However, urgent reforms and investments in waste 
management and the circular economy are needed 
to significantly reduce Malta’s reliance on landfills 
for  waste  disposal  (448  kg  per  person  in  2024 
versus 110 kg per person, average in the EU) (159). 
Also,  Malta  needs  to  step  up  efforts  to  meet  the 
2025  municipal  waste  recycling  target,  (after 
failing  to  meet  the  2020  50%  recycling  target); 
and  the  2025  65%  packaging  waste  recycling 
target  (160).  There  are  three  extended  producer 
responsibility (EPR)  schemes in operation in Malta 
covering  packaging,  batteries  and  electrical  and 
electronic  equipment 
is 
ascertaining  EPR  challenges,  best  practices  and 
enforcement  gaps  in  Member  States,  including 
Malta (162).  

(161).  A  LIFE  project 

Bioeconomy industry 

(156) Eurostat, Municipal Waste by waste management 

operations, Link. 

(157) Eurostat, circular material use rate, Link. 

(158) [env_wasmun] Municipal waste by waste management 

(151) Eurostat, Plastic packaging recycling rate, Link.  

operations 

(152) Techno-economic and environmental assessment of CDW 

(159) See footnote 144. 

management, JRC, 2024, Link. 

(160) Waste Early Warning Reports 2023 - country-specific 

(153) Eurostat, Persons employed in circular economy sectors, Link. 

factsheets - Environment. 

(154) Eurostat, Material footprints, Link. 

(161) Extended Producer Responsibility - ERA. 

(155) Eurostat, Circular material use rate. Link. 

(162) LIFE4EPR mapping tool, Link. 

68 

 
 
 
In Malta, value added by the bioeconomy as a 
whole  decreased  from  2018-2023  by  0.8%. 
However,  among  the  bioeconomy  sub-sectors, 
value  added  has  grown  in  food  and  beverages, 
wood  products  and  furniture,  and  bio-based 
chemicals  and  plastics  (by  an  average  of  3.7%, 
11.2%  and  1.0%  between  2018  and  2023 
respectively)  (163).  Overall  employment  in  the 
bioeconomy has risen by 2.4%. Labour productivity 
in the bioeconomy – measured as value added per 
person  employed  –  was  41.9%  of  the  national 
average  and  has  been  decreasing  from  63.6%  in 
2018(164).  Research  and  development 
(R&D) 
business expenditure on bioeconomy-relevant sub-
sectors has grown by less than the level of overall 
R&D  business  expenditure 
(5.4% 
compared to 8.7% on average between 2018 and 
2023) 
the 
CleanAlgae2Value  project,  Malta 
is  exploring 
potential  ways to use microalgae in the European 
bioeconomy.   

participating 

in  Malta 

(165). 

By 

in 

Zero-pollution industry 

While air quality in Malta has improved over 
the  past  ten  years,  additional  action  is  still 
needed  to  curb  some  specific  pollutants, 
namely  NOx  and  PM10.  Malta  has  significantly 
reduced  emissions  of  several  air  pollutants  since 
2005, while GDP growth has continued. According 
to the inventories submitted under Article 10(2) of 
the  National  Emission  Reduction  Commitments 
Directive  (NECD)  in  2024,  Malta  has  met  its 
emission  reduction  commitments  for  2020–2029 
for  the  air  pollutants  nitrogen  oxides  (NOx),  non-
methane  volatile  organic  compounds  (NMVOC), 
sulphur  dioxide  (SO2),  ammonia  (NH3)  and  PM2.5. 
According  to  the  latest  projections  submitted 
under  Article  10(2)  of  the  NECD,  Malta  is  also 
reduction 
projected 
commitments  for  2030  onwards  for  NMVOC,  SO2 
and PM2.5, but not for NOx or NH3.  

its  emission 

to  meet 

The EEA estimates that 360 years of life are 
lost  per  100 000  inhabitants  attributable  to 
air  pollution  due  to  PM2.5  concentrations  that 

exceed  WHO  air  quality  guideline  levels  (166).  In 
2022,  annual  damages  from  pollutant  levels  that 
exceed  the  air  quality  standards  in  Malta  are 
estimated  to  cost  EUR  0.32  million  per  year  (167). 
Although  the  share  of  pollution  and  resources 
taxes in  total  environmental  taxes  was  above  the 
EU average, there appears to be scope to step up 
implementation  of  the  polluter  pays  principle  for 
air pollution, e.g. taxing NOx emissions (168).  

Water pollution from industry also remains a 
challenge. Malta  has  one  of  the lowest  levels  of 
emissions  of  heavy  metals  to  water  in  the  EU 
(weighted  by  human  toxicity  factors)  but  ranks 
eighth  on  emission 
intensity  (above  the  EU 
average  intensity  of  0.864 kg/EUR 1  billion  GVA). 
The  main  industrial  contributors  to  emissions  to 
water  in  Malta  are  the  energy  sector  for  heavy 
metals,  and  livestock  for  nitrogen,  total  organic 
carbon  and  phosphorous.  Malta  is  also  facing 
water  scarcity,  as  evidenced  by  the  Seasonal 
Water  Exploitation  Index  +  (169).  In  2023,  in  the 
third  quarter  of  the  year,  this  index  reached 
66.7%, far above the 20% generally considered as 
a  sign  of  water  scarcity.  Levels  over  40%  are  a 
sign of severe scarcity. Water pollution by industry 
imposes direct and indirect costs of EUR 83 million 
annually  (170),  not  yet  sufficiently  borne  by  the 
polluters.  

The current level of investment falls short to 
meet  current  needs.  To  meet  national  and  EU 
targets for pollution prevention and control, Malta 
would need to spend an additional EUR 32 million 
every  year  (about  0.19%  of  GDP)  (171)  largely  on 

(166) EEA, 2025, Harm to human health from air pollution in 

Europe: burden of disease status, 2025, Link. 

(167) Update of the costs of not implementing EU environmental 

law - Publications Office of the EU 

(168) European Commission: Directorate-General for Environment, 

RPA Europe, Conduct in-depth assessments on 
environmental priorities to support the greening of the 
European Semester and integration of environmental 
priorities into the EU's economic governance framework, 
2025. 

(169) https://www.eea.europa.eu/en/analysis/indicators/use-of-

(163) Bioeconomy subsectors: food and beverages; bio-based 

freshwater-resources-in-europe-1. 

textiles; wood products and furniture; bio-based chemicals 
and plastics. 

(164) Joint Research Centre, Developments of Economic Growth 

and Employment in Bioeconomy Sectors across the EU, Link. 

(170) European Commission: Directorate-General for Environment, 
IEEP, Green taxation and other economic instruments – 
Internalising environmental costs to make the polluter pay 
(p.48, Table 5), 2021, Link. 

(165) Joint Research Centre, Business expenditure in Research and 

(171) European Commission, Environmental Implementation 

Development (R&D) in the EU bioeconomy, Link,. 

Review (2025), Malta country report. Link. 

69 

 
 
 
improving  air  quality,  particularly  in  industrial 
regions and urban transport corridors (172). 

(172) European Commission: Directorate-General for Environment, 
EMRC, Logika Group and RPA Europe; Update of the costs of 
not implementing EU environmental law, 2025, Link. 

70 

 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Malta 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19),  and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

71 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)90909080867571330-Share of energy-related emissions in industrial GHG emissions (2)19.823.127.628.430.823.7-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)53.462.686.385.791.560.5-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)70.266.860.660.858.276.476.342.843.9Energy intensity of manufacturing, GWh/€ (4)0.600.600.630.620.600.530.501.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)0.000.000.000.009.569.148.09--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 95            81            -                  158            229                   233           216             722             619             - chemicals and chemical products (NACE C20) -           160          185                 164            146                   145           144             --- other non-metallic mineral products (NACE C23) -           -           368                 296            523                   439           500             2,495           2,352          - basic metals (NACE C24) 20            8              7                     6                5                       5               5                 2,842           3,099          Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % 29.843.041.640.8- domestic road transport25.132.89.817.737.144.845.0-1.4-5.6- buildings10.120.26.08.530.313.56.2-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %1.01.31.51.41.4-19.0%42.1%29.7%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)3.493.653.877.9215.4020.3137.661.038.96Number of publicly accessible AC/DC charging points (8)--979512101120113446956n/aShare of electrified railways, % of total (9)-------55.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person10.912.111.611.611.911.410.714.813.7Circular material use rate, %8.3            12.5          16.2                 18.4           20.4                  19.5           18.611.612.2Resource productivity, €/kg2.2            2.4            2.1                   2.7             3.2                    3.7             3.42.13.0Employees in circular economy3.1            3.13.1                   3.5             2.7                    2.7             -2.12.0Patents in circular economy0-           -                  -            12.312.0Recycling rate           10.4             9.1                  10.9             13.6                    12.5             17.4 16.7            46.4048.1Plastic recyling 11%15%10%17%16%36%-41%42%Construction and demolition waste (CDW) recovery 100-1008889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR288283328341376274--0.8%642,438863,436Employment, total number of people employed9,0659,4679,5139,5379,87310,428-2.4%17,649,04017,085,642ProductivityValued added per worker, thousand EUR31.729.934.535.738.126.3--3.1%36.450.5Valued added per worker, % of national average63.659.270.464.266.341.9--62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)2234435.4%15,67223,335Total R&D business expenditure475055646578-8.7%196,587259,525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution0.00.1-----414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)-           no data-                  no data-                   no data-              no data Water chemical statusGood9                     Good (%)0.5                    Poor10.0Poor (%)50%EUTOCPhosporusMaltaMaltaCd, Hg, Ni, Pbnitrogen 
 
  
 
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

In  2025,  Malta  took  some  steps  to  improve 
interconnection  and  to  support  the 
its 
deployment  of 
renewable  energy,  but 
progress  remained  limited.  On  the  other  hand, 
its  final  energy  consumption  increased,  and  there 
were  no  steps  aimed  at  phasing  out  fossil  fuel 
subsidies. 

the  2025 

country-specific 
For  Malta, 
recommendations  highlighted  the  need  to 
accelerate  the  deployment  of  renewable 
energy by promoting large-scale projects and 
small-scale  investments  in  direct  energy 
production  and  consumption.  They  also 
highlighted the need to reduce energy demand by 
increasing  energy  efficiency  in  buildings.  They 
further  encouraged  Malta to  phase  out  fossil  fuel 
subsidies,  including  by  winding  down  emergency 
energy support measures. 

Energy prices and costs 

Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. 
(ii) For non-household consumers, the consumption band is ID 
for electricity and I4 for gas. VAT and recoverable charges are 
not displayed for non-household consumers as these are 
typically recovered by businesses. This also applies to the ‘% 
of taxes and levies’, which is shown excluding VAT and 
recoverable charges for non-household consumers. 
(iii) ‘Without taxes and levies’ indicates the retail price 
excluding all taxes and levies. It includes the energy/supply 
and network cost components, which are not disaggregated in 
Eurostat’s six-monthly price dataset. 
Source: Eurostat 

72 

in  first  half  of 

In the first half of 2025 Malta’s retail energy 
last  year’s  trend  and 
prices  followed 
decreased  slightly,  remaining  significantly 
below  the  EU  average.  Household  electricity 
the  year  averaged 
prices 
EUR 0.1244/kWh  (the  second  lowest  in  the  EU), 
while  industrial  prices  averaged  EUR 0.1176/kWh. 
For  large  businesses,  taxes  and  levies  (excluding 
VAT)  for  non-household  consumers  accounted  on 
average  for  only  1%  of  electricity  bills,  whereas 
for  household  consumers  all  taxes  and  levies 
made up 4.7% of the total bill (the fourth lowest in 
the EU) (173). 

Flexibility and electricity grids 

The  electricity  supply  market 
in  Malta 
remains closed, with Enemalta being the only 
electricity  supplier  on  the  island  and  few 
opportunities  for  consumer  empowerment. 
Given  this  market  set-up,  all  consumers  pay 
regulated  tariffs  and  customer  switching  cannot 
be  implemented  in  Malta.  In  terms  of  consumer 
empowerment, 93% of final household consumers 
had smart meters installed by 2024 (174).  

The  absence  of  a  liquid  wholesale  market 
hindered  the  liberalisation  of  the  electricity 
market,  the  development  of  demand-side 
response mechanisms and  other aggregation 
opportunities. About 10% of households in Malta 
produce  their  own  energy,  which  is  considerably 
higher than the proportion of prosumers in most of 
the  EU  Member  States (175).  Energy  communities 
have  not  yet  found  their  place  in  the  Maltese 
energy  system,  with  no  such  communities 
registered in Malta so far. 

The  flexibility  of  the  electricity  system  is 
limited.  The  concentration  of  the  renewable 
energy  on  one  technology  (solar),  combined  with 
the  lack  of  demand-side  measures  that  could 
allow to adjust consumption, puts pressure on the 
grid  and  creates  congestion.  Rising  summer 

(173) Analysis based on Eurostat data from the first half of 2025. 

(174) Source: ACER – Electricity country sheets – 2025 monitoring 

report. 

(175) Source: ACER – Electricity country sheets – 2025 monitoring 

report. 

 
 
 
 
 
 
 
temperatures driving extreme peaks create cooling 
demand  that  further  strain  the  Maltese  power 
system.  

Graph A9.2: Malta’s installed renewable capacity 
vs electricity generation mix 

In  2024,  electricity  accounted  for  40.9%  of 
Malta’s  final  energy  consumption,  above  the 
EU  average  of  23.4%,  and  this  percentage 
has increased slightly in the past decade (176). 
When it comes to households, electricity  accounts 
for  76.8%  of  final  energy  consumption,  while  in 
industry  it  represents  75.9%  (see  also  Annex  8). 
For  the  transport  sector,  this  share  remains 
in 
negligible, 
electrification across sectors is required in order to 
cost-effectively  decarbonise  the  economy  and 
bring 
renewable 
generation to consumers. 

the  benefits  of  affordable 

at  0.7%. 

progress 

Further 

Renewables and long-term contracts 

Malta  has  taken  some  steps  to  support  the 
renewable  energy,  but 
deployment  of 
progress 
remains  very  slow.  Renewable 
installed electricity production capacity in Malta in 
2025  (254  MW)  increased  by  5%  compared  to 
2024  (242  MW).  An  overwhelming  share  of  this 
total  installed  capacity  is  solar,  which  accounted 
for  250 MW  in  2025.  There  was  still  no  wind 
capacity  in  2025.  The  share  of  renewable  energy 
sources  (RESs)  in  Malta’s  electricity  mix  in  2025 
was  16.17% (177),  far  below  the  EU  overall  RES 
share (45%) and one of the lowest rates in the EU. 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

in  Annex 

Malta’s  contribution  towards 
its  target 
renewable  energy  share  in  2030,  24.5%,  is 
below the 28% objective calculated using the 
formula  set  out 
II  to  the 
Governance  Regulation.  Malta  plans  to  develop 
a large floating offshore wind farm by 2033 with 
installed capacity of 280 to 320 MW, which would 
more than double its installed RES capacity (178). A 
large offshore solar project  is also being planned, 
but 
implementation  has  not  yet  started. 
Furthermore,  2024  was  the  last  year  in  which 
Malta  released  a  forecast  for  the  allocation  of 
support  for  renewables  on  the  Union  Renewables 
Development Platform.  

its 

energy 
for 

sources 
of 

Renewable 
in  Malta 
electricity 
16.2% 
accounted 
generation  in  2025,  an  increase  of  0.5 
percentage  points  compared  to  the  previous 
year  (15.7%  in  2024).  The  active  renewable 
generation  sources  were  solar  (15.7%  of  total 
electricity  generation)  and  biomass/combustible 
renewable 
(0.4%),  with  no  wind  or 
hydropower generation recorded.  

fuels 

(176)CAGR  (compound  annual  growth  rate)  of  0.44%  between 
2015  and  2024  and  minimum/maximum  share  of  39.0%  and 
40.9% respectively (source: Eurostat). 

(177) Yearly electricity data, Ember.  

(178) Following  the  publication  of  the  preliminary  qualification 
questionnaire  (PQQ)  in  December  2024,  three  offers  were 
submitted by the deadline in July 2025. The evaluation has 
started  and  will  include  a  due  diligence  check,  which  is 
expected to continue in 2026. 

73 

 
 
 
 
 
 
through 

resilience  plan 

Under  a  reform  supported  by  its  recovery 
(RRP),  Malta  has 
and 
introduced  new  mandatory  requirements  for 
on-site  renewable  energy  generation 
in 
residential  and  non-residential  buildings, 
including 
installation  of 
photovoltaic  (PV)  systems  (demonstrating 
increased efforts to utilise available rooftop 
space). The introduction of these requirements in 
the  updated  version  of  Technical  Document  F 
(containing  minimum  energy  performance  and 
building  envelope  requirements)  is  a  step  in  the 
right direction. 

the 

The  government  has  introduced  a  scheme 
aimed  at  promoting  the  voluntary  adoption 
of renewable energy by organisations. Eligible 
entities  were  given  the  opportunity  to  receive  a 
fully funded PV system for their facilities. 

renewed, 

giving  applicants 

The  solar  water  heater  grant  scheme  has 
been 
the 
opportunity  to  claim  up  to  75%  of  the  total 
eligible cost, up to a maximum of EUR 1 400. 
An  additional  grant  of  EUR 500  is  provided  after 
five  years  to  cover  maintenance  costs.  The  heat 
pump  water  heater  scheme  aims  to  provide  an 
alternative  technology  to  solar  water  heaters, 
especially  for  households  which  do  not  have  an 
available  roof  area.  As  well  as  increasing  its 
support  for  these  investments,  the  government 
has also simplified the application process. 

has 

permitting 

framework 

The 
been 
reviewed, partly through the reform included 
in  Malta’s  RRP.  A  system  of 
fast-track 
permitting,  in  the  form  of  a  notification  process, 
was  adopted  by  the  regulator  (REWS)  for  PV 
systems  of  less  than  or  equal  to  16 amps  per 
phase, or 20 amps per phase if system is equipped 
with  enabled  volt-var  inverters,  to  facilitate  the 
installation  of  such  systems  and  their  connection 
to  the  grid.  Malta  has  also  adopted  a  simplified 
procedure for repowered systems. 

A  one-stop  shop  could  facilitate  procedures 
and  reduce  the  number  of  authorities 
involved.  Malta  has  already  developed  two 
functioning electronic portals for that purpose. 

Energy efficiency 

Malta made no progress in terms of reducing 
its  energy  consumption,  despite  some 
measures  aimed  at 
increasing  energy 
efficiency.  In  2024  final  energy  consumption 
(FEC)  increased  slightly  compared  to  2023,  to 
0.742 Mtoe,  continuing  the  increasing  trend  since 
2019 (179).  Malta’s  FEC  in  2024  was  in  line  with 
the trajectory to its expected contribution in 2030. 
While  in  industry  FEC  has  decreased  since  2019 
(− 7.8%), 
in  energy 
consumption  over  the  same  period  for  services 
(+ 4.9%),  transport  (+ 7.9%)  and  the  residential 
sector  (+ 15.0%).  At  the  same  time,  the  energy 
intensity  of  the  Maltese  economy  reduced  by 
19.6% between 2019 and 2024 (180), and the FEC 
per capita also decreased by 7.3%. 

there  was  an 

increase 

in 

the 

Malta’s  significant  increase  in  final  energy 
consumption 
residential  sector 
between  2019  and  2024  contrasts  with  its 
long-term  renovation  strategy  (LTRS),  which 
indicates  a  reduction  of  18%  by  2030.  The 
observed increase has been driven by a rise in the 
number  of  dwellings,  among  other  factors (181). 
The  ‘Renovate  your  Home’  support  scheme  is  a 
step  in  the  right  direction,  but  that  relatively  few 
dwellings have benefited from it (800 dwellings in 
2025)  Malta  has  not  yet  submitted  its  draft 
national  building  renovation  plan  pursuant  to  the 
recast  Energy  Performance  of  Buildings  Directive 
(EPBD)  or  provided  a  clear  and  predictable 
energy-efficient  and 
pathway 
decarbonised building stock. 

towards  an 

In  Malta  31.2%  of  the  energy  consumed  is 
used  in  buildings.  Heating  and  cooling  account 
for  57%  of  the  country’s  residential  final  energy 
consumption,  with  renewables  supplying  59%  of 
the total energy used for heating and cooling in all 
sectors.  Approximately  60 000  aerothermal  heat 
pumps were sold in 2023, taking the total stock of 
installed heat pumps to around 600 000. Financial 

(179) This is in contrast to the general trend in the EU: final energy 
consumption in the EU-27 decreased by 7.6% between 2019 
and 2024. 

