MALTA Law and Practice Contributed by: Rosanne Bonnici and Rebecca Diacono, Fenech & Fenech Advocates
(subject to certain exceptions), as well as transfers of immovable property in Malta, among others. The default rate of transfer duty on transfers of mar - ketable securities and partnership interests is 2%, going up to 5% if the company/partnership owns or has real rights over immovable property in Malta. However, a company/partnership may be entitled to a duty exemption covering acquisitions or disposals of marketable securities issued by companies locally as well as acquisitions or disposals by said company/ partnership of marketable securities. Transfers of immovable property in Malta are subject to duty at the rate of 5%, applying to transfers inter vivos and causa mortis alike. That said, the DDTA caters for reduced rates of transfer duty and several exemptions, such as the first-time buyers scheme, which is applicable to individuals purchasing their res - idential home for the first time in Malta, and exemption upon the transfer of a person’s home to their heirs upon death, subject to statutory conditions. Property Tax Malta does not currently impose any taxes on property on the basis of ownership. In addition to transfer duty (as indicated above), income tax is charged in the form of a Property Transfer Tax under the ITA upon transfers (widely defined) of property or, in certain instances, with respect to any capital gains realised upon trans - fers of property inter vivos. 1.2 Exemptions No wealth tax, gift tax, inheritance tax or similar taxes are currently in force in Malta. The ITA imposes tax on capital gains on the transfer of several chargeable assets, such as securities, busi - ness and real estate (including by way of donation), as well as a property tax on the transfer of real estate. There are a number of exceptions and exemptions, including on donations between family members and spouses, for example. The DDTA does, however, levy transfer duty (stamp duty) on the transfer of a limited number of assets, both during a person’s lifetime and on death.
As mentioned previously, the DDTA brings to charge transfers of marketable securities and partnership interests if the relevant document is executed in Malta or, if executed outside Malta, when said document is made use of in Malta (subject to certain exceptions), as well as transfers of immovable property or real rights thereon in Malta, among others. The default rate of transfer duty on transfers of mar - ketable securities and partnership interests is 2% or the value or the consideration, whichever is higher, going up to 5% if the company/partnership owns or has real rights over immovable property in Malta, both during a person’s lifetime and, in terms of current policy, also upon death. That said, a foreign-owned Maltese company or partnership may (subject to the satisfaction of a number of conditions) qualify for a so-called duty exemption, which covers acquisitions or disposals of marketable securities issued by com - panies locally as well as acquisitions or disposals by said company/partnership of marketable securities, In so far as the transfer of real estate located in Malta or real rights thereon is concerned, the default rate is 5% of the value or the consideration, whichever is higher. Several provisions in the law cater for a reduction in the quantum brought to charge or out - right exemptions, mostly targeting transfers between family members, such as the transmission upon death of the residential property occupied by the deceased at the time of death to their children. 1.3 Income Tax Planning There are limited opportunities for income tax plan - ning. A number of these opportunities arise around