(180) While FEC increased by 6%, GDP increased by 31.9% in    

real terms. 

(181) Source: https://www.indicators.odyssee-

mure.eu/decomposition.html. 

74 

 
 
subsidies  are  available  for  up  to  50%  of  the  cost 
of heat pumps, capped at EUR 1 000. 

Security of supply and diversification 

link  with 

Malta  is  currently  interconnected  with  the 
European  electricity  grid  through  a  single 
Italy, 
submarine  power  cable 
providing an interconnection rate of 35.86%. 
The  total  dependence  on  the  single  subsea 
interconnector  with  Sicily  for  external  supply  is  a 
vulnerability  of  Malta’s  power  system.  To  further 
increase  the  security  of  electricity  supply  in  the 
country,  a  decision  was  taken  to  invest,  with 
support from the European Regional Development 
Fund,  in  a  second  225 MW  electricity  subsea  link 
with Italy (Sicily). This second cable link connecting 
the existing Magħtab terminal station and Ragusa 
terminal station is expected to be commissioned in 
2026.  It  will  contribute  to  long-term  security  of 
supply  and  allow  for  the  integration  of  a  higher 
share of renewable energy sources. 

Malta  is  considering  a  new  hydrogen-ready 
gas interconnector with Italy, which would be 
capable of transmitting 100% hydrogen from 
its  commissioning  date.  Malta  is  benefitting 
from  an  exemption  under  Article  24  of  the  TEN-
E Regulation and this continues to be  a project of 
common interest in the second Union list under the 
revised Regulation. 

Malta is taking some steps to strengthen its 
national grid. Through its RRP, Malta is investing 
in  its  electricity  distribution  network,  through 
investments in cables and distribution services. 

In  2025, Malta  did  not depend on  Russia  for 
its  imports  of  natural  gas.  Malta  is  the  only 
Member  State  whose  natural  gas  demand 
increased between August 2022 and July 2024, by 
7%,  compared  to  the  average  gas  demand 
between  2017  and  2021,  mainly  due  to  the 
shifting  of  demand  from  the  interconnector  to 
local electricity generation. However, between April 
consumption 
and 
decreased by 3.75%. 

July  2024,  Malta’s  gas 

Malta’s  energy  mix  (182)  shifted  slightly 
towards natural gas and renewables in 2024. 
The share of natural gas was  35.6% in that year, 
while  renewables  and  biofuels  rose  to  8.3%.  Oil 
and  petroleum  products  remained  the  dominant 
source increasing slightly, to 56.2%. 

In  response to  rising  energy prices  following 
the  regional  crisis  in  the  Middle  East,  Malta 
has  retained  existing  energy  subsidies  as 
part of its commitment to shelter households 
and firms from price surges.  

Fossil fuel subsidies 

Malta  has  taken  no  measure  to  address  the 
2025  CSR  on  phasing  out  fossil  fuel 
subsidies.  In  2024,  environmentally  harmful (183) 
fossil  fuel  subsidies  without  a  planned  phaseout 
before  2030  represented  1.2% (184)  of  Malta’s 
GDP (185),  remaining  the  highest  rate  in  the  EU 
(above  the  EU  weighted  average  of  0.32%). 
Subsidies to electricity, petrol and diesel remain in 
place  as  fossil  fuel  subsidies  without  a  planned 
phaseout  date,  which  do  not  specifically  address, 
in  a  targeted  way,  energy  poverty  or  genuine 
energy  security  concerns.  Additionally,  Malta’s 
2023 effective carbon rate (186) averaged EUR 75.9 
per  tonne  of  CO₂  –  below  the  EU  weighted  mean 
of EUR 84.80. 

(182) Gross inland consumption (Eurostat). Electricity and heat are 
excluded  in  order  to  avoid  double-counting.  The  focus  is  on 
primary energy sources. 

(183) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil  fuel  subsidies  (i.e.  tax  expenditures  linked  to  forgone 
tax  revenues  that  have  an  identifiable  fiscal  impact  for  the 
central  budget)  that  support  fossil  fuel  energy  production, 
transmission and/or consumption.  

(184) European  Commission  calculation  based  on  underlying  data 
from  the  Study  on  energy  subsidies  and  other  government 
interventions in the EU – 2025 edition, Enerdata. 

(185) 2024 gross domestic product at market prices, Eurostat. 

(186) The  effective  carbon  rate  is  the  sum  of  carbon  taxes,  ETS 
permit  prices  and  fuel  excise  taxes,  representing  the 
aggregate effective carbon rate paid on emissions. 

75 

 
 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

Considerable work remains to be done in the 
area of climate adaptation. Malta is one of the 
EU Member States most exposed to climate risks. 
While  Malta  has  made  some  progress,  namely  by 
setting up a dedicated institutional framework, and 
there  are  some  promising  ongoing  projects, 
concrete implementation of the adaptation related 
is  still  far  from  being  achieved, 
measures 
sustainable  water 
as 
especially 
management  and  transport  vulnerability.  Malta 
continues 
environmental 
challenges  related  to  water  scarcity  and  water 
quality,  due  primarily  to  diffuse  pollution  from 
unsustainable  agriculture  practices;  untreated 
urban  wastewater;  a  high  level  of  landfilling  of 
waste; 
increasing  sealed,  artificially  modified 
and/or degraded soil due to excessive construction 
resulting 
illegal 
trapping and hunting of protected bird species 

in  habitat  degradation;  and 

concerns 

serious 

face 

to 

Climate adaptation and preparedness 

Malta  is  one  of  the  EU  Member  States  most 
exposed  to  climate  risks.  as  it  becomes 
increasingly  subject  to  heatwaves,  droughts, 
floods and wildfires, which have a direct impact 
on  its  society  and  economy.  Malta  is  included  in 
two of the three regions identified as hotspots for 
climate risks, meaning that they are most affected 
by  climate  change  –  Southern  Europe  and  low-
lying coastal regions. Malta faces multiple climate-
related  challenges  as  it  is  exposed  to  extreme 
weather  events.  As  an  example,  Storm  Harry  in 
mid-January 2026 caused widespread damage to 
infrastructure  and  economic  activities,  in  addition 
to  threatening  public  safety.  If  current  levels  of 
increased,  direct 
coastal  protection  are  not 
economic  damages  and  social 
impacts  from 
coastal  flooding  in  Malta  are  projected  to  rise 
sharply. 

Although  adaptation  strategies  have  been 
drawn  up  recently,  much  clearly  remains  to 
be  done.  A  recent  study  commissioned  by  the 
Commission’s  Directorate-General  for  Climate 
Action (187) estimates that Malta will need to invest 

in 

first  and 

almost  EUR 56  million  per  year  (0.2%  of  annual 
GDP,  significantly  lower  than  the  EU  average, 
0.5%): 
infrastructure 
foremost 
retrofitting  and reinforcement (more than 60% of 
the total), followed by  health (around 25% of the 
total),  while  investments  in  the  resilience  of 
ecosystems,  restorations  and  agriculture  play  a 
smaller  role  compared  to  other  Member  States. 
Malta  makes  use  of  several  EU  funds  to  improve 
its  preparedness,  such  as  the  European  Regional 
Development  Fund 
(ERDF)  and  the  common 
agricultural policy (CAP) strategic plan. 

adaptation 

Malta’s  institutional  framework  for  climate 
change 
involves  multiple 
stakeholders at both central and local levels, 
including  a  dedicated  body,  the  Climate 
Action  Authority  (CAA).  Malta  aims  to  increase 
mitigation and adaptive capacity by understanding 
the  available  climate  data  and  working  to  bridge 
existing  gaps.  This  is  currently  being  achieved 
through  multiple  ongoing  projects,  such  as  the 
Common  Coast  project,  launched  in  March  2024 
and  funded  by  the  EU’s  Technical  Support 
level, 
Instrument.  Looking  at  the  subnational 
although  some  mayors  have  signed  the  2020 
commitment  to  join  the  framework  of  the  EU 
Covenant of Mayors, none of them has committed 
to work on adaptation to date. 

Several  national  policy  measures  related  to 
adaptation  and  preparedness  have  been 
implemented over recent years. Malta’s recent 
national energy and climate plan (NECP) developed 
its  pathway  towards  2050,  looking  into  climate 
change  mitigation  and  adaptation  aspects.  The 
vulnerability  risk  assessment  (VRA)  has  been 
concluded,  and the Climate Action Authority (CAA) 
is  preparing  a  national  plan  for  climate  resilience 
(NRP)  for  the  government’s  approval,  which  will 
focus  on:  agriculture  and  fisheries,  arts  and 
entertainment, construction, energy, human health, 
tourism,  transport,  manufacturing,  water  services, 
waste, and wholesale and retail trade. In the third 
quarter of 2025, the CAA conducted a preliminary 
(PMC)  to  gather  market 
market  consultation 
intelligence,  understand 
industry  capacity  and 
assess  the  availability  of  specialised  expertise 
needed  for  the  NRP’s  development.  A  tender  will 

(187) European Commission (2026), Assessment of EU and 

Member States adaptation investment needs, Table 25,  
Link. The study provides detailed estimates of adaptation 
investment needs at the level of the EU and individual 
Member States per type of measure. It relies on a common 

methodology that makes estimates comparable across the 
EU. Four accompanying methodological reports provide a 
detailed description of how the results were estimated to 
ensure full transparency. 

76 

 
 
 
 
 
 
be  issued  to  the  purpose,  which  will  follow  the 
United  Nations  Framework  Convention  on  Climate 
Change 
recent 
(UNFCCC)  guidelines.  Despite 
progress,  significant  work  remains  to  be  done  to 
bring  Malta’s  adaptation  frameworks,  policies, 
planning  and  implementation  up  to  the  required 
level of maturity. 

The  insurance  penetration  in  Malta  is  below 
(coastal 
50%  for  climate-related  perils 
flood,  earthquake,  wildfire,  windstorm  and 
floods).  Based on the most recent data from the 
EIOPA Dashboard for the insurance protection gap 
(188)  the  climate  risk  in  the  Islands,  although 
scoring  1.5  on  a  scale  from  1  to  4,  is  judged 
relevant.  Malta  Financial  Services  Authority  is 
pushing  financial  institutions  to  manage  climate-
related  risks  by  incorporating  them  into  risk 
(189)  and 
registers,  assessing  physical 
strengthening resilience strategies. 

risks 

infrastructure 

The  Maltese  transport 
is 
highly  vulnerable  to  climate-related  risks. 
The  transport  vulnerability  index  of  the  TEN-T 
network  to  climate  change  for  Malta  has  been 
assessed  to  be  one  of  the  highest  in  the  EU, 
scoring  0.42.  This  is  mainly  driven  by  the  lack  of 
general  preparedness 
the 
transport  sector,  the  quality  of  the  transport 
infrastructure,  and 
inadequate  economic  and 
institutional  capacity  (190).  The  highest  costs  are 
expected  for  adaptation  to  coastal  floods  and 
heatwaves.  Estimates  show  that  in  total  EUR 418 
million  will  need  to  be  invested  by  the  middle  of 
the century in TEN-T mostly in maritime ports (EUR 
340 million), followed by roads and airports. There 
are no railways in Malta. 

to  adaptation  of 

There  is  scope  to  tap  into  nature-based 
solutions  more  widely  and  systematically. 
Nature-based solutions and prevention play  a key 
role  in  increasing  resilience,  but  so  far,  they  have 
not been deployed at large scale and widely across 
sectors in Malta. However, two EU-funded projects 

(188) Dashboard on insurance protection gap for natural 

catastrophes - European Insurance and Occupational 
Pensions Authority. 

(189) https://www.mfsa.mt/news-item/mfsa-urges-banks-to-
strengthen-climate-related-and-environmental-risk-
management/. 

(190) Support study on the climate adaptation and cross-border 

investment needs to realise the TEN-T network. Publications 
Office of the European Union, 2024, Link.  

77 

‘Renature’ (191) and the Life Integrated Project (192), 
are  advancing  Nature-based  Solutions  (NbS)  in 
Malta  to  restore  ecosystems  and  improve  water 
management.  

Water resilience 

Malta’s  natural  water  supplies  are  not 
sufficient,  even  if  used  sustainably.  Malta  is 
facing  water  scarcity,  as  evidenced  by  the 
Seasonal Water Exploitation Index +. In 2023, this 
index  reached  66.7%  which  is  above  the  20% 
generally  considered  as  a  sign  of  scarcity  in  the 
third quarter of the year. Above 40%, it would be a 
sign of severe scarcity (193) (see Annex 19). Despite 
this  concerning  situation,  water  productivity  in 
Malta  stands  well  above  the  EU-27  average, 
suggesting that the economy has already adapted 
significantly to sustained water scarcity (194). 

Malta’s  population,  agriculture,  tourism,  the 
energy  sector  and  therefore  the  overall 
economy  rely  heavily  on  the  availability  of 
freshwater.  Malta’s  semi-arid  Mediterranean 
climate,  high  (and  increasing)  population  density, 
and  limited  land  area  combine  to  make  the 
development of economically viable surface water 
resources  particularly  challenging.  According  to 
Malta’s 
third  River  Basin  Management  Plan 
(RBMP), only 58% of the number of surface water 
bodies  achieve  good  ecological  status.  Main 
pressures  are  discharges  not  connected  to  the 
sewerage  network,  as  well  as  agricultural 
activities. Good  chemical  status  of  the  number  of 
surface  water  bodies  has  fallen  from  52.6%  to 
45%  between  the  second  and  third  river  basin 
management plan (RBMP). Concerning the area of 
Malta’s  groundwater  bodies,  all  100%  is  in  poor 
chemical  status,  and  82%  is  failing  to  achieve  a 
good quantitative status. 

The  natural  water  cycle 
increasingly 
unable  to  match  freshwater  demand.  The 
resulting water scarcity affects water users across 

is 

(191) ReNature: https://www.renature-project.eu/. 

(192) Life Integrated Project: https://www.rbmplife.org.mt/. 

(193) https://www.eea.europa.eu/en/analysis/indicators/use-of-

freshwater-resources-in-europe-1.  

(194) [env_wat_abs] Annual freshwater abstraction by source and 

sector. 

 
 
 
 
the  economy.  Rising  temperatures,  low  annual 
rainfall  precipitation  and  an  increase  in  high-
intensity  rainfall  events  have  weakened  Malta’s 
natural  water  supplies.  Furthermore,  the  fall  in 
household  rainwater  reservoirs  in  use  and  the 
increase  in  impermeable  surfaces  (roads,  roofs) 
has reduced rainwater infiltration for groundwater 
recharge  and  has  increased  stormwater  runoff  to 
the sea. To address this challenge, Malta needs to 
increase  rainwater  retention,  preferably  with  NbS. 
Some  measures  are  planned  in  the  2022-2027 
RBMP  cycle,  co-financed  by  EU  LIFE.  Furthermore, 
the  diffuse  pollution  both  from  urban  areas  and 
from  agriculture  (nitrates  and  pesticides)  as  well 
as the saline intrusion in groundwater due to over-
abstraction,  further  reducing  this  water  source’s 
is  a 
availability.  Desalination  of  seawater 
significant source of water supply (see Annex 19). 

Wastewater  treatment  remains  a  pressing 
issue. Malta has three agglomerations covered by 
the Urban Wastewater Treatment Directive, two of 
which still have compliance issues, concerning the 
low proportion of households connected to at least 
secondary  urban  wastewater  treatment plants.  To 
address the  situation,  Malta  plans  to  increase  the 
capacity  of  its  wastewater  treatment  plants  and 
disconnect  farmyard  wastewater  by  2026  (195). 
These efforts are partly supported by EU funds. 

Malta’s  third  River  Basin  management  Plan 
(RBMP)  shows  that  the  most  significant 
water  challenge 
is  water  scarcity.  For 
groundwater  resources,  abstractions  for  public 
water  supply  occur  in  27%  of  the  groundwater 
bodies.  All  groundwater  bodies  are  utilised,  to 
varying extents, for agricultural water supply. As a 
result  of  these  pressures,  13%  of  groundwater 
bodies exhibit a lowering of the water table, while 
80%  are  impacted  by  saline  intrusion.  For  the 
implementation of the Floods Directive (FD), Malta 
has  updated  the  Flood  Risk  Management  Plan 
(FRMP), that includes NbS like green infrastructure 
and  sustainable  drainage  systems,  as  well  as  a 
national  Flood  Hazard  and  Risk  Map  (FHRM)  and 
also maps with higher resolution for each area of 
potential  significant  flood  risk.  In  the  FRMP,  there 
is  room  for  improvement  of  the  links  to  climate 
change,  explanation  of  objectives  and  estimation 

(195) MINISTRY  FOR  THE  ENVIRONMENT,  ENERGY  AND  PUBLIC 
CLEANLINESS  AND  THE  MINISTRY  FOR  EUROPEAN  FUNDS 
AND  IMPLEMENTATION  OF  THE  ELECTORAL  PROGRAMME 
€86  million  EU  funding  granted  to  upgrade  Malta’s  water 
and wastewater infrastructure. 

of  costs.  Concerning  the  FHRM  there  is  room  for 
improvement  of  the  information  and  accessibility 
for the public. 

The annual water investment needs reach an 
estimated  EUR  61 million  (in 2022 prices) in 
Malta.  This  comprises investment  needs  both  for 
the  water  industry  and  for  the protection  and the 
management  of  water.  Of  the  total  annual  need, 
EUR  13  million  relates  to  the  management  of 
wastewater. A further EUR 25 million is necessary 
for drinking-water-related investments and around 
the  protection  and 
EUR  23  million 
management  of  water  (196).  In  the  programming 
period  2021-2027,  EUR 85  million  from  cohesion 
policy  funds  have  been  allocated  to  supporting 
sustainable water and wastewater management in 
Malta (197). 

for 

Nature restoration 

Malta’s  economy  is  structurally  exposed  to 
nature  loss  because  it  is  among  the  EU 
Member  States  with  the  highest  dependency 
on ecosystem services (198). Half of gross value 
added (GVA)  relies directly on ecosystem (50%)  – 
above the EU average of 44%. This vulnerability is 
particularly  acute  in  the  agriculture,  fisheries, 
aquaculture,  construction  and  water  utilities 
sectors,  which  depend  directly  on  healthy 
terrestrial and marine ecosystems (199). 

Despite Malta’s rich biodiversity, reflected in 
the 28.7% (200) of its territory designated as 
protected  areas,  habitat  degradation 
is 
increasingly  widespread.  The  quality  of  the 
biodiversity  with  shared  fish  stocks  in  the  Central 
Mediterranean  remain  overfished  (201).  Enhanced 

(196) Environmental Implementation Review - Environment - 

European Commission. 

(197) cohesiondata.ec.europa.eu. 

(198) Hirschbuehl  et  al.  (JRC),  The  EU  economy`s  dependency  on 
European 

VASILAKOPOULOS, 

editor(s), 

P. 

nature, 
Commission, (2025).  

(199) Hirschbuehl  et  al.  (JRC),  The  EU  economy`s  dependency  on 
European 

VASILAKOPOULOS, 

editor(s), 

P. 

nature, 
Commission, (2025).  

(200) Protected areas and birds - Environment - Eurostat. 

(201) European  Commission,  2025,  Common  Fisheries  Policy 

Monitoring, STECF-Adhoc-25-01, Link. 

78 

 
 
 
data  collection,  monitoring  and  fisheries  control, 
combined with ecosystem-based management, are 
essential to safeguard long-term fisheries viability. 
The 
illegal 
trapping  and  killing  of  protected  species  remains 
one of the main challenges in Malta and a matter 
of concern. 

long-standing  situation 

regarding 

Nature  degradation  is  further  amplified  by 
invasive alien species. 9 recorded invasive alien 
species  in  Malta  in  2024  (202),  have  inflicted 
estimated damages of EUR 80 million up to 2020, 
primarily  affecting  agriculture  and  public  health 
(203). At the same time, eutrophication, a threat to 
biodiversity  and  ecosystem  integrity,  stalled  at 
99%  since  2005  (204).  Nitrogen  deposition  from 
agriculture  remains  a  critical  driver  of  this 
degradation. Furthermore, Malta continues to face 
an  estimated  EUR 5  million  shortfall  in  funding 
designed  to  address  conservation  priorities.  Over 
EUR 30  million  from  cohesion  policy  funds  in 
2021-2027  (disregarding  ESF+)  are  specifically 
earmarked to support biodiversity actions (205). 

Sustainable agriculture and land use 

Malta’s carbon removals fall slightly short of 
the  level  of  ambition  needed  to  meet  its 
2030  target  for  land  use,  land-use  change 
and  forestry  (LULUCF).  To  meet  it,  additional 
carbon removals of –0, 002 million tonnes of CO2 
equivalent  (CO2eq)  are  needed  (206).  The  latest 
available  projections  show  a  slight  gap  to  2030 
(207).  Additional  measures  are  therefore  needed in 
the  land  sector  to  reach  the  2030  target.  In 
addition  to 
increasing  LULUCF  net  removals, 
further  investment  in  healthy  forests  and  soils  is 

(202) European Commission, 2025, Environmental Implementation 

Review, Malta Country Report, Link. 

(203) Neobiota,  Economic  Cost  of  invasive  alien  species  across 
Europe  (2021).  European  Commission:  Directorate-General 
for  Environment,  EMRC,  Logika  Group  and  RPA  Europe; 
Update  of  the  costs  of  not  implementing  EU  environmental 
law (2025).  

(204) EEA,  Eutrophication  caused  by  atmospheric  nitrogen 

deposition in Europe 2024.  

(205) See footnote 185. 

key  to  building  resilient,  biobased  product  value 
chains  and  enabling  a  growing,  competitive  EU 
bioeconomy. In particular, continued improvements 
in the monitoring system of net removal data and 
projections  will  play  a  crucial  role  in  supporting 
timely and effective action in the sector. 

In  2024,  only  0.77%  of  Malta’s  land  area  was 
under organic farming, which is the worst result in 
the  EU  (208).  Malta’s  action  plan  for  organic  food 
2023–2030  specifies  a  national  target  of  5  %  of 
utilised  agricultural  area  being  converted  to 
organic  production  by  2030  and  aims  to  increase 
organic  aquaculture  by  the  same  year  (209)  The 
plan  also  encourages  farmers  to  adopt  a  more 
sustainable  approach  to  pest  control  to  enhance 
and restore biodiversity and to recover soil health 
and quality. Given Malta’s water scarcity, the plan 
is  intended  to  support  investments  in  water 
capture,  storage  and  distribution  systems.  On  the 
other  hand,  sealed,  artificially  modified  and/or 
degraded soil continues to increase in Malta due to 
excessive  construction.  This,  together  with  the 
environmental  pressures  on  the  relatively  small 
number  of  forested  areas  on  the  islands  –  only 
17%  have  a  favourable  conservation  status  – 
makes 
in  Malta 
unsustainable. 

the  situation  of  nature 

Water  quality  pressures  are  intensifying, 
ranking among the worst in the EU. In relation 
to  the  EU  Nitrates  Directive,  more  than  95%  of 
Malta’s  groundwater  monitoring  stations  recorded 
average  nitrate  concentrations  exceeding  25 mg/l 
(and  63.6%  above  50 mg/l,  the  EU  threshold  for 
safe drinking water) between 2016 and 2019 (210). 
This 
trend  underscores  systemic  agricultural 
pressures  due  to  Malta’s  high  livestock  density–
3.27  livestock  units  per  hectare  in  2023  (211), 
compared  to  the  EU  average  of  0.75.  A  14% 
in  agricultural  ammonia  emissions 
increase 
(212)  underscores 
between  2018  and  2023 
regression  in  emission  control  in  Malta  (213)  to 

(208) [sdg_02_40] Area under organic farming. 

(209) Environmental 

Implementation  Review  -  Environment  - 

European Commission. 

(210) EEA, Nitrate in groundwater in Europe, 2025. Link. 

(211) Eurostat, Livestock density index. Link. 

(212) EEA, Air pollutant emissions data viewer (Gothenburg 

Protocol, Air Convention) 1990-2023. 

(206) National  LULUCF  targets  of  the  Member  States  in  line  with 

Regulation (EU) 2023/839 Link. 

(207) Climate action progress report 2025. Link. 

(213) EEA, Magnitude of emission reductions (percentage) required 
by EU Member States to meet their emission reduction 
commitments for 2030 onwards, based on 2023 data, 2025.  

79 

 
 
 
meet its reduction commitments to be achieved by 
persists, 
nitrate 
2030.  However, 
indicating gaps in nutrient management strategies. 

pollution 

to 

Pesticide contamination in soil is not an issue 
in  Malta.  However,  contamination  in  surface 
water  and  groundwater,  especially  by 
nitrates stemming from agriculture activities 
the 
remains  a  challenge.  According 
Commission  recommendations  for  Malta’s  CAP 
strategic  plan,  the  share  of  ammonia  emissions 
from  agriculture  in  the  country  is  still  relatively 
high, and Malta has been found to be at high risk 
of non-compliance with its commitments to reduce 
ammonia emissions. Malta had a high surplus for 
nitrogen and phosphorus from 2000 to 2015 and 
is  one  of  the  Member  States  facing  the  greatest 
challenges  in  tackling  nutrient  pollution  from 
agriculture. Malta has not provided information to 
the  Commission  about  the  contribution  of  its 
agriculture  to  nitrogen  discharges  in  the  aquatic 
environment  for  the  2016-2019  reporting  period. 
the  greatest 
the  data  available, 
Based  on 
contributor 
is 
soils 
to  Malta’s  unhealthy 
unsustainable  soil  erosion  by  water,  wind,  tillage 
and harvest, which affects 97% of cropland area. 
18% of the country experiences soil sealing above 
50% imperviousness (214). 

(214) European  Commission,  2023,  Staff  Working  Document: 
Impact assessment report accompanying the proposal for a 
Directive  of  the  European  Parliament  and  of  the  Council  on 
Soil Monitoring and Resilience (Soil Monitoring Law), Link.  

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A10.1:Key Adaptation Indicators 

(1) EFFIS (European Forest Fire Information System). Link. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on modelling of the risk from floods, 
wildfires and windstorms and on the insurance penetration rate. Scale: 0 (no protection gap) – 4 (very high gap). EIOPA, 2025, Dashboard on insurance protection gap 
for natural catastrophes. 
(3) This measures total water consumption as a percentage of the renewable freshwater resources available for a given territory and period. Values above 20% are 
generally considered to be a sign of water scarcity, while values equal to or greater than 40% indicate severe water scarcity. 
(4) European Commission, 2024, Seventh Implementation Report from the Commission to the Council and the European Parliament on the implementation of the 
Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third River Basin Management Plans and Second Flood Risk Management Plans). 
(5) Indicator refers to concentrations of nitrate (NO3) in groundwater, measured as milligrams per litre (mgNO3/L). Nitrate can persist in groundwater for a long time 
and accumulate at a high level through inputs from anthropogenic sources (mainly agriculture). The EU drinking water standard is limited to 50 mgNO3/L to avoid 
threats to human health. 
(6) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2025 greenhouse gas inventory submission. 2030 
value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA and JRC. 

81 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems000.3200-2.76[area impacted by drought as % of total]Forest fires burned area (1)-          34            -          -          -          -           354 510     [burned area in ha. per year]Economic losses from extreme events28            -          -          -          2              -           40 452       [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1               -[composite score between 0 and 4]Sub-national climate adaptation action-          -          -          -          -          -           34               [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)27.14       38.04       28.86       36.73       30.08       -4.53            [total water consumption as % of renewable freshwater resources]Water productivity291          277          328          364          398          -151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)7.25%7.17%7.47%8.08%7.99%-Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 47.70%16.71%2.42%33.17%0.00%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----58%38%Groundwater bodies (quantitative)-----73%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---50%--44%[% of direct dependency]Protected area2929292928.726.4[% of terrestrial protected areas]Invasive alien species (IAS)-----929.2[number of IAS of Union concern]Damage cost of IAS----0.081.69[EUR billion]Eutrophication 581581295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State604          554          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land47%Complex and mixed cultivation0%Forests0%Herbaceous vegetation associations27%Open spaces with little or no vegetation11%Pastures15%Permanent crops0%Water0%Wetlands0%201920202021202220232024latest dataNitrates in groundwater (5)::::[mgNO₃/l]Livestock density3.273.270.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 93%93%92%93%91%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers0%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakesn.d.18%Pesticide contamination in soil 0%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (6)6.18.60.60.81.0--198 421 [ktCO₂-eq] 
 
        
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

Malta’s  labour  market  continues  to  perform 
strongly,  but  challenges  persist.  Labour 
demand  remains  high,  but  labour  shortages  are 
rising.  Shortages  are  increasingly  met  through 
reliance on third-country nationals (TCNs) to meet 
demand,  and  staff  turnover  is  elevated.  Job 
quality,  including  workplace  safety,  remains  a 
concern,  exacerbated  by  limited  labour  inspection 
capacity  and  gaps  in  social  dialogue.  Significant 
gender  and  disability  employment  gaps  also 
remain.  While  efforts  are  needed  to  respond  to 
these  challenges,  Malta  is  on  track  to  reach  its 
2030 national employment rate target. 

low 

and 

showcases 

labour  market 

high 
The 
employment 
unemployment. 
Employment  remains  robust  across  key  sectors, 
tourism  and  hospitality, 
including 
financial 
iGaming,  as  well  as  electronics, 
services, 
(215). 
pharmaceuticals  and 
In  2025,  the 
ICT 
employment  rate  reached  83.6%,  among  the 
highest in the EU (vs EU: 76.1%), reflecting steady 
progress  towards  the  2030  national  target  of 
84.6%. Youth employment rates (15-29), however, 
decreased  sharply  by  2.2 pps  to  68.4%  (vs  EU: 
49.1%).  Overall  labour  market  participation  (15-
64) continued its increase from 76.0% in 2020 to 
82.6%  in  2025,  driven  by  rising  employment 
among native workers and continued immigration. 
At  the  same  time,  labour  market  participation  of 
young  people  fell,  just  as  their  employment  rate, 
by 2.2 pps, to 72.8% in 2025. There is also a small 
increase in the proportion of young people neither 
in  employment  nor  in  education  and  training 
(NEETs),  by  1.3 pps  to  8.5%,  while  remaining 
below 
The 
average 
unemployment rate (15-74) fell to 3.1% in 2025, 
with  long-term  unemployment  at  0.6%,  both 
among the lowest in the EU (vs EU 6.0% and 1.9%, 
respectively). Labour market slack declined further 
to  4.9%  in  2025,  well  below  the  EU  average  of 
11.7%.  This  decrease  was  mainly  due  to  the 
reduction  in  the  share  of  those  underemployed 
working  part-time.  The  overall  positive  labour 
market  outcomes  have  also  been  sustained  by 
increased participation of third-country nationals.  

of  11.0% 

the 

EU 

Recent  demographic  expansion  has  been 
largely  driven  by  labour-related  migration, 
third-country  nationals. 
particularly  of 

(215) Government of Malta, Economic Survey, 2025. 

82 

Between  2015  and  2025,  Malta  recorded  the 
largest relative population increase in the EU, with 
the  population  growing  by  34%  to  574 250 
inhabitants. This growth has been largely driven by 
a  sharp  rise  in  the  foreign-resident  population, 
from  6%  in  2013  to  28%  in  2024  (216).  In  2024, 
TCNs represented 20% of the population, while EU 
mobile workers accounted for 8%. 

(TCNs) 

barriers, 

job  security, 

including  weak 

Third-country 
face 
nationals 
significant and multidimensional employment 
challenges.  TCNs  often  experience  poorer  labour 
conditions, 
long 
working hours, restricted career progression, lower 
health  and  safety  standards,  and  limited  rights  in 
case  of  loss  of  employment.  Their  in-work  at  risk 
of poverty rate is also high at 17.3% compared to 
Maltese nationals (5.4%). TCNs also present lower 
wages  and  limited  trade  union  representation. 
TCNs 
frequently  depend  on  employers  or 
employment  agencies  for  their  residence  status. 
is  further  constrained  by 
Their  participation 
of 
language 
qualifications  and  discrimination 
The 
regulatory  framework  has  evolved  with  the  2025 
Labour  Migration  Policy, 
introducing,  amongst 
others,  longer  grace  periods,  mandatory  salary 
payments 
institutions  and 
workforce application limits (where employers are 
eligible  to  apply  for  additional  TCNs  based  on  a 
fixed  percentage  of  their  workforce).  The  Skills 
Pass,  currently  mandatory  and  available  to  TCNs 
for  a  fee,  serves  as  a  monitoring  and  compliance 
tool  but  adds  an  administrative  barrier.  Together 
legislation  on  employment 
with 
agencies, 
improve 
oversight and curb exploitation practices, although 
their effectiveness remains to be assessed. 

recognition 
(217). 

these  measures  seek 

the  2023 

licensed 

through 

limited 

to 

Despite  progress,  Malta  still  records  a  wide 
gender employment gap. Over the past decade, 
the  gap  narrowed  by  14.4 pps,  one  of  the  largest 

(216) Central Bank of Malta, Understanding Recent Labour Supply 
Dynamics in Malta, and The native Maltese population: 
projections and implications on the labour supply, 2025. 

(217) Debono, M. (2021). Migrants and the challenge of decent 

work in Malta. e-Revista Internacional de la Protección Social 
(e-RIPS), Vol. VI, Nº 2, pp. 272 – 293 ; Justice and Peace 
Commission, Beyond GDP II: Third Country National in Malta, 
2024, JRS, Forced to Hide: The Human cost of legal precarity 
and labour exploitation in Malta, 2025; ETUI, Worker 
participation, 2024 

 
 
 
 
 
 
 
reductions in the EU, but was at 12.4 pps in 2025, 
2.8 pps above the EU average and still among the 
widest  in  the  EU.  While  younger  cohorts  (20-29) 
now show narrower gaps than the EU average and 
employment  among  older  women  (55-64)  has 
increased,  the  gap  widens  with  age,  which 
contributes  to  one  of  the  widest  pension  gaps  in 
the  EU  (36.6%  vs  EU:  23.9%).  Women  remain 
underrepresented  in  construction  and  ICT  and 
overrepresented in services (e.g. education, health, 
social  work,  retail  and  wholesale).  Barriers  are 
particularly  pronounced  for  older  (50-64),  lower-
skilled  and  migrant  women  as  well  as  those  with 
children,  including  the  non-universality  of  early 
childhood education and care. Taken together, the 
combination  of  a  high  employment  gap  and  a 
below-average  gender  pay  gap  (4.9%  vs  EU: 
11.1% in 2024) indicates that gender inequality on 
the  labour  market  in  Malta  is  driven  mainly  by 
lower  female  labour  market  participation  rather 
than pay disparities. 

Demand is strongest for personal service workers, 
sales  workers,  office  associate  professionals,  as 
well  as  drivers  and  vehicles  operators  (219).  In 
2025,  ICT  specialists  comprised  48%  of  total 
employment,  in  comparison  to  5.0%  of  the  EU 
average,  marking  a  decrease  of  0.5  percentage 
points from 2024. The demand for ICT specialists 
remains  significantly  high  across  all  sectors, 
whereas  the  supply  continues  to  fall  short. 
Concurrently, in 2025, 66.80% of individuals aged 
16–74  possessed  at  least  basic  digital  skills, 
surpassing the EU average of 60.40%.  

Graph A11.1: Labour shortages (%) and the job 
vacancy rate (%) in Malta 

Persons  with  disabilities  continue  to  face 
challenges.  The  employment  gap  between 
persons  with  and  without  disabilities  widened  in 
2025, well above the EU average (30.1 pps vs EU: 
24.2 pps  and  24.0 pps  in  2024).  It  is  now  more 
pronounced  for  men  (30.7 pps  vs  27.6 pps  for 
women).  The  labour  force  participation  rate  for 
persons  with  disabilities  is  slightly  below  the  EU 
average (52% vs 55.5% in 2024), while their NEET 
rates  in  2024  remained  moderate  at  45.2%  but 
still  above  the  EU  average  (29.8%).  A  relatively 
large  proportion  of  persons  with  disabilities  are 
low-skilled,  facing  strong  competition  in  a  labour 
market  with  a  high  share  of  low-skilled  workers 
limited 
(see  Annex  13). 
tourism, 
inclusiveness 
in 
construction  and 
their 
employment opportunities. 

In 
sectors 
ICT 

such  as 

restricts 

context, 

further 

this 

Labour  shortages  are  intensifying  across 
sectors.  The  job  vacancy  rate  reached  3.3%  in 
Q4-2025,  one  of  the  highest  in  the  EU  and  well 
above the EU average (2.1%). Shortages are most 
visible in services – notably professional, scientific 
and  technical  activities  –  (5.0%),  construction 
(4.6%) and ICT (4.6%). Employers’ surveys confirm 
these  pressures,  with  a  high  share  of  firms  in 
services 
the  EU)  and 
construction  (46.8%  vs  27.5%)  reporting  labour 
shortages  as  a  constraint  on  production  (218). 

(85%  vs  23.1% 

in 

Seasonally adjusted data, not calendar adjusted, provisional 
data for the job vacancy rate. 
Source: ECFIN business and consumer survey data and 
Eurostat [jvs_q_nace2]. 

Wages  have  rebounded.  Wage  growth  reached 
7.6%  in  2024  and  is  projected  at  4.2%  in  2025 
and  3.5%  in  2026.  Following  a  marked  drop  in 
2023  (-2.9%),  real  wages  increased  by  5.2%  in 
2024  but  are  expected  to  decelerate  to  1.9%  in 
2025  and  further  to  0.8%  in  2026.  This  recovery 
reflects easing inflation and nominal wage growth, 
although  with  significant  heterogeneity  in  wage 
increases  across  sectors,  such  as  sizeable 
increases  in  the  public  administration  sector  and 
below-average increases for workers in the sector 
including  retail  trade  and  accommodation  and 
food  services.  The  recovery  in  real  wages  is 
expected  to  continue  offsetting  earlier  losses  in 
purchasing  power  by  2025.  The  statutory 
minimum  wage  increased  by  21.3%  between 
January  2022  and  December  2025  but 

(218) DG ECFIN, European Business and Consumer Surveys. 

(219) From 1 July 2024 to 30 June 2025. 

83 

0.0.51.1.52.2.53.3.54.0102030405060708090Job vacancy rate (%)Labour shortages (%)IndustryConstructionServicesJob vacancy rate (rhs) 
 
  
 
corresponded  to  a  modest  real  increase  of  0.8%. 
Unit labour costs rose by 6.3% in 2024 and 4.1% 
in 2025; in 2026, growth is forecast to slow down 
to 3.9% but to remain above the EU average. 

Job quality remains uneven, with low wages, 
atypical  work  and  high  labour  turnover  in 
some  sectors.  The  share  of  low-paid  jobs  has 
increased, with over 10% of workers remaining in 
low-paid jobs for the last four years (15.9% vs EU: 
14.7%  in  2022)  (220),  disproportionally  affecting 
women  and  TCNs.  Wage disparities  persist  across 
sectors  and  skills  levels,  which  contributes  to 
uneven  job  quality  and  income  inequality.  Malta 
also  records  a  relatively  high  share  of  atypical 
working  hours  (39.1%  of  workers  vs  EU:  32.6%). 
The in-work poverty rate among single households 
is  the  highest  in  the  EU  (28.8%  vs  EU:  11.8%). 
High  labour  turnover,  particularly  among  foreign 
workers  (both  TCNs  and  EU  nationals),  reflects 
job  attractiveness  amid  demanding 
limited 
working conditions, high living costs and restricted 
career progression (221). 

Malta  has  strengthened  labour  inspection 
and  OSH  oversight,  but  challenges  persist. 
Labour inspection capacity increased to 19 officers 
in  2024,  up  from  10 
in  2023,  raising  the 
inspector-to-worker  ratio  from  0.3  to  0.6  per 
10 000  workers.  Despite  this  progress,  inspection 
coverage  remains  below 
ILO  standards  and 
sanctions for breaches are still relatively low (222). 
The  Occupational  Health  and  Safety  Authority 
(OHSA) has expanded both staffing and inspection 
activity,  yet  enforcement  challenges  persist. 
Recent  regulatory  changes  aim  to  address  these 
weaknesses, with legislative amendments adopted 
in  2024  and  2025  strengthening  penalties, 
enhancing  compliance  with 
labour  and  OSH 
regulations and promoting a safer workplace. 

Social  dialogue  presents  some  weaknesses. 
While employer organisation density was at 69.6% 
in  2010,  trade  union  density  stood  at  36.5% 

(220) European Commission, Labour Market and Wage 

Developments in Europe, 2025. 

(221) Of all terminations, 29% is for TCNs who have been in the 
terminated employment for less than three months. See: 
Central Bank of Malta, Estimating labour turnover in the 
Maltese economy using administrative data, 2023 and 
Jobsplus, Other Labour Market Trends, 2024. 

(222) ILOSTAT, Number of Labour inspectors by sex, Inspectors per 

(below 

(2023), but with a low trade-union membership of 
foreign workers, who represent an increasing share 
of the labour force. Collective bargaining coverage 
remained  low  at  31.0%  in  2022,  reflecting  the 
concentration  of  bargaining  in  the  public  sector 
and the predominance of firm-level agreements in 
the  private  sector,  which  typically  apply  only  to 
union-represented  workers 
the  80% 
benchmark)  (223)  (224).  In  Malta,  tripartite  social 
dialogue  takes  place  primarily  within  the  Malta 
Council  for  Economic  and  Social  Development 
(MCESD), which brings together representatives of 
government,  employers  and  trade  unions  and 
should  serve  to  discuss  and  provide  advice  on 
economic  and  social  policy  matters  in  a  regular 
systematic  way.  Other  examples  of 
and 
dedicated 
shortcomings 
resources  for  capacity  building  and  training  for 
social  partners,  which  Malta  plans  to  address  in 
the coming period. Bipartite social dialogue is also 
constrained  by  fragmented  representation,  and 
weak inclusion of non-standard workers (225).  

insufficient 

include 

Public  sector  employment 
is  high  and 
continues to expand. The public sector employed 
554 195  full-time  workers 
in  October  2025, 
18.3%  of  total  full-time  employment,  an  increase 
of  4.3%  compared  with  October  2024  (226).  This 
persistent  expansion  may  raise  concerns  about 
efficiency,  productivity  performance  and  potential 
crowding-out  effects  on  the  private  sector.  Social 
partners  have  underlined  the  urgent  need  to 
further  strengthen  reskilling  and  upskilling  of  the 
public  sector  workforce  to  improve  efficiency  and 
enhance the quality of public services. 

(223) OECD/AIAS ICTWSS database, Malta: Main indicators and 

characteristics of collective bargaining, 2025. 

(224) Directive (EU) 2022/2041 of the European Parliament and of 
the Council of 19 October 2022 on adequate minimum 
wages in the European Union. 

(225) Zammit, E. L. (2019). Social dialogue and competence 

development: the role of Malta’s social partners. Centre for 
Labour Studies: Biennial Report: 2017-2018; and Servizzi 
Ewropej f’Malta (SEM) (2021). Promoting Improved Social 
Dialogue in Malta. Misco; MCESD, Provision of Evidence 
based research and Delivery of Training, Final Research 
report, 2021; Manwel Debono, An Analysis of Trade Union 
Membership in Malta, 2018; Godfrey Baldacchino, The state 
of industrial  relations in Malta:  A critical commentary, 
2023-2024. 

10’000 employed persons 2024. 

(226) NSO Malta. Registered Employment, May 2025. 

84 

 
 
 
ANNEX 12: SOCIAL POLICIES 

social 

outcomes 

Malta’s 
showed 
improvement in 2025. Malta presents an overall 
favourable social situation, with several indicators 
showing  progress,  including  poverty.  In  particular, 
child  poverty  was  high  in  2024  and  decreased 
significantly  in  2025.  Nonetheless,  the  social 
protection  system  keeps  presenting  gaps,  and 
vulnerabilities  persist  among  certain  groups. 
Shortcomings  in  benefit  adequacy,  accessibility 
and  coverage  continue 
the  most 
vulnerable households. Third-country nationals and 
persons  with  disabilities  also  experience  poorer 
social  outcomes  than  the  rest  of  the  population. 
These  dynamics  highlight  the  need  to  strengthen 
social  protection,  expand  access  to  essential 
services  and  provide  more  targeted  support 
alongside  continued  economic  growth.  Addressing 
these  challenges  will  contribute  to  fostering 
Malta’s inclusive growth and competitiveness. 

to  affect 

Overall  poverty  rates  remain  stable,  while 
in-work poverty is intensifying. Malta’s at-risk-
of-poverty  or  social  exclusion  (AROPE)  rate  stood 
at 19.4% in 2025, which is below the EU average 
of  20.8,  on  a  positive  downward  trend  over  the 
past  three  years.  The  country  should  keep  up 
efforts to achieve Malta’s 2030 target of reducing 
the AROPE rate by 3.1 percentage points (pps) for 
the  overall  population  and  by  6.1 pps  for  children 
from 2019 levels (20.7% and 23.7%). It should be 
noted  that, in  a  context  of  population growth,  the 
absolute  number  of  people  affected  continues  to 
rise.  Severe  material  and  social  deprivation 
remains  low  in  Malta  and  continues  to  decline, 
standing at 4.1% compared with 6.3% in the EU in 
2025.  By  contrast,  in-work  poverty  has  continued 
to  rise,  affecting  9.2%  of  workers  in  2025,  now 
above  the  EU  average  of  8.3%,  it  has  followed  a 
steady  upward  trend  over  the  past  decade.  Malta 
for  Poverty 
adopted 
Reduction  and  Social  Inclusion  in  2025,  whose 
success  will  depend  on  effective  implementation. 
To address the multiple dimensions of poverty, the 
implementation  of  a  comprehensive  approach,  as 
set  out  in  the  EU  Anti-Poverty  Strategy,  can 
support  progress  towards  achieving  the  national 
anti-poverty target. 

the  National  Strategy 

Child  poverty  decreased,  while  some  groups 
remain  vulnerable.  After  an  increase  between 
2022  and  2025,  the  AROPE  rate  among  children 
decreased  to  23.3%  in  2023,  now  below  the  EU 
average  of  24.3%.  In  absolute  terms,  around 
21 000  children  were  affected  in  both  2023  and 
2024, putting Malta at risk of missing its national 

child  poverty-reduction  target.  The  risk  of  severe 
poverty  for  children  (defined  as  living  below  the 
threshold  of  40%  of  the  median  equivalised 
income)  also  decreased  in  2025,  reaching  5.8%, 
below  the  EU  average  of 6.4%.  However,  children 
in vulnerable households are particularly affected. 
In  2025,  46.1%  of  single  parents  with  dependent 
children  were  at-risk-of-poverty,  and  39.7%  of 
children with parents with a low level of education 
were  AROPE,  remaining  below  the  EU  average. 
Children of Maltese nationals faced slightly higher 
poverty  rates  (20.8%)  than  those  of  non-Maltese 
nationals  (19.3%)  in  2025.  With  the  support  of 
European Social Fund Plus (ESF+) funding, Malta is 
implementing the European Child Guarantee. While 
progress  has  been  made  in  health  promotion  and 
disease  prevention  for  children  in  need,  gaps 
remain  in  addressing  non-financial  barriers  to 
participation in early childhood education and care 
and in ensuring inclusive education. Malta has also 
published  the  Social  Plan  for  the  Family  2025-
2030  and  the  Children's  Policy  Framework  2024-
2030, which includes measures to support families 
in vulnerable situations (227). 

Graph A12.1: Children (0-3) participating in early 
childhood education and care by duration and risk 
of poverty or social exclusion (%) 

Source: Eurostat [ilc_caindform25b]. 

Early  childhood  education  and  care  faces 
similar challenges, with non-universal access 
and reliance on private and church providers. 
Participation among children under three increased 
from 19.1% in 2015 to  55.9% in 2025. However, 
participation gaps between children who are at risk 

(227) Government of Malta, A Social Plan for the Family 2025-

2030, 2025 and Children's Policy Framework 2024-2030, 
2024. 

85 

0.10.20.30.40.50.60.70.Zero hoursFrom 1 to 24 hours25 hours or overTotalAt risk of poverty or social exclusionNot at risk of poverty or social exclusion 
 
  
 
 
of poverty or social exclusion and children who are 
not are wide. In 2025, 59.5% of children at risk did 
not  participate  in  ECEC,  compared  with  39.4%  of 
other  children.  Only  24.9%  of  children  at  risk  of 
poverty  or  social  exclusion  participated  for  more 
than 25 hours per week, compared with 48.2% of 
their peers not at risk. 

Despite  positive  improvements,  poverty  and 
social  exclusion  affect  vulnerable  groups 
disproportionately.  In  2025,  29.7%  of  third-
country nationals were at risk of poverty or social 
exclusion,  compared  with  15.8%  of  Maltese 
nationals.  Adults  with  low  educational  attainment 
faced an AROPE rate of 26.1% (EU: 34.2%), which 
is  above  the  rate  of  11.7%  (EU:  10.3%)  recorded 
among  highly  educated  adults.  Persons  with 
disabilities  were  also  exposed  to  substantially 
higher  and  increasing  risks  (35.9%  vs  16.6%  for 
persons without disabilities, EU: 28.7% vs 17.7%); 
this  is  linked  to  barriers  and  limited  employment 
and  educational  opportunities  for  persons  with 
disabilities,  as  illustrated  by  a  wide  disability 
employment gap (see Annex 11). Energy poverty in 
Malta  is  below  EU  levels  (7.6%  vs  EU:  8.8%)  and 
slightly  decreasing, 
for  vulnerable 
groups.  In  2025,  10.9%  of  people  at  risk  of 
poverty  or  social  exclusion  struggle  to  keep  their 
homes  adequately  warm,  decreasing  from  17.1% 
in 2024. Geographical disparities also persist, with 
higher poverty rates in Gozo, Comino and northern 
and western areas of Malta.  

including 

People  aged  65  and  over  remain  vulnerable. 
Among  them,  30.3%  were  at  risk  of  poverty  or 
social  exclusion  in  2025  (vs  EU:  18.8%).  The 
monetary  poverty  rate  is  also  much  higher  for 
older  people  in  Malta  than  for  the  working-age 
population,  almost  the  double  in  2025.  Risks  are 
higher  still  for  older  women,  but  decreasing 
(31.4%,  compared  with  29.0%  for  men).  This 
disparity  partly  reflects  Malta’s  persistently  wide 
gender  pension  gap  –  the  widest  in  the  EU  at 
36.6%  in  2025  (vs  EU:  23.9%)  –  despite  recent 
reductions.  Pension  adequacy  remains  limited, 
particularly 
is 
reflected  in  the  median  relative  income  of  older 
people  (60+),  which  is  below  the  EU  average  for 
both men (0.80 vs EU:  0.97) and women (0.74 vs 
EU:  0.91).  Self-employed  farmers  and  primary 
producers  are  particularly  exposed  to  pension 
inadequacy, as most qualify only for the minimum 
pension.  As  a  result,  many  continue  working 
beyond retirement age, which delays generational 

low-income  groups.  This 

for 

renewal and the entry of younger farmers into the 
sector. 

inequality 

Income 
in  Malta  has  been 
decreasing  in  a  context  of  strong  economic 
performance. In 2025, the income of the richest 
20% of the population was 4.49 times higher than 
that  of  the  poorest  20%,  slightly  above  the  EU 
average  of  4.62.  Although  the  gap  narrowed  in 
2025 it is not yet as the pre-pandemic low level of 
2019.  The  gross  disposable  household  income 
index  (GDHI,  2008=100)  remains  well  above  the 
EU  average  (171.74  vs  EU:  114.40  in  2024),  and 
high  employment  levels  have  helped  keep  overall 
poverty  levels  close  to  the  EU  average.  Malta 
applies  an  automatic  cost-of-living  adjustment 
(COLA)  to  wages  and  pensions.  As  in  previous 
years,  this  mechanism  was  complemented  by  an 
‘additional  COLA’,  a  separate  targeted  payment 
aimed  at  supporting  low-  and  middle-income 
households  and  pensioners  facing  higher-than-
average increases in costs of living (228).  

received 

households 

Malta’s  social  protection  system  has  limited 
effectiveness  in  reducing  monetary  poverty. 
In  2025,  social  transfers  reduced  the  monetary 
poverty  rate  by  only  24.89%,  which  is  well  below 
the  EU  average  of  33.20%.  Benefit  coverage  is 
also comparatively low: only 77.1% of adults (18–
64) who were both at risk of poverty and living in 
(quasi-)jobless 
social 
benefits,  compared  with  83.6%  at  EU  level  in 
2025.  This  points  to  weaknesses  in  the  system’s 
ability to reach those most in need. Malta relies on 
a broad mix of cash and in-kind benefits covering 
pensions,  unemployment,  housing,  disability,  and 
family and child support. A study conducted by the 
Joint  Research  Centre  indicates  that  coverage 
varies  among  different  social  benefits.  Some 
benefits,  such  as  the  additional  COLA  mechanism 
and  family  and  child  benefits,  effectively  reach 
their  intended  recipients.  Others,  such  as  housing 
and  unemployment  support, 
leave  scope  for 
improvement  in  coverage.  Some  groups,  such  as 
migrants,  have 
rates.  The 
additional  COLA  mechanism  has  the  potential  to 
reduce  poverty  among  several  vulnerable  groups, 
while  social  assistance  and  child  allowances  help 
to  alleviate  poverty  within  specific 
target 
demographics.  Nonetheless,  there  remains  scope 
to 
improve  the  adequacy  of  these  benefits, 
particularly the additional COLA. Although they are 

lower  coverage 

(228) Social Security, Additional Cost of Living Benefit 2025. 

86 

 
 
allocations  to  family  and  child  (6.9%),  disability 
(4.2%), housing (1.4%)  and unemployment (0.8%) 
benefits  remain  comparatively  limited.  To  support 
families, the 2026 budget speech announced new 
tax  deductions  for  families  with  children  and  an 
increase in child allowances (231). 

Care  services  across  the  life  cycle  in  Malta 
display  some  structural  weaknesses.  Long-
term  care  is  characterised  by  fragmentation  and 
capacity constraints. Provision is largely dominated 
by private and church-based operators, and public 
funding  rose  in  2023  above  the  EU  average 
(1.86%  of  GDP  vs  EU:  1.7%).  The  regulatory  and 
quality  frameworks  are  still 
incomplete.  The 
system  continues  to  prioritise  residential  care 
(89.5% of public spending vs EU: 46.2% in 2022) 
over  home-  and  community-based  services. 
Working  conditions  in  the  sector  are  often  poor, 
characterised  by  low  pay  (in  2022,  gross  hourly 
wages  stood  at  67.7%  of  the  average  for  the 
whole economy, vs EU: 89.2%); a high reliance on 
third  country  nationals  and  women;  overqualified 
workers; and limited collective bargaining coverage 
(65.8%  vs  EU:  82.4%  in  2022)  (232).  Together, 
these 
to  services, 
undermine  quality  and  raise  concerns  about  the 
long-term 
care 
provision. 

factors  constrain  access 

sustainability  of 

long-term 

efficient  in  helping  narrow  the  poverty  gap,  they 
do  not  lift  a  sufficient  number  of  people  out  of 
poverty (229). 

coverage 

social  protection 

Formal 
is 
comprehensive,  but  some  challenges  persist 
in  effective  access,  adequacy  and  system 
coordination.  The  governance  of  the  social 
protection  system  is  fragmented  across  several 
ministries  and  agencies,  contributing  to  overlaps, 
coordination  gaps  and  uneven  access.  Moreover, 
the  benefits  system  is  highly  fragmented  (230). 
Some  groups  face  barriers  to  accessing  social 
protection.  Eligibility  conditions  restrict  coverage 
under  certain  schemes,  resulting,  for  instance,  in 
limited access for third country nationals and self-
employed  workers  to  sickness  and  unemployment 
benefits.  Unemployment  benefits  remain  short  in 
duration, low in amount and linked to contribution 
history.  This  is  in  a  context  of  a  legal  reform  in 
increased  the  adequacy,  duration  and 
2024 
accessibility of unemployment benefits, supported 
by  a  new  monitoring  mechanism.  Furthermore, 
despite  recent  reforms  addressing  certain  formal 
coverage  gaps  (e.g.  granting  paternity  leave  to 
self-employed  fathers  from  2025  onwards,  which 
was  previously  available  only  to  employees), 
effective  access  to  social  protection  remains 
limited  for  some  groups.  In  2025,  only  5.2%  of 
temporary workers at risk of poverty received any 
social  benefit  (vs  EU:  39.8%),  and  just  27.9%  of 
unemployed  individuals  did  so  (vs  EU:  54.8%). 
Additional reforms are under preparation, including 
studies  on  sickness,  maternity,  paternity  and 
invalidity  benefits,  which  aim  to  strengthen  the 
overall coherence and effectiveness of the system. 

Social protection spending remains relatively 
low  and  unevenly  distributed.  In  2023,  total 
to  13.1%  of  GDP, 
expenditure  amounted 
continuing  a  downward  trend  and  falling  well 
below  the  EU  average  of  27.8%. 
In  2023, 
purchasing power standard terms, social protection 
spending stood at EUR 5 426 per inhabitant, which 
is  almost  half  the  EU  average  of  EUR 10 707.  In 
2024,  spending  was  heavily  concentrated  on  old-
age pensions (43.4%) and sickness and healthcare 
(33.3%),  which  together  accounted  for  three 
contrast, 
quarters  of 

spending.  By 

social 

(229) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+. 

(230) Caritas, A minimum essential budget for a decent living 

2024, 2024. 

(231) Government of Malta, Budget Speech 2026, 2025. 

(232) NSO, Paid Care Work in Malta, 2023. 

87 

 
 
 
ANNEX 13: EDUCATION AND SKILLS 

Despite  continued  efforts,  Malta  still  faces 
challenges in  the  education  and  skills fields. 
Malta has continued to expand participation across 
education  levels  and  reduce  early  leaving  from 
education  and 
training.  However,  persistent 
weaknesses  in  learning  outcomes,  equity  and  the 
limited  supply  of  qualified  teachers  continue  to 
constrain  the  development  of  human  capital. 
These,  along  with  low  participation  in  vocational 
education  and  training  (VET),  including  in  science, 
technology,  engineering  and  mathematics  (STEM) 
subjects,  and  the  fragmentation  of  the  training 
offer, also due to weak skills intelligence, continue 
to contribute to skills mismatches – as highlighted 
by  the  2025  country-specific  recommendation  on 
education and skills. 

for 

disadvantaged 

Early childhood education and care (ECEC) is 
less  accessible  for  disadvantaged  children 
and  faces  quality  issues.  Participation  in  ECEC 
in Malta is high for children from age three to the 
starting  age  of  compulsory  education,  reaching 
94.5%  in  2024  (vs  EU:  95.0%),  but  access  and 
quality  challenges  persist  in  the  early  years, 
children. 
particularly 
Participation  among  children  under  age  three 
increased to 55.9% in 2025, above the EU average 
(40.5%) and more than double its 2015 level. Yet, 
among  children  at  risk  of  poverty  or  social 
exclusion, it remains very low at 40.5%, compared 
with  60.6%  among  their  peers  not  at  risk (233). 
recent 
Workforce  qualification  gaps  persist: 
estimates  suggest  that  more  than  one  fifth  of 
pedagogical 
relevant 
childcare 
qualifications, 
qualification 
and  minimum 
requirements remain below bachelor’s level. Policy 
initiatives  under  the  National  Education  Strategy 
2024–2030  aim  to  strengthen  quality  assurance, 
revise standards for provision for children aged 0-
training  and  professional 
3  and 
development  of  ECEC  staff.  Discussions  are 
ongoing  on  potential  adjustments  to  eligibility  for 
the  Free  Childcare  Scheme,  which  could  help 
address  participation  gaps  among  disadvantaged 
families.  Clearer  timelines,  dedicated  resources 
and robust monitoring will be important to ensure 
that  these  reforms  translate  into  more  equitable 
access and higher quality provision. 

improve 

staff 

lack 

in 

levels 

proficiency 

reading,  47.7% 

Malta’s  future  productivity  and  innovation 
capacity.  According  to  PISA  2022,  around  one 
third  of  Maltese  15-year-olds  do  not  reach 
minimum 
reading, 
mathematics  and  science.  Underachievement  is 
from 
particularly  prevalent  among  students 
backgrounds: 
socio-economic 
disadvantaged 
51.5%  underperform 
in 
in 
mathematics  and  46.0%  in  science.  The  share  of 
top  performers  has  declined  substantially  since 
2015,  with  strong  disparities  across  school  types, 
reflecting  a  stratified  education  system.  At  the 
same  time,  early  leaving  from  education  and 
training  has  declined  markedly  over  the  past 
decade,  from  over  15.6%  in  2016  to  8.6%  in 
2025, now below the EU average (9.1%). However, 
it remains high for specific groups, notably young 
men  and  young  persons  with  disabilities,  among 
whom  early  leaving  reached  36.6%  in  2024  (EU 
average: 24.6%).  These challenges extend beyond 
early leaving: in 2024, 45.2% of young people with 
disabilities  were  not  in  employment,  education  or 
training  (EU  average:  29.8%)  (234).  To  address 
persistent  weaknesses  in  basic  skills,  Malta  has 
launched, in cooperation with the OECD, an action 
plan responding to the PISA 2022 results (235). The 
plan  envisages  curriculum 
targeted 
literacy  and  numeracy  initiatives  and  additional 
support  for  students  at  risk  (236).  These  measures 
are  aligned  with  the  National  Education  Strategy 
2024-2030,  which  places  a  strong  emphasis  on 
basic  skills,  equity  and  inclusion.  Moreover,  Malta 
will  receive  Technical  Support  Instrument  funding 
to  develop  a  revised  framework  on  basic  skills, 
focusing  on  teacher  education,  curriculum  and 
assessment,  and  student  support.  This  will  be 
achieved  through  tailored  recommendations,  pilot 
interventions  in  schools,  and  targeted  capacity-
building  measures.  At 
this  stage,  however, 
evidence  on  implementation  progress  and  impact 
of these initiatives remains limited.  

reforms, 

Digital  and  STEM  competences  remain  a 
challenge  for  Maltese  students,  despite 
recent 
assessments 
indicate  persistent  gaps:  according  to  ICILS  2023, 
only  48%  of  eighth  graders  achieved  at  least  a 
basic  level  of  computer  and  information  literacy 

International 

efforts. 

Low  levels  of  basic  skills  remain  a  major 
structural  challenge,  raising  concerns  about 

(233) Eurostat [ilcaindform25b], non-zero hours. Low reliability 
data for children at risk of poverty or social exclusion. 

(234) Eurostat [edat_lfse_39], [edat_lfse_40]. Low reliability data. 

(235) CSR 2025.5.2: ‘in particular by fostering basic skills of 

students, the initial and continuous training of teachers’. 

(236) CSR 2025.5.4: ‘Strengthen the inclusiveness of education 

and training.’ 

88 

 
 
 
 
 
level  remains 

(vs EU: 57%), and more than half underachieved in 
computational  thinking.  Participation  in  advanced 
mathematics  and  science  subjects  at  upper 
secondary 
limited,  constraining 
progression  into  post-secondary  STEM  education 
and  contributing  to  skills  shortages.  Gender 
disparities  persist,  with  women  under-represented 
in several STEM fields. Recent initiatives, including 
curriculum  updates,  awareness  raising  activities, 
financial 
cooperation 
school-industry 
incentives,  seek  to  broaden  participation  and 
challenge stereotypes, but their impact will need to 
be assessed over time (237). The Education Strategy 
2024-2030  aims  to  strengthen  digital  literacy, 
communications 
information 
integrate 
technology 
technologies 
(ICT)  and  emerging 
(including  artificial  intelligence  (AI))  into  curricula, 
and enhance teachers’ digital competences. 

and 

and 

scientific 

Notwithstanding  increasing  policy  attention, 
in 
Malta  continues  to  face  challenges 
attracting  and  retaining  qualified  staff, 
particularly  in  STEM  subjects.  According  to 
TALIS  2024,  Malta’s  lower  secondary  teaching 
workforce remains comparatively young, with only 
15.3%  aged  50  or  over  (vs  EU:  39.9%).  However, 
retention  risks  are  pronounced  among  younger 
teachers: 24.1% of those under 30 intend to leave 
the  profession  within  the  next  five  years  (vs  EU: 
15.2%). Although no systematic data on vacancies 
are  reported  at  the  national  level,  this  could 
exacerbate recurrent teacher shortages, especially 
in 
learning 
opportunities  are  widely  available,  yet  teachers 
increasingly  question  the  impact  of  continuous 
professional  development  on  their  classroom 
practice:  only  44.9%  report  that  recent  training 
had a positive impact, down sharply from 70.9% in 
2018  and  below  the  EU  average  (56.0%).  Unmet 
training  needs  are  particularly  high  in  the  use  of 
digital  technologies  and  AI  (39.0% vs  EU:  25.2%), 
as well as in teaching diverse classrooms. Overall, 
while  Malta  has  taken  major  steps  to  improve 
teachers’  pay,  career  structures  and  training 
pathways,  the  TALIS  results  suggest  that  further 
progress  could  help  to  make  the  profession  more 
attractive  and  to  ensure  a  stable  supply  of 

subjects.  Professional 

qualified  teachers,  in  line  with  the  EU  human 
capital agenda (238). 

Graph A13.1: Attractiveness of the teaching 
profession, Malta vs EU (2018, 2024) 

Source: OECD, TALIS 2024 

its 

impact 

is  constrained  by 

VET delivers strong labour market outcomes, 
but 
low 
enrolment  and  limited  work-based  learning. 
recent  VET 
In  2024,  employability  among 
graduates  was  high  but  decreasing  in  Malta,  with 
rates  reaching  80.7%  in  2025  (vs  EU:  80.2%).  At 
the  same  time,  in  2024,  only  29.8%  of  medium-
level pupils were enrolled in VET (vs EU: 52.9%). In 
2025,  only  50.6%  of  recent  graduates  reported 
having  work-based  learning  experience  (vs  EU: 
66%). Participation in STEM-related subjects within 
VET  remains  limited:  32.1%  of  medium-level  VET 
students  were  enrolled  in  STEM  programmes  in 
2024 (vs EU: 36.6%) (239), while women accounted 
for 
just  14.6%  (vs  EU:  15.9%).  Fragmented 
in  skills 
governance  and  capacity  constraints 
planning  and  training  provision  undermine  the 
attractiveness  of  VET  and  its  ability  to  cater  to 
labour  market  needs.  This  may  create  a  growing 
gap  at  a  time  when  nearly  half  of  projected  job 
openings  in  Malta  up  to  2035  are  expected  to 
require medium-level qualifications (240). Malta has 
taken positive steps, for example by establishing a 
National  Career  Guidance  Network,  strengthening 
the  role  of  the  National  Skills  Council  in  aligning 
training  with  labour  market  needs,  and  fostering 
agreements  with  Malta  College  of  Arts,  Science 
and Technology as well as the Institute of Tourism 

(237) CSR 2025.5.1: ‘Strengthen the quality and labour-market 
relevance of education and training to address low 
educational outcomes as well as the severe shortage and 
mismatch of skills, also in the area of science, technology, 
engineering and mathematics (STEM) and the green 
transition’. 

(238) CSR 2025.5.2: ‘in particular by fostering basic skills of 

students, the initial and continuous training of teachers’. 

(239) European Commission, The Union of Skills, COM(2025) 90. 

(240) Cedefop, Skills Forecast Malta, 2025. 

89 

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%201820242018202420182024201820242018202420182024Overall jobsatisfactionSatisfactionwith salaryIntention toleave teachingwithin five years(under age 30)Intention toleave teachingwithin five years(aged 50 andabove)Participation inimpactfullearning overprevious twelvemonthsShare reportinghigh learningneeds in the useof AIAttractivenessShortagesProfessional learningMaltaEU 
 
     
 
Studies (241). However, further implementation and 
better  coordination  could  help  boost  enrolment, 
expand  work-based  learning  and  improve  the 
attractiveness  and  inclusiveness  of  VET.  Malta 
could  also  further  explore  the  potential  of  the 
Centres of Vocational Excellence. 

Graph A13.2: Enrolment in STEM fields in initial 
medium-level VET (%) 

Source: Eurostat [educ_uoe_enra03] 

Underdeveloped  STEM  education  pipelines 
constrain  the  supply  of  technical  specialists 
needed for  the digital and  green  transitions. 
In 2023, STEM graduates accounted for 13.8% of 
all  tertiary  graduates  in  Malta,  well  below  the  EU 
average (25.2%) – despite a rapidly increasing and 
above-EU  average  overall  tertiary  educational 
attainment  rate  (in  2025,  47.7%  vs  EU:  44.8%). 
Yet, the share is expected to decline further in the 
future  as  Malta  had  the  lowest  share  of  tertiary 
students  enrolled  in  STEM  fields  in  the  EU  at 
13.9% in 2023 (vs EU: 26.9%), down significantly 
from 21.5% in 2015. This is due to early structural 
bottlenecks,  as  few  school  students  complete 
advanced  courses  in  mathematics,  physics  and 
chemistry,  narrowing  access  to  STEM-related 
faculties. Gender imbalances also remain marked, 
with  women  representing  only  17.4%  of  ICT 
students and 27.1% of engineering students, both 
below  EU  averages.  These  developments  pose 
challenges  for  Malta  in  meeting  the  projected 
employment  growth 
for  professionals  and 
technicians  and  associate  professionals,  which  is 
expected to further increase demand for advanced 
technical  and  STEM-related  skills  (242).  Several 

(241) CSR 2025.5.3: ‘as well as promoting enrolment in vocational 
education and training, and in adult learning for the low-
skilled’. 

(242) Cedefop, Skills Forecast Malta, 2025. 

in  place, 

initiatives  are 

policy 
including  the 
the 
National  Education  Strategy  2024-2030, 
Digital  Education  Strategy  2025-2030,  targeted 
stipends and scholarships in STEM and green skills, 
and  outreach  initiatives  such  as  Girls4STEM,  but 
their  impact  on  STEM  enrolment  and  graduate 
outcomes  has  yet  to  become  evident  (243).  Malta 
benefits  from  European  Social  Fund  Plus  support 
to  provide  scholarships  for  advanced  studies, 
including master’s and PhDs, particularly in priority 
areas  such  as  STEM,  to  help  address  skills  needs 
and support future labour market demand. 

for 

level, 

groups. 

Malta’s efforts to further boost participation 
in  adult  learning  are  hindered  by  persistent 
barriers 
Adult 
vulnerable 
participation  in  education  and  training  during  the 
previous  12  months  reached  39.9%  in  2022  (vs 
EU:  39.5%)  but  remains  well  below  the  national 
2030  target  of  57.6%  (244).  Participation  shows  a 
decline  from  2022  to  2024  (according  to  labour 
force  survey  data)  and  varies  significantly  by 
education 
labour  status  and  age.  The 
participation  rate  of  low  skilled  people  reached 
only  16.3%  in  2022  (vs  EU  18.4%)  and  is 
particularly  concerning.  While  initiatives  such  as 
the National Strategy for Lifelong Learning 2023–
2030  and  the  e-College  platform,  funded  by  the 
Recovery  and  Resilience  Facility,  signal  a  strong 
increasing  uptake,  the 
policy  commitment  to 
decline 
pronounced 
in 
inequalities  indicate  that  current  measures  have 
yet  to  sufficiently  overcome  barriers,  particularly 
for  low-qualified,  economically  inactive  and  older 
adults  (245).  Malta  has  started  exploring  the 
introduction of individual  learning accounts, which 
could  tackle  the  scattered  provision  of  learning 
courses for adults.  

participation 

and 

Skills  shortages  and  mismatches  pose 
significant challenges to productivity growth 

(243) CSR 2025.5.1: ‘Strengthen the quality and labour-market 
relevance of education and training to address low 
educational outcomes as well as the severe shortage and 
mismatch of skills, also in the area of science, technology, 
engineering and mathematics (STEM) and the green 
transition’. 

(244) Adults’ participation in education and training is monitored 
using the adult education survey (AES). The AES indicator 
excluding guided on-the-job training is used to track progress 
towards the 2030 target of 60%. 

(245) CSR 2025.5.3: ‘as well as promoting enrolment in vocational 
education and training, and in adult learning for the low-
skilled’. 

90 

0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%2015202420152024OverallWomenMaltaEU 
   
 
 
In  2024, 

Labour  and 

competitiveness. 

(see  Annex  11). 

institutionalised  mechanism  for 

and 
skills 
shortages  are  closely  linked  to  skills  mismatches, 
which,  despite  some  recent  improvement,  remain 
elevated 
the 
macroeconomic  skills  mismatch  stood  at  18.7%, 
practically unchanged from the previous year and 
broadly in line with the EU average (19.24%) (246). 
Malta  has  taken  various  skills  assessment  and 
anticipation  initiatives,  including  labour  force  and 
skills  surveys,  employer  surveys  on  hard-to-fill 
vacancies  and  graduate  outcome  analyses. 
However,  the  system  remains  fragmented  and 
largely  ad  hoc,  with  limited  sectoral  analysis  and 
no 
regularly 
updating  or  integrating  skills  intelligence  (247). 
Skills shortages also remain a major constraint on 
investment  in  Malta:  around  90%  of  firms  report 
the  availability  of  skilled  staff  as  an  obstacle  to 
investment, well above the EU average (77%) (248). 
structural 
These 
challenges 
tertiary-educated 
overqualification:  21.5%  of 
workers  are  employed  in  jobs  not  requiring  such 
education, with particularly high rates in wholesale 
and  retail  trade  (56.1%),  other  services  (42.4%), 
construction  (42.3%).  accommodation  and  food 
services  (41.6%),  and  administrative  and  support 
services  (33.4%).  Skills  shortages  are  particularly 
acute  in  emerging  areas  linked  to  the  green 
transition,  as  43%  of  firms  report  having  no 
employees  in  green  roles  and  around  two  thirds 
consider the workforce insufficiently prepared (249). 

coexist  with 

ICT  skills  shortages  remain 
Digital  and 
particularly  acute,  constraining  innovation 
and  productivity.  In  2025,  66.8%  of  individuals 
had  at  least  basic  digital  skills  (vs  EU:  60.40%) 
and in 2025 ICT specialists accounted for 4.8% of 
total  employment.  Yet,  roughly  two  out  of  three 
companies 
ICT 
vacancies,  well  above  the EU  average  (57.5%).  At 
the  same  time,  investment  in  digital  upskilling 
remains limited: only 31.1% of firms provided ICT 

report  difficulties 

filling 

in 

(246) The macroeconomic skills mismatch indicator measures the 
dispersion of employment rates across skill groups (proxied 
by qualification levels, with ISCED 0-2 low; 3-4 medium and 
5-7 high). 

(247) OECD Shaping Malta’s Future Through a National Skills 

Strategy and Targeted Maritime Sector Measures: Analysis 
Report (Output 2), 2025. 

(248) European Investment Bank (2024), EIB Investment Survey 

2024: European Union Overview. 

(249) Central Bank of Malta (2024). ‘The impact of mitigating 

climate change on Maltese firms’ employment plans’. Article 
published in the Quarterly Review 2024:4. 

training in 2024, while 65.9% reported no training 
related to AI (250). In response, Malta has initiated a 
series  of  targeted  measures  to  strengthen  its 
digital  skills  pipeline.  It  launched  the  DiHubMT  in 
2025  to  address  industry-relevant  skills  gaps  in 
areas  such  as  AI  and  cybersecurity.  It  expanded 
postgraduate  scholarships 
in  advanced  digital 
fields  and  launched  early  digital  skills  initiatives 
for  children.  Longer-term  reforms  are  initiated 
under the Malta Vision 2050 Project, which places 
greater emphasis on future-proof STEM skills and 
integrated learning pathways. 

remains 

Despite  various  skills  assessment  and 
anticipation 
initiatives,  persistent  skills 
mismatches  highlight  weaknesses  in  Malta’s 
skills system. Skills intelligence is not sufficiently 
embedded  in  policy  design  and  implementation, 
limiting  alignment  between  education  and  labour 
market  needs  (251).  Career  guidance  remains 
largely  concentrated  in  initial  education,  with 
limited outreach to adults: only 23.3% of working-
age  adults  seek 
learning  or  career-related 
information  (vs  EU:  26.9%).  These  challenges  are 
compounded  by  fragmented  skills  governance. 
While  several  national  strategies  exist,  their 
dispersed 
implementation 
across 
institutions,  with 
coordination  and 
limited 
insufficiently  clear  targets  and  timelines.  Recent 
coordination  efforts  involving  the  National  Skills 
Council  and  key  labour  market  and  education 
stakeholders,  including  Jobsplus,  remain  at  an 
early  stage  and  have  yet  to  translate  into  a 
coherent 
framework. 
Strengthening  skills  governance,  supported  by 
more  systematic  use  of  skills  intelligence  and 
comprehensive  career  guidance,  would  help 
address  persistent  mismatches  and  support 
Malta’s 
and 
to 
demographic change, as well as the effective use 
of  domestic  and  foreign  talent.  To  address  some 
of  these  challenges,  Malta  benefits  from  the 
support  of  the  EU’s  Technical  Support  Instrument 
to strengthen its capacity to design and implement 
a  comprehensive  skills  strategy,  and  ensure  that 
the  country  can  withstand  future  challenges 
(digital,  green,  demographic  trends),  in  line  with 
the Union of Skills. A particular focus will be placed 
on  the  maritime  industry,  which  suffers  from  a 
growing 
seafarers, 
potentially hampering the green transition.  

technological 

governance 

adaptation 

European 

shortage 

skills 

of 

(250) Malta Chamber of SMEs (2025). SME Barometer Q1 2025. 

(251) OECD 2025 ibid. 

91 

 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Malta 

Update of 4 May 2026. Members States are categorised based on the Social Scoreboard according to a methodology agreed with 
the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

92 

39.98.666.88.512.44.4983.63.10.6171.719.423.324.930.16.055.90.1Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025)Adult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025) 
 
 
 
  
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

t

the  health  of 

Malta’s  health  system  faces  challenges  that 
its 
negatively  affect 
population,  social  fairness,  competitiveness 
and  productivity.  The  main  challenges  include 
increasing  demand  for  services  due  to  population 
growth,  high  out-of-pocket  (OOP)  payments  for 
healthcare  and  a  high  prevalence  of  overweight 
and  obesity.  These  challenges  are  mainly  due  to: 
(ii)  health  workforce 
(i) 
shortages; (iii) limited spending on prevention; and 
(iv)  shortcomings  in  the  effectiveness  of  current 
preventive measures. 

insufficient  funding; 

Life expectancy at birth in Malta was one of 
the highest in the EU in 2024. Women tend to 
live longer than men (3.6 years in 2024) but spend 
fewer  years  in  good  health  (0.6 years  in  2023). 
Income  disparities  are  pronounced:  89%  of 
high-income  respondents  reported  good  health  in 
2024 compared with 68% in the lowest group (252). 
is  slightly  below  the  EU 
Treatable  mortality 
average,  suggesting  that  the  health  system  is 
relatively effective. Cardiovascular diseases (CVDs) 
and  cancer  dominate  mortality,  albeit  at  rates 
lower  than  EU  averages.  Ischaemic  heart  disease 
was  the 
leading  cause  of  preventable  and 
treatable  deaths  in  2022.  Cancer  mortality  has 
declined  rapidly,  but  cancer  incidence  is  projected 
to  rise  by  44%  by  2040  (compared  with  18%  at 
EU  level)  (253).  Managing  cancer  will  therefore 
remain  a  key  policy  concern,  including  assessing 
in  public  funding  for  cancer 
the  shortages 
medicines.  The Maltese  government  has launched 
a  new  non-communicable  disease  prevention 
framework to address the high share of mortality 
attributable to chronic conditions.  

the 

last 

stable 

Mental  health  outcomes  in  Malta  present  a 
mixed  picture.  Suicide  rates  in  Malta  have 
decade. 
over 
remained 
Standardised  mortality  rates  due  to  mental 
disorders  in  persons  65  years  and  over  show 
standardised  death  rates  twice  the  EU  average, 
mainly due to increased dementia mortality. At the 
same  time,  perceived  unmet  needs  for  mental 
healthcare  affected  8%  of  adults  in  2024  (254) 
(similar  to  the  EU  average).  Mental  health  is 

(252) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Malta. State of Health 
in the EU. 

(253) Country Health Profile 2025: Malta – see earlier footnote. 

(254) Country Health Profile 2025: Malta – see earlier footnote. 

93 

targeting 

prioritised  in  Malta's  National  Health  Strategy 
(2020-2030), 
social 
Framework 
determinants, 
transformation, 
service 
individual/network  support,  and  integration  via 
investment/innovation. The National Mental Health 
Strategy  advances community  services, telehealth 
and  home-based  care,  which  are  included  in  the 
National  Health  Systems  Strategy  (2023-33).  The 
February 2024 National Dementia Strategy, under 
the  restructured  Ministry  of  Health  and  Active 
Ageing,  addresses  ageing-related  needs,  building 
on  the  2023-2030  National  Strategic  Policy  for 
Active  Ageing.  Malta  participates  in  EU4Health 
joint  actions  targeting  mental  health  burdens, 
CVDs, cancer, diabetes and respiratory diseases.  

Preventable mortality in  Malta is  among the 
lowest 
in  the  EU  despite  very  modest 
spending  on  prevention.  In  2023,  spending  on 
prevention  in  Malta  accounted  for  just  0.9%  of 
total  health  spending,  much  lower  than  the  EU 
average of 3.7% (see Table A15.1) (255). This share 
has  been  falling  over the last decade,  contrary  to 
the  EU-wide  trend.  Key  initiatives  target  obesity, 
diabetes  and  cancer  through  enhanced  services, 
physical  activity  programmes,  remote  monitoring 
and  community  screening.  These 
include  the 
2025-35  Non-Communicable  Disease  Prevention 
Framework,  National  Cancer  Plan,  Strategy  for 
Health-Enhancing  Physical  Activity 
(2025-30), 
the 2025  Obesity  Research  Programme  and  the 
National Health Systems Strategy (2023-33). Their 
impact  is  still  to  be  seen.  The  recovery  and 
resilience plan (RRP) also supports prevention via a 
strategic 
centre, 
diagnostic  upgrades,  radiotherapy  procurement 
and  newborn  hearing  screening.  A  report  on 
obesity  prevalence  among  4-5-year-olds  has  also 
been published (in 2022).  

blood/tissue 

framework, 

Behavioural  and  environmental  risk  factors 
remain  major  determinants  of  mortality. 
Unhealthy  diets,  physical  inactivity  and  smoking 
are the main challenges. Low vegetable intake and 
limited  leisure-time  physical  activity  contribute  to 
widespread  overweight  and  obesity,  increasing 
deaths from diabetes and ischaemic heart disease 
(19%  of  preventable  deaths  in  2022).  Adult 
physical  activity  was  slightly  above  the  EU 
average,  but  daily  activity  among  15-year-olds 

(255) Ambiguities in the boundary of prevention spending have 

been reported by Malta, which may underestimate the level 
of spending on disease prevention. 

 
 
 
 
 
 
 
Table A15.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2023 data (or latest available). Doctors’ density data refer to practising doctors in all countries except 
Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data refer to practising nurses (EU 
recognised qualification) in most countries except Portugal (licensed to practice) and Slovakia (professionally active). Latest data 
update on nurses for Belgium and Sweden: 2022; for France: 2021; for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***‘Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

initiatives 

Additional 

care.  Malta’s  Immunisation  Schedule  has  been 
progressively  expanded,  particularly  with 
the 
addition  of  several  diseases  during  the  last  6 
years. 
improve 
immunisation  are  being  implemented:  Malta  is 
upgrading the vaccination IT system by end-2026 
for  real-time  monitoring  and  communication.  A 
vaccination  strategy  draft  also  awaits  public 
consultation,  with  a  new  missed-appointment 
tracker  for  catch-up  programmes.  These  are 
complemented by public awareness campaigns.  

to 

In 2023, the largest share of health spending 
went  on  outpatient  care,  although  health 
spending  per 
for 
inhabitant 
differences  in  purchasing  power)  was  lower 
than the EU average. Per capita health spending 
in  2023  was  slightly  below  the  EU  average  and 
just 66% of health spending was publicly funded.  

(adjusted 

Graph A15.1: Healthcare infrastructure investment 
by year 

remains  among  the  lowest  in  the  EU  (2022)  (256). 
Smoking  can  be  linked  with  high  preventable 
mortality from lung cancer (18% in 2022) (257). In 
2022, cigarette smoking among Maltese 15-year-
olds  fell  to  10%  from  18%  in  2014  and  remains 
below  the  EU  average  of  17%.  However,  e-
cigarette  use  rose  in  popularity,  with  19%  of  15-
year-olds 
reporting  past-month  usage,  only 
slightly  below  the  EU‘s  21%.  Behavioural  risk 
factors in Malta are more prevalent among groups 
with  lower  levels  of  education  than  in  most  EU 
countries. Obesity among adults with a lower level 
of  education  in  2022  was  twice  the  rate  among 
adults with a higher level of education, while daily 
smoking  was  nearly  double  (258).  In  addition, 
mortality  linked  to  air  pollution  is  high  (see 
Annex 8). 

across 

vaccines. 

influenza  uptake 

Malta’s  immunisation  outcomes  show  some 
variations 
Malta’s 
immunisation rates for measles dropped slightly in 
2024,  after  exceeding  the  EU  average  in  2022-
2023  and 
recovered  from 
post-COVID-19  disruptions  and  is  close  to  the  EU 
average.  Human  papillomavirus  (HPV)  vaccination 
for  girls  outperforms  the  EU,  with  a  recent 
extension  to  boys  via  catch-up  programmes 
showing  a  positive  response.  National  schedule 
vaccinations  are  freely  available  through  primary 

(256) Country Health Profile 2025: Malta – see earlier footnote. 

(257) Country Health Profile 2025: Malta – see earlier footnote. 

Source: Country Health Profiles - Dashboard 

(258) Country Health Profile 2025: Malta – see earlier footnote. 

Population  ageing 
raises  fiscal  sustainability 
concerns. The share of people aged 65+ rose from 

94 

16.97.57.611.212.62.68.99.219.619.519.720.421.521.421.921.920152016201720182019202020212022EUR million per 100 000 populationMaltaEU2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population212.5198.3209.5192.7n.a.0.83233.1 (2023)Mortality due to circulatory diseases per 100 000 population 286.0 271.8 273.8 254.4n.a.0.68313.0 (2023)Current expenditure on health, purchasing power standards, per capita3 0263 3223 3633 563n.a.1.633834.9 (2023)Public share of health expenditure, % of current health expenditure 66.7 67.4 67.0 66.0n.a.1.0880.6 (2023)Spending on prevention, % of current health expenditure 1.51.21.20.9n.a.0.583.7 (2023)Available hospital beds per 100 000 population*** 349 343 335 329n.a.1.14440 (2023)Doctors per 1 000 population*4.24.34.54.6n.a.1.434.3 (2023)*Nurses per 1 000 population* 8.0 8.0 7.8 7.5n.a.1.087.6 (2023)*Mortality at working age (20-64 years), % of total mortality14.113.813.412.212.20.8014.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 16.6 15.8 24.0 22.9 24.81.1720.3 (2024) 
 
 
      
 
  
 
primary  and  secondary  care  by  offering  faster 
access  to  treatments  which  may  not  be  available 
in  the  public  sector  (e.g.  cosmetic  and  specific 
dental procedures). Patients may also seek private 
providers  for  medicinal  products  that  are  not 
included in the government formulary list (which is 
decided  on  the  basis  of  health  technology 
assessments).  Despite  high  OOP  payments,  Malta 
reports  low  levels  of  self-reported  unmet  needs 
for  medical  care:  just  0.1%  of  the  population  in 
2025 (compared with an EU average of 2.4%).  

Malta  maintains  fewer  hospital  beds  and 
discharges than EU averages but with higher 
bed  occupancy  and  avoidable  admissions.  In 
recent years, Malta has consistently had a smaller 
number of hospital beds per 1 000 population and 
hospital  discharges  per  100 000  population  than 
the  EU  averages,  and  the  occupancy  rate  for 
curative care beds was higher than the EU average 
in 2023 reflecting partially the rapid expansion of 
the  Maltese  resident  population  over  the  last 
decade.  In  2022,  Malta  had  higher  avoidable 
hospitalisation  rates  for  diabetes,  asthma  and 
chronic  obstructive  pulmonary  disease,  and 
congestive  heart  failure.  This  may 
indicate 
shortcomings  in  primary  healthcare  as  these 
conditions  can  be  managed  effectively  within 
outpatient settings. Malta makes efforts to ensure 
continuity  between  primary  and  outpatient  care, 
but  persistent  public-private  fragmentation  and 
the  absence  of  a  patient  registration  system 
contribute  to  the  challenge.  In  January  2025,  a 
new  agreement  to  outsource  non-complicated 
emergency services to three private hospitals was 
announced  to  ease  pressures  on  public  hospitals 
and  increase  capacity.  Malta  also  outsources 
elective  surgical  procedures  in  this  regard.  Such 
agreements  are  periodically  renewed  to  reflect 
better the needs of the health system. 

faces 

challenges 

Malta 
in 
significant 
addressing  antimicrobial  resistance,  with 
antibiotic  consumption  among  the  highest  in 
the EU. Antimicrobial resistance (AMR) is a major 
public  health  threat  in  Europe,  and  reducing 
excessive antibiotic use is central to tackling it. The 
the  highest  antibiotic 
Maltese 
In  2024,  antibiotic 
consumers 
the  EU. 
levels. 
consumption  exceeded  pre-pandemic 

rank  among 

in 

12% in 2000 to 18% in 2024 and is projected to 
reach  25%  by  2050,  driving  higher  care  demand 
and  expenditure  (see  Annex  2).  The  largest  share 
of health expenditure, above the EU average, was 
allocated  to  outpatient  care,  followed  by  retail 
medical  goods,  and  inpatient  and  dental  care.  In 
2024, investments in health capital formation as a 
share of total health expenditure were among the 
lowest  in  the  EU.  This  may  be  reflected  in  the 
scarcity  of  key  diagnostic  technologies  (medical 
imaging).  However,  the  situation  is  improving  in 
this  respect  –  also  with  the  use  of  RRP  and 
cohesion policy funds. 

Graph A15.2: Out-of-pocket payments: share in 
healthcare spending and categories, 2023 

Household out-of-pocket payment: direct payment for 
healthcare goods and services from the household primary 
income or savings, where the payment is made by the user at 
the time of the purchase of goods or the use of the services 
(Eurostat). VHI: voluntary health insurance. 
(1) Others: eyeglasses, hearing aids, lab tests... 
Source: Eurostat and Country Health Profiles - Dashboard 

spending 

OOP payments are particularly high in Malta, 
but  reported  unmet  needs  for  medical  care 
remain  low.  The  level  of  OOP  payments  for 
healthcare in Malta was 31% in 2023 – more than 
twice  the  EU  average  (see  Graph A15.2).  This  is 
driven  by  pharmaceutical 
(25%), 
outpatient care (22%), dental care (11%), inpatient 
care (9 %) and long-term care (7%). All categories 
are close to the EU averages, except for long-term 
care,  which  is  considerably  lower  than  the  EU 
average  of  24 %.  Free  outpatient  medicine 
coverage is limited to people with selected chronic 
conditions (yellow card – ‘Kartuna s-safra’) and for 
those  means-tested  and  identified  as  having  low 
income  (pink  card  –  ‘Kartuna  r-Roza)’.  Remaining 
residents  pay 
the  full  price  for  outpatient 
prescriptions.  High  OOP  spending  is  reinforced  by 
the  role  of  private  providers,  who  complement 

95 

66%31%3%25%22%7%26%11%9%Gov. & CompulsoryOut-of-pocket (OOP)Voluntary (VHI)PharmaceuticalsOutpatient careLong-term careOthersDental careInpatient careShare ofspendingOOP BreakdownOOP share -EU-27 average:15% 
      
Continued  efforts  are  needed  to  keep  track  with 
the 2030 recommended national target of 17 (259).  

Malta’s  health  workforce  has  expanded  in 
recent  years  through  targeted  recruitment 
and  retention  efforts,  yet  persistent  gaps 
remain. In 2023, the country had 4.6 doctors per 
1 000 population – slightly above the EU average 
of 4.3 – while nurses stood at 7.9 per 1 000, just 
below the EU average of 8.5. General practitioners 
accounted  for  just  18%  of  all  doctors  in  2022, 
reflecting  a  decade-long  decline,  even  as  the 
number  of  medical  graduates  surged  to  30.6  per 
100 000  population  (more  than  double  the  EU 
average  of  15.2 in  2023).  The  number  of  nursing 
graduates, however, has fallen since the pandemic 
and  lags  further  behind,  at  16.5  per  100 000 
(versus the EU’s 31). These imbalances stem from 
Malta’s  unique  challenges  as  a  small  nation:  a 
brain drain of specialised staff to larger EU and UK 
markets offering better pay and conditions; heavy 
reliance on foreign nurses, particularly in hospitals; 
and  heightened  demographic  pressures  from 
faster-than-average ageing.  

retention 

Malta  faces  challenges  in  health  workforce 
retention  and  distribution,  driven  by  high 
workloads and demographic pressures. Health 
is  undermined  by  high 
workforce 
workloads,  poor  work–life  balance  for 
junior 
doctors  and  limited  career  progression  in  some 
specialisations. High living costs, restrictive policies 
on family reunification, limited awareness of rights 
among  foreign  staff,  and  uncertainty  over  access 
to social benefits contribute to the short tenure of 
foreign  health  workers,  further  straining  staffing 
capacity.  To  address  health  workforce  challenges, 
Malta launched its first National Health Workforce 
Strategy  in  2022,  aiming  to  attract,  develop  and 
improved 
retain 
remuneration  for  specialists,  enhanced  training 
pathways, 
career 
prospects,  multidisciplinary  primary  care  teams 
and  a  new  human  resource  planning  tool  for 
sustainability.  The  RRP  supports  the  development 
of  a  policy  framework  emphasising  recruitment, 
retention  and  planning  as  part  of  broader  system 
resilience  and  sustainability  reforms.  Moreover, 
Malta  participates  in  the  EU4Health-funded  joint 

health  workers 

family-medicine 

through 

better 

action  HEROES  (260),  through  which  EU  countries 
share  best  practices  and  expertise  on  health 
workforce planning. 

Employment 

significance. 

Malta’s  pharmaceutical  sector  is  of  modest 
in 
economic 
pharmaceutical  manufacturing  stands  at  0.71%, 
above  the  EU  average.  Clinical  trial  activity  was 
just  1.77  per  million  population  in  2024  (EU 
average  18.3),  with  just  three  trials  in  total  since 
2015  (261).  On  trade,  extra-EU  exports  increased 
steadily,  but  remain  below  the  EU  2025  average 
(10 % versus the EU’s 13.9%), reflecting its most-
improved  status  over  recent  years.  As  a  small 
island  nation,  Malta 
international 
cooperation – including the Valletta Declaration on 
joint  procurement,  the  WHO’s  Small  Countries 
Initiative 
of 
strengthen 
understanding  with 
innovation 
to  medicines, 
its  generics-focused  domestic 
complementing 
industry. 

a  2025  memorandum 

Italy  – 
access 

leverages 

and 

and 

to 

advances 

establishing 

(excluding  phone) 

include: 
remote  monitoring 

Malta  aims  to  scale  up  the  digitalisation  of 
its  health  system,  with  support  from  EU 
programmes. The share of people accessing their 
personal  health  records  online  in  Malta  is  higher 
than the EU average (41.6 in 2024 vs 27.6). This is 
driven  by  the  myHealth  portal,  which  enables  the 
viewing of records, symptom tracking and parental 
access  (see  Annex 7).  However,  the  use  of  online 
instead  of 
health  services 
in-person  consultations  was  comparatively  low. 
a 
Recent 
telemedicine  centre; 
(e.g. 
diabetes) and shared records; and developing a the 
Digital  Health  Strategic  Roadmap  supporting  the 
National  Health  Systems  Strategy  with  improved 
interoperability,  a  digital  clinical  platform  and 
expanded  telemedicine.  In  addition,  investments 
under  the  RRP  and  cohesion  policy  aim  to  boost 
the digital transformation of the healthcare sector 
in  Malta.  Measures  focus  on  building  and 
improving  digital  health  tools,  e-health  services 
and  applications.  Malta  also  participates  in  joint 
actions  and 
receives  direct  grants  under 
EU4Health,  aimed  at  improving  the  semantic 
interoperability  of  health data  and  facilitating the 
implementation  of  the  European  Health  Data 
Space. 

(259) National target set by the Council Recommendation on 

stepping up EU actions to combat antimicrobial resistance in 
a One Health approach, 2023/C 220/01. 

(260) The project – JA HEROES | Health Workforce Planning Project. 

(261) ) US National Library of Medicine, https://clinicaltrials.gov. 

96 

 
 
 
 
 
as  a  result  of  strong  population  and  labour  force 
growth through immigration. 

Graph A16.1: House prices, rents and price-to-
income evolution in MT and EU27 since 2005s 

Source: Eurostat 

and 

structurally 

Malta’s  housing  supply  indicators  point  to  a 
volatile 
constrained 
construction  cycle.  Residential  building  permits, 
measured  in  square  metres,  were  very  volatile 
between  2014  and  2023,  recovering  partially  in 
2025  (see  Graph  A16.2).  Over  the  same  period, 
residential  building  producer  prices  continued  to 
rise,  accelerating  particularly  after  2020.  They 
have  reached  historically  high  levels  in  recent 
years,  reflecting  the  impact  of  rising  construction 
costs  and  capacity  pressures 
in  the  sector. 
in  dwellings,  expressed  as  a 
Investment 
percentage  of  GDP,  fluctuated  as  well,  growing 
strongly and peaking around 2020, while easing in 
recent years.  

ANNEX 16: HOUSING 

Vulnerable  groups  in  Malta  face  significant 
challenges  due  to  rising  rents  and  house 
prices.  Rising  house  prices  and  rents  impact  not 
only  the  overall  population  but  also,  in  particular, 
vulnerable households (including non-EU nationals, 
children,  single-parent  households,  and  those  at 
risk  of  poverty),  thereby  deepening  poverty  and 
social exclusion. The construction sector, critical to 
addressing  housing  supply,  struggles  with  labour 
shortages  and  poor  job  conditions,  relying  heavily 
on non-EU nationals who endure precarious safety 
standards. Although the government has launched 
is 
substantial  social  housing 
expanding  the  housing  stock, 
it  seems  that 
provision  remains  insufficient.  Efforts  are  also 
ongoing  to  strengthen  existing  housing  support 
schemes.  High  rental  rates  and  limited  access  to 
accessible  social  housing  make  it  difficult  for 
people  with  disabilities 
live 
independently. 

initiatives  and 

in  Malta 

to 

Housing market developments 

Malta’s  housing  market  has  experienced  a 
strong  and  sustained  increase  in  nominal 
house  prices  over  the  past  decade,  clearly 
outpacing  developments  in  the  EU.  After  a 
period  of  relative  stability  in  the  early  2010s, 
house  prices  in  Malta  rose  significantly  from 
around 2014 onwards (see Graph A16.1). Over the 
in  house  prices 
past  decade, 
increase 
significantly  outpaced 
rental  prices 
(including  existing  and  new  rental  contracts), 
although  the  latter  have  increased  noticeably  in 
recent  years.  The  proportion  of  tenants  in  Malta 
also increased rapidly over the last decade, with a 
12  percentage  point  rise,  driven  by  strong  rental 
demand from foreign workers and tourists.  

that  of 

the 

Affordability pressures remain comparatively 
contained  overall.  The  price-to-income  ratio  in 
Malta  has  declined  since  2007.  Slightly  higher 
overall  income  growth  has  offset  the  increase  in 
house  prices,  limiting  affordability  pressures  as 
measured  by  the  price-to-income  ratio.  House 
prices  and  rents  increased  by  5.9%  and  1.7% 
respectively  between  2024  and  2025.  In  recent 
years  the  proportion  of  homeownership  in  Malta 
has  declined,  falling  to  68.1%  in  2024  compared 
with  an  average  of  79.7%  in  2020-2024.  This 
reflects the emergence of a buoyant rental market 

97 

751001251501752002252502753000507091113151719212325Index (2005 = 100)Nominal prices MTNominal prices EU27Rental prices MTRental prices EU27Price-to-income ratio MTPrice-to-income ratio EU27 
 
  
 
 
Graph A16.2: House supply indicators in MT since 
2005 

wages and a high incidence of workplace accidents 
(see Annex 11) (264)). 

Structural policies 

Recent  initiatives  aim  to  address  the  rapid 
growth  in  housing  demand.  Labour  migration 
and  the  expansion  of  the  tourism  sector  have 
increased 
the  demand  for  housing,  putting 
pressure  on  affordability.  The  government  has 
initiated  a  sizeable  social  housing  construction 
programme  in  recent  years,  the  largest  since  the 
1980s.  The  initiative  seeks  to  strengthen  the  role 
of  public  housing  and  to  partly  offset  demand 
pressures  by  expanding  the  stock  of  social  and 
affordable  dwellings  (265).  Malta  is  also  working 
more  closely  with  the  private  sector  to  lease 
properties to the Housing Authority for a period of 
10  years  (known  as  the  Nikru  biex  Nassistu 
scheme)  for  use  as  social  housing.  At  present, 
there  are  more  than  1  300  private  properties  in 
this scheme that are used for social housing (266). 

Caps  are  in  place  but  have  not  prevented 
rents  from  rising.  Since  the  entry  into  force  of 
the  Private  Residential  Leases  Act  in  January 
2020, Malta has applied a 5% cap on annual rent 
increases.  The  cap  applies  only  when  an  existing 
lease is renewed but not when a tenancy ends and 
a  new  contract  is  signed.  In  practice,  this  allows 
landlords to terminate leases and re-let the same 
property  at  significantly  higher  rents,  effectively 
circumventing  the  cap.  In  2025,  a  parliamentary 
petition  was  submitted  arguing  that  this  loophole 
undermines  tenant  protection  and  contributes  to 
rent  inflation.  The  petition  called  for:  (i)  the  rent 
cap  to  be  linked  to  the  registered  rent  of  the 
dwelling,  irrespective  of  tenant  turnover;  and  (ii) 
stronger 
leases  being 
terminated  solely  to  increase  rents  (267).  At  the 

safeguards  against 

(264) Justice and Peace Commission, Beyond GDP II: Third Country 
Nationals in Malta, 2024, and Construction Malta, Malta’s 
construction sector under fire, 2025.  

(265) Housing Europe, The State of Housing in Europa: Malta, 

2025, and Times of Malta, Beyond Walls – A book on the 
evolution of social housing in post-war Malta, 2025. 

(266) Housing Authority, Nikru biex Nassistu and Malta 

Independent, Scheme whereby landlords lease vacant 
properties to Housing Authority for social housing extended, 
2025. 

(267) Times of Malta, 1 November 2025 and Parliament of Malta, 

Petition No.: 76, 2025. 

(1) 4-quarters moving sums (averages for prices) 
Source: Eurostat 

Demand for housing in Malta remains strong. 
The number of residential property transactions as 
measured  by  registered  final  deeds  of  sale  and 
registered promise-of-sale agreements stayed flat 
in 2023 and 2024 and increased in 2025 by 6.0% 
and 7.3% respectively (262). Furthermore, Malta has 
had  particularly  stable  and  low  mortgage  interest 
rates (263) compared with other Member States. As 
a result, the house price growth in the country did 
not  exceed  the  change  in  the  borrowing  capacity 
of the population.  

The construction sector in Malta is grappling 
with  significant  labour  shortages  and  job 
quality concerns. The job vacancy rate within the 
construction  industry  has  been  increasing  since 
early  2021,  reaching  4.6%  by  Q4  2025,  which  is 
average.  By  Q4  2025,  46.8%  of  employers in  the 
higher  than  pre-pandemic  levels  and  the  EU 
construction 
labour 
sector  anticipated 
shortages  would  constrain  production  vs  the  EU 
average  of  27.5%.  Additionally,  non-EU  nationals 
make  up  an  increasingly  high  proportion  of  the 
workforce  (up  to  25%)  in  the  construction  sector, 
highlighting  their  significant  role  in  addressing 
labour  demands.  Despite  recent  reforms,  the 
sector still faces poor working conditions, with low 

that 

(262) NSO Malta 2026. ‘Residential Property Transactions: March 

2026’, News Release 061/2026. 

(263) European Commission 2025. ‘Housing in the European Union: 
Market Developments, Underlying Drivers, and Policies’. 
European Economy Discussion Paper 228. 

98 

012345678305070901101301501701900507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis) 
  
 
 
same  time,  measures  need  to  consider  that  rent-
control  measures  tend  to  reduce  supply  and 
renovations (268). 

Vulnerable groups 

Housing  affordability  in  Malta  continues  to 
be a pressing issue, especially for vulnerable 
households.  In  20254,  7.7%  of  those  at  risk  of 
poverty  or  social  exclusion  had  mortgage  or  rent 
arrears.  Moreover,  although  people  face  a  lower 
overall  housing  cost  overburden  rate  than  the  EU 
average (6% vs 7.9% in 2025) (269),(270). A notable 
21.2%  of  non-EU  nationals  face  housing  cost 
overburden 
issue 
in  2025.  Moreover, 
profoundly  affects  23%  of  people  at  risk  of 
poverty or social exclusion and a striking 35.4% of 
young people at risk of poverty or social exclusion, 
as well as 21.5% in the lowest income quintile. 

the 

Housing  costs  are  a  significant  driver  of 
in  particular. 
poverty,  affecting  children 
Evidence by the JRC shows that rental and housing 
costs  cause  living  standards  to  deteriorate,  while 
housing subsidies only partially improve them (271). 
This points to housing affordability as a structural 
rather than transitory factor shaping poverty risks. 
The  analysis  reveals  a  significant  tenure  divide, 
with  tenant  households,  especially  those  paying 
market rents, experiencing the largest increases in 
poverty  and  poverty  gaps.  Housing 
costs 
substantially  deepen  poverty  among  the  poorest 
households.  They  also  push  a  non-negligible 
proportion  of  households  in  the  lower-middle 
income  range  into  poverty,  and  affect  children 
more  deeply.  Vulnerable  households,  particularly 
those  consisting  of  single  parents,  non-EU 
low  educational 
nationals  and  families  with 
attainment, are deeply affected. 

Overcrowding  and  energy  poverty  are 
significant issues for vulnerable groups. While 
the  general  overcrowding  rate  remains  low  at 
4.7%,  well  below  the  EU  average  of  16.8%,  it 
impacts  9.7%  of  non-EU  nationals  and  only  3.2% 
of  Maltese  nationals.  This  issue  is  particularly 
prevalent  among  families  with  dependent  elderly 
and/or  children.  Similarly,  energy  poverty  affects 
vulnerable groups more deeply (see Annex 12). 

Housing support is delivered through a single 
public  framework  managed  by  the  Housing 
Authority. Housing support includes the allocation 
of  social  housing,  housing  affordability  schemes, 
regulation  of  the  private  rental  market  and 
property  management.  Social  housing  is  provided 
to  eligible  low-income  households.  In  parallel,  a 
range of benefit-based schemes provides financial 
support  to  households,  including:  (i)  grants  and 
subsidies to promote access to homeownership; (ii) 
rent  support  to  improve  rental  affordability;  (iii) 
measures to increase owner-occupiers’ purchasing 
power; 
property 
refurbishment  to  improve  housing  quality.  In  the 
2026  Budget  Speech,  several  existing  housing 
schemes  were  boosted  and  extended  (272).  While 
accessibility  in  public  buildings  has  been  largely 
a 
satisfactorily 
comprehensive  set  of  standards  is  needed  to 
address accessibility in private dwellings (273). 

legislation, 

assistance 

addressed 

and 

(iii) 

for 

in 

it. 

there 

Nonetheless,  there  does  not  appear  to  be 
enough  social  housing  and  it  is  difficult  to 
is  no  specific 
access 
In  Malta, 
for  social 
comprehensive  standalone  policy 
improvements, 
housing.  Despite  some  recent 
supply  remains  limited  and  partially  reliant  on 
public–private  partnerships, 
long 
waiting  lists.  Only  8.1%  of  the  population  lives  in 
housing rented at reduced prices or free of charge, 
which  is  below  the  EU  average  of  10.2%.  At  the 
same  time,  eligibility  is  narrowly  defined  on  the 
basis  of  income,  assets,  family  composition  and 
residency  criteria (274).  The  Ministry  for  Social  and 

resulting 

in 

(268) Kholodilin, ‘Rent control effects through the lens of empirical 
research: An almost complete review of the literature’, 2024. 

(269) This indicator should be read together with the tenure 

structure (homeowners, tenants), that may differ across 
countries and regions. 

(270)The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

(271) The simulation was performed by the European Commission, 
Joint Research Centre, based on the EUROMOD model, J2.0+. 

(272) Government of Malta, Budget Speech 2026, 2025. 

(273) Accessible and sustainable housing for persons with 

disabilities, Bezzina Lara, Callus Anne-Marie, Camilleri Zahra 
Amy, Gauci Vickie, European Disability Experts, to be 
published.  

(274) Housing Authority, Annual Report, 2024 and Social Housing 
website; Government of Malta, Affordable and Social 
Housing: Working Paper to the National Strategy for Poverty 
Reduction and Social Inclusion: 2025-2035, 2024. 

99 

 
 
 
Graph A16.3: Housing affordability selected indicators 

Source: European Commission.  The overburden rate should be read together with the tenure structure (homeowner, tenants), 
that may differ across country and regions. 

Affordable  Accommodation  announced  at  the  end 
of  2025  that  the  social  housing  stock  had  been 
(275).  The  2025–2035 
substantially 
national  strategy  for  poverty  reduction  and  social 
inclusion  also  features  a  number  of  policy 
measures related to social housing. 

increased 

Homelessness  in  Malta  remains  an  under-
addressed  issue.  In  the  absence  of  an  official 
definition or a national strategy, support is largely 
provided by charities and the third sector. In 2024, 
150  people  were  living  rough  (ETHOS  1),  399  in 
emergency accommodation (ETHOS 2) and 551 in 
accommodation  for  the  homeless  (ETHOS  3). 
indicates  capacity  constraints,  with 
Evidence 
shelters  operating  close 
full  occupancy, 
to 
accommodating  both  adults  and  children,  while 
cases of rooflessness persist. Financial difficulties 
are the most commonly reported trigger, alongside 
mental  health  issues,  domestic  violence  and  job 
loss,  with  notable  gender  differences  in  the 
underlying causes (276). 

(275) Housing Authority, Social Housing Impact: Over 900 Families 

Assisted in 22 Months, 2025. 

(276) ESPAN, The fight against homelessness and its links with 

anti-poverty policies across the European Union, 2025, YMCA 
Malta and Marketing Advisory Services, Contemporary 
homelessness in Malta: qualitative research, 2022 and ESN, 
European Social Services Index, 2025. 

100 

 
 
 
HORIZONTAL 
ANNEX 17: SUSTAINABLE DEVELOPMENT GOALS 

dimensions 

This annex assesses Malta’s progress on the 
sustainable  development  goals  (SDGs)  along 
competitiveness, 
of 
the 
and 
fairness 
social 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set developed to monitor progress on the SDGs in 
the EU. 

On  SDGs  related  to  competitiveness,  Malta 
performs  well  on  decent  work  and  economic 
growth 
(SDG 4). 
(SDG 8)  and  education 
However, though improving, it needs to catch 

Graph A17.1: Progress towards the SDGs in Malta 

up  with  the  EU  average  on  SDG 9  (Industry, 
innovation and infrastructure). Malta increased 
its  tertiary  education  rate  from  41%  in  2019  to 
47.7% in 2025 against 44.8% for the EU (SDG 4). 
Further,  both  adult  participation  in  learning  in  the 
past  four  weeks  (19.7%)  and  the  percentage  of 
adults with at least basic digital skills (66.8%) are 
(13.7%  and  60.4%, 
above  the  EU  average 
respectively).  However, 
innovation 
regarding 
(SDG 9),  the  Maltese  research  and  innovation 
system suffers from underinvestment as shown by 
the  indicator  on  gross  domestic  expenditure  on 
R&D  (0.54%  of  GDP  in  2024  against  the  EU 
average  of  2.24%).  The  percentage  of  R&D 
personnel  (0.76%  of  the  active  population  in 
2024)  is  less  than  half  the  EU  average  (1.59%). 
Complementing  the  Cohesion  Funds,  the  recovery 
and  resilience  plan  (RRP)  targets  digitalisation 
bottlenecks.  Cohesion  Policy  also  supports  R&I 
infrastructure 
the 
development of a business incubation centre. 

equipment, 

and 

and 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. A high status does not 
mean that a country is close to reaching a specific SDG, but signals that it is doing better than the EU on average. The progress 
score is an absolute measure based on the indicator trends over the past five or six years. The calculation does not take into 
account any target values, as most EU policy targets are only valid for the aggregate EU level. Depending on data availability for 
each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

101 

 
 
 
 
 
 
 
While  Malta  is  improving  on  several  SDGs 
related to sustainability (SDGs 9, 12, 13, 15), 
their status remains below the EU average. It 
performs  well  on  SDG 7  (Affordable  and 
clean energy), SDG 11 (Sustainable cities and 
communities) and SDG 14 (Life below water), 
but needs to catch up with the EU average on 
SDG 2  (Zero  Hunger).  Although  Malta’s  energy 
consumption  per  capita  is  below  the  EU  average 
(SDG 7),  the  17.2%  share  of  renewable  energy  in 
gross final energy consumption, though improving, 
remains  far  below  the  EU  average  of  25.2%  in 
2024  (SDG 13).  As  for  affordable  energy,  the 
percentage  of  the  Maltese  population  unable  to 
keep their homes adequately warm (7.8% in 2024) 
is below the EU average (9.2%). Waste generation 
per capita was higher than the EU average in 2022 
(5 008 kg  against  4 981 kg) 
(SDG 12),  and 
municipal  waste  was  recycled  (SDG 11)  at  a  rate 
around  a  third  of  the  EU  average  (17.4%  against 
47.9%  in  2023).  Only  7.1%  of  the  Maltese 
population  were  connected  to  at  least  secondary 
wastewater  treatment 
in  2023  compared  to 
80.7%  at  EU  level  (SDG 11).  Various  measures  in 
Malta’s  RRP  aim  to  contribute  to  better  energy 
efficiency, clean energy, sustainable transport, and 
a  circular  economy.  Examples  include  energy-
efficiency  renovations  of  private  and  public 
buildings,  investments  and  reforms  to  increase 
renewable 
of 
sustainable  transport,  and  measures  to  improve 
waste management and recycling, including in the 
construction  and  demolition  industries.  Alongside 
the RRF, Cohesion Policy also supports multimodal 
solutions  to  improve  mobility  (e.g.  pedestrian 
pathways,  cycling  lanes)  and  investment  in  an 
organic  processing  plant to  reduce  the  amount  of 
organic waste that goes to landfill. 

promotion 

capacity, 

energy 

On  SDGs  related  to  social  fairness,  Malta 
performs  well  on  decent  work  and  economic 
growth (SDG 8), affordable and clean energy 
(SDG 3)  and  education 
(SDG 7),  health 
(SDG 4). Though still below the EU average, it 
is  improving  on  gender  equality  (SDG 5). 
However,  though still  above the  EU  average, 
it  is  moving  away  from  SDGs  addressing 
poverty  and  inequalities  (SDGs 1,  10).  Malta 
has  very  low  self-reported  unmet  medical  needs 
(0.3%  in  2024  against  2.5%  for  the  EU),  but  the 
is  above  the  EU  average  and 
obesity  rate 
increasing  (SDG 3).  On  SDG 4  (Quality  education), 
Malta has significantly decreased its rate of early 
leavers  from  education  and  training,  which  fell 

from  14.2%  (2019)  to  8.6%  in  2025,  and  is  now 
below  the  EU  average  (9.1%).  However,  there  is 
significant  room  for  improvement  in  increasing 
basic  skills  levels  (32.6%  of  low-achieving  15-
year-olds  in  mathematics  against  29.5%  for  the 
EU  in  the  OECD  Programme  for  International 
Student Assessment (PISA) 2022). The percentage 
of children over three in early childhood education 
stood  at  94.5%  in  2024,  slightly  below  the  EU 
average  (95%).  The  gender  employment  gap 
(SDG 5),  though  improving,  remains  wide  in  Malta 
(12.4 percentage  points  (pps)  against  9.6 pps  for 
the  EU  in  2025).  Further,  women  hold  far  fewer 
senior management positions in Malta than the EU 
average  (18%  vs  33.6%  in  2025).  Although  the 
percentage  of  people  at  risk  of  poverty  or  social 
exclusion  (SDG 1)  remains  below  the  EU  average 
(19.7%  vs  21%  in  2024),  there  is  a  significant 
urban-rural 
and 
investments  in  the  Maltese  RRP  are  helping  to 
strengthen  the  health  system,  provide  quality 
inclusive  education  and  training,  and  promote 
female labour market participation. 

(SDG 10). 

Reforms 

gap 

increased 

(SDG 8),  Malta  further 

Malta performs well on most SDGs related to 
macroeconomic stability (SDG 8 and SDG 16), 
however,  it  is  moving  away  and  needs  to 
catch  up  with  partnership  for  the  goals 
(SDG 17).  Regarding  decent  work  and  economic 
growth 
its 
employment rate from 75.6% in 2019 to 83.6% in 
2025,  which  is  very  high  compared  to  the  EU 
average  (76.1%  in  2025).  At  8.5%  in  2025,  the 
percentage  of  young  people  not  in  employment, 
education  or  training  is  below  the  EU  average 
(11%)  and  long-term  unemployment  is  very  low 
(0.6%  against  1.9%  for  the  EU  in  2025).  While 
general government gross debt, at 46.4% of GDP, 
was far below the EU average of 81.7% of GDP in 
2025,  the  share  of  environmental  taxes  in  total 
tax  revenues  remained  below  the  EU  average 
(SDG 17).  Although  overall  Malta  performs  above 
the  EU  average  on  SDG 16  (Peace,  justice,  and 
strong  institutions),  it  scores  worse  than  the  EU 
average  in  the  Corruption  Perceptions  Index  (46 
against  62  in  2025,  with  0  being  highly  corrupt 
and 100 very clean).  The RRP includes reforms to 
institutional 
address 
challenges  relating  to  justice  and  to  the  fight 
against corruption and money laundering. 

long-standing 

several 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

102 

 
ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Map A18.1:  GDP per head compared with the EU 
average 

Malta’s economy continues to grow, with the 
islands of Gozo and Comino catching up with 
the mainland. In 1995, Malta's GDP per head (in 
purchasing power standard,  PPS)  was 78% of the 
EU  average.  Over  the  following  20  years,  it  grew 
consistently,  reaching  the  EU  average  in  2016. 
Between  2005  and  2024,  Malta  had  the  highest 
growth  among  EU  countries,  with  an  average 
annual GDP growth of 5.2% (277). In 2024, Malta’s 
GDP per head (in PPS) was above the EU average 
at  110%.  Despite  disparities  in  GDP  per  head 
between  the  mainland  and  Gozo  and  Comino, 
between  2014  and  2024,  Gozo  and  Comino 
outpaced the mainland’s growth (see Table A18.2). 
They  recorded  average  annual  GDP  growth  per 
head  of  4.3%  and  3.8%,  respectively  (compared 
with the EU average of 1.4%).  

Disparities  in  GDP  per  head  continue  to 
mirror  significant  productivity  gaps.  Malta 
mainland  serves  as  the  economic  hub  of  the 
country. In 2024, GDP (in PPS) per hour worked on 
the  mainland  was  84%  of  the  EU  average,  while, 
in  Gozo  and  Comino,  it  reached  70%  (Graph 
A18.1).  In  particular,  in  2024,  Malta  mainland’s 
productivity  level  in  public  services  and trade  and 
transport  was  well  above  the  EU  average,  with  a 
PPS  index  of  120%  and  108%,  respectively. 
Meanwhile,  Gozo  and  Comino’s  productivity  levels 
fell  below  the  EU  average  in  all  sectors.  Only  in 
construction  did  Gozo  and  Comino  surpass  Malta 
mainland  with  a  PPS  index  of  88%  of  the  EU 
average. Nonetheless, the country’s productivity in 
industry  demands  particular  attention  as  it  stood 
at  a  PPS  index  of  81%  in  Malta  mainland 
compared  with the  EU  average,  and  60%  in Gozo 
and Comino. 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average 
Source: Commission calculations based on Eurostat 16 July 
2025 data. 

Graph A18.1: Productivity per hour worked in Malta 
(NUTS 3 level): average annual growth 2014-
2024 and productivity level in 2024 

Source: ARDECO (JRC) 

(277) Source:  Eurostat  -  https://ec.europa.eu/eurostat/statistics-
explained/index.php?title=National_accounts_and_GDP. 

103 

0.71.82.31.8100847084EUMaltaGozo and Comino/Għawdex uKemmunaMaltaAverage annual growth2014-2024 (%)Productivity in 2024GDP/hour, EU27 = 100 
 
 
 
 
 
 
   
 
 
 
Table A18.1:Main development trends, challenges and the concentration of resources 

Source: European Commission based on Eurostat data; categories of regions based on Map A18.1. 

Key challenges for regional 
competitiveness 

the quality of educational spending (see Annex 2). 
Similarly,  participation  in  STEM-related  subjects 
within  vocational  education  and  training  (VET)  is 
also limited. (see Annex 13).  

A  favourable  environment  for  research  and 
development is crucial for Maltese territories 
to  flourish.  Total research  and  development 
(R&D) intensity is limited and continues to be on a 
declining  trend  (at  0.54%  of  GDP  in  2024  vs  the 
EU  average  of  2.24%)  (see  Annex  4).  As  the 
Maltese  ecosystem  is  characterised  by  a  majority 
of  micro-enterprises  operating  in  a  small  market, 
the  administrative  burden,  together  with  the 
limited  availability  of  funding  and  investment  for 
R&D, can be a significant barrier for companies to 
innovate  and  scale  up.  In  2024,  R&D  expenditure 
in  the  business  enterprise  sector  (BERD)  only 
accounted for 0.38% of GDP (EU average: 1.49%). 
Efforts to strengthen investments in R&D, together 
with  the  effective  implementation  of  Malta’s 
Smart 
better 
academia-business collaboration, could help foster 
innovation-driven growth (see Annex 4).  

Specialisation 

Strategy 

and 

and  mathematics 

A  critical  shortage  in  science,  technology, 
(STEM) 
engineering 
graduates  threatens  future  research  and 
innovation  capacity.  Despite  a  high  number  of 
individuals  with  a  tertiary  education,  the  number 
of new STEM doctorate graduates in Malta is well 
below the EU average (278). This restricts the talent 
pool  of  workers  needed  to  nurture  the  local 
innovation  ecosystem  and  raises  questions  about 

the 

sustainability 

Demographic  trends have a major impact on 
the  country,  putting  significant  pressure  on 
resources, 
of 
infrastructure  and  the  delivery  of  public 
services.  Between  2015  and  2024,  Malta’s 
population  grew  at  an  average  annual  rate  of  27 
per 1 000 residents. All parts of the country grew 
at  a  faster  pace  compared  with  the  EU  average 
(EU:  1.8).  Malta’s  population  density  was  1 766 
people  per  km²  in  2023  (EU:  109  per  km²), 
recording  the  largest  growth  in  the  EU  between 
January 2003 and January 2023 (279). 

Malta’s  rapid  population  growth  and  high 
density  put  sustained  pressure  on  transport 
infrastructure, 
impacting  competitiveness 
and  people’s  quality  of  life.  In  the  Regional 
Competitiveness  Index  2022,  Malta  achieved  a 
score  of  90  (vs  EU:  100),  with  infrastructure 
quality  identified  as  a  factor  adversely  impacting 
the 
cars 
continue  to  dominate  as  the  preferred  mode  of 
transport, with the stock of licensed motor vehicles 
continuing  to  rise.  The  motorisation  rate  in  Malta 
(passenger  cars  per  1 000  inhabitants)  grew  by 
0.17%  (280).  Gozo  and  Comino  had  the  highest 
motor  vehicle  density,  with  1 126  vehicles  per 

competitiveness.  Private 

country’s 

(278) Source:  European  Innovation  Scoreboard  2025  –  country 

(279) Source: Eurostat – Demography of Europe 2025 edition.  

profile Malta. 

(280) Source: Eurostat (demo_pjan, road_eqs_carage). 

104 

Main development trendsMore developed region(population 574,250)Malta has experienced a robust growth in GDP per capita (in PPS), exceeding the EU average. However, territorial imbalances between mainland Malta and Gozo and Comino are relevant, with mainland Malta serving as the main economic hub of the country. The rapid population growth and high density pose challenges to the sustainability of infrastructure and the delivery of public services, highlighting the need for strategic land management. The country's connectivity relies heavily on road transport and private vehicle use, leading to traffic congestion and indicating the urgent need for 'soft mobility' solutions and alternative collective modes of transport. To ensure long-term competitiveness and the quality of life of citizens, increased investments are crucial in the decarbonisation of the economy and in research and development activities to foster innovation-driven growth. Furthermore, water scarcity remains a pressing issue amid growing population demands, requiring more sustainable and innovative solutions to seawater desalination and efficient  
 
 
 
   
 
Effective 

residents 

in (281). 
1000 
traffic 
management  is  essential,  particularly  in  urban 
‘soft  mobility’ 
areas.  Further 
infrastructure 
alternative 
collective  modes  of  transport  could  facilitate 
multimodality and encourage a cultural shift away 
from relying on private cars.  

investment 
and 

sustainable 

in 

Map A18.2:  Average annual population change at 
NUTS 3 level (2015-2024) 

Source: Eurostat and JRC 

The  country’s  greenhouse  gas  emissions  per 
head are below the  EU average,  with  energy 
and transport remaining as pivotal levers for 
decarbonisation.  In  2024,  the  share  of  energy 
from  renewable  sources  in  gross  final  energy 
consumption was still limited in  Malta, accounting 
for  17.2%  (EU  average:  25.2%)  (282).  There  is 
increase 
significant  untapped  potential 
renewable energy generation, including from wind 
and  solar  sources.  As  of  2025,  there  is  still  no 
wind  power  production.  Solar  power  is  the  main 
source:  solar  photovoltaic  (PV)  production  in  the 
country stands at 0.38 MWh/year/capita, below the 
EU  average  of  0.56  MWh/year/capita.  While 
Malta’s towns and suburbs exceed the EU average 
for  solar  PV  production,  cities  and  rural  areas  are 
below it (283). The technical potential for solar PV in 

to 

(281) Source:  Malta  National  Statistics  Office  –  Transport  –  Road 

Transport. 

(282) Source: Eurostat – Renewable energy statistics. 

Malta  (2.23  MWh/year/capita)  is  well  above  the 
current output, pointing to major scope to scale up 
solar  rooftop  production,  especially  outside  city 
cores.  

emissions 

Domestic  transport  in  Malta  significantly 
contributes  to  greenhouse  gas  emissions.  In 
transport 
from  domestic 
2023, 
accounted  for  34.1%  of  Malta’s 
total  net 
greenhouse  emissions.  Access  to  electric  vehicle 
charging  infrastructure  in  Malta  is  well  below  the 
EU average, with pronounced territorial disparities. 
In  2022,  in  Gozo  and  Comino,  there  were  14 
electric  vehicle  charging  points  within  10 km, 
compared  with  51  on  the  mainland  (EU  average: 
287). Gaps in public charging infrastructure, which 
is  particularly  underdeveloped  in  certain  areas, 
slows the transition to decarbonised transport and 
sustainable mobility (see Annex 8).  

Map A18.3:  Electric vehicle recharging points, 
2025 

Source: European Commission, TENtec Geographic 
Information System, https://link.europa.eu/CMDyTH 

types 

Malta’s 
territories  would  benefit  from 
stronger  measures  to  improve  air  quality.  In 
2024,  PM2.5  annual  average  concentration  in 
levels  across  all 
Malta  was  above  the  EU 
settlement 
10.88 μg/m³, 
towns/suburbs: 9.96 μg/m³, rural: 9.24 μg/m³, total: 
10.12 μg/m³,  EU  average:  7.74 μg/m³) (284). 
In 
addition  to  accelerating  investment  in  renewable 
energy  and  prioritising  lower  urban  emissions 
through  cleaner  mobility  solutions,  it  would  be 
urban 
create  more 
beneficial 
green 
afforestation, 
promote 
and 
infrastructure 

(cities: 

to 

(283) Source: European Commission and JRC – Rural Observatory. 

(284) Source: European Environment Agency – European air quality. 

105 

 
 
 
 
 
 
 
 
 
 
Table A18.2:Selection of key regional indicators (at NUTS 3 level) for Malta 

Dark green - the indicator is at least 120% of the EU average. 
Light green - the indicator is at least 100% but less than 120% of the EU average. 
Yellow - the indicator is at least 90% but less than 100% of the EU average. 
Light red - the indicator is at least 75% but less than 90% of the EU average. 
Dark red - the indicator is less than 75% of the EU average. 
This colour scale applies to 'positive' indicators where higher values are favourable. 
For 'negative' indicators (where higher values are unfavourable), the colours are reversed. 
Source: Eurostat and JRC 

soil 

especially  given 
from  over-
construction. This would give the population access 
to  green  open  spaces  while  helping  filter  the  air 
and reduce particulate matter.  

sealing 

faces 

climate 

distinct 

Malta 
change 
vulnerabilities, particularly its access to safe 
and high-quality water resources. The country 
is  affected  by  severe  water  scarcity,  which  is 
exacerbated by the over-extraction of fresh water 
and  the  significant  growth  in  the  population  and 
the number of tourists (see Annex 10). Since 2024, 
approximately  66%  of  Malta’s  water  supply  has 
been  sourced  from  reverse  osmosis  desalination 
plants,  while  the  remaining  34%  has  come  from 
fresh  groundwater  and  surface  water  abstraction 
(285).  Malta  has  four  reverse  osmosis  plants, 
including one in Gozo that received cohesion policy 
funding  in  the  2014-2020  programming  period. 
Ensuring  secure  access  to  water  underscores  the 
need  to  support  innovation  in  existing  seawater 
desalination  as  part  of  an 
integrated  water 
management  approach  with  a  view  to  (i)  limit 
energy  consumption  and  reduce  greenhouse  gas 
emissions  by  promoting  the  use  of  renewable 
energies;  and  (ii)  mitigate  the  environmental 
impact of brine disposal. 

through 
In  2022, 

challenges 
investments. 

resilience-
specific 
building 
the  blue 
economy  accounted  for  4.2%  of  the  national 
economy  and  generated  6.2%  of  national 
employment  (compared  with  the  EU  average  of 
1.7% and 2.4%, respectively). However, Malta has 
the  lowest  female  employment  rate  in  the  EU’s 
tourism  sector (286).  Climate  change  adaptation 
and 
resilience  are  critical  for  Malta’s  blue 
economy,  particularly  for  fisheries  and  coastal 
tourism, which are vulnerable to extreme weather 
events and the rise in sea levels (see Annex 10). A 
lack of investment delays further digitalisation and 
data management capabilities in fisheries control. 
Furthermore,  the  intense  use  of  coastal  and 
marine 
environmental 
exacerbates 
pressures  and  creates  conflict  among  users  of 
Malta’s  waters.  Investments  in  climate-resilient 
infrastructure,  skills  training,  and  sustainable 
aquaculture  could  enhance  the  sector’s  long-term 
viability. 

areas 

Malta  and  Gozo’s  sustainable  blue  economy 
contributes  significantly  to  tackling  island-

(285) Source:  Water  services  corporation,  available  at:  WSC  - 

Annual Report 2024. 

(286) Most  value  added  and  employment  is  generated  from 
coastal tourism (the largest sector), port activities and living 
resources (fisheries and aquaculture). 

106 

GDP per head (PPS, index)Real GDP per head growthPopulation growthProductivity: GDP (PPS) per hour worked (index)Productivity in industry (PPS, index)Productivity in construction (PPS, index)R&D expenditureR&D expenditure in business enterprise sector (BERD)Access to alternative fuel infrastructureEU27=100Average annual % changeAverage annual change per 1000 residentsEU27=100EU27=100EU27=100% of GDP% of GDPElectric vehicles charging points within 10 km20242014-20242015-2024202420242024202420242022EU1001.41.81001001002.21.5288Malta1103.826.98471720.540.3848Malta (mainland)1133.827.184717151Gozo and Comino/Għawdex u Kemmuna        664.324.170538814  
 
 
 
  
 
ANNEX 19: TRANSPORT 

Map A19.1:  TEN-T cross-border & national priority sections in Malta. 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  Malta  is  facing  with  the 
implementation  of  the  trans-European  transport 
network (TEN-T). 

European 

Malta  is  connected  to  the  trans-European 
transport network through the Scandinavian 
–  Mediterranean 
transport 
corridor.  The  corridor  plays  a  crucial  role  in 
facilitating the exchange of goods and passengers 
between  the  EU  and  its  external  borders  to  the 
north  and  to  the  south.  Being  an  island,  the 
country's  connection  to  the  TEN-T  network  is 
primarily via air and sea, rendering the upgrading 
of  ports  and  the  development  of  alternative  fuel 
infrastructure  essential  for  the  greening  and 
development of intra-EU transport. In this context, 
projects  to  enhance  the  competitiveness  and 
sustainability  of  the  maritime  sector,  such  as 
upgrading  the  basic  infrastructure  of  ports  and 
the  deployment  of  alternative  fuel  technologies, 
are of major importance. 

The  TEN-T  in  Malta  comprises  126 km  of 
road (16 of which are on the core network). 
Malta has no inland waterways or rail network. It 

has one airport, which is a core airport, as well as 
four  ports  (including  two  core  ports)  and  one 
urban node on the TEN-T (287). 

In  the  absence  of  a  rail  network,  and  in 
addition to the general priorities highlighted 
above,  priority  projects  include  the  upgrade 
and  grade  separation  of  two  critical  road 
sections in the south of Valletta. The projects 
will  strengthen  hinterland  connectivity  to  key 
logistics  hubs  and  support  their 
ports  and 
integration  into  the  transport  network,  while  also 
alleviating  congestion  issues  and  improving  road 
safety 
These 
interventions  will  not  only  increase  the  overall 
efficiency and reliability of the transport network, 
but  also  support  the  achievement  of  key  EU 
objectives,  such  as  reducing  greenhouse  gas 
road  safety.  The 
emissions  and 
improved  connectivity  and  reduced  travel  times 
resulting  from these projects  will  have  a  positive 
impact on the island's  economic competitiveness, 
life. 
social  cohesion,  and  overall  quality  of 

increasing 

southern 

along 

axis. 

the 

(287) TENtec Information System, according to Reg. 2024/1679. 

107 

 
 
 
 
 
 
 
 
Transport infrastructure projects are usually 
well  developed  and  mature  when  submitted 
for  financing,  with  realistic  timelines  and 
appropriate  mitigation  measures.  However, 
procurement  irregularities  have  been  detected  in 
EU-funded projects. 

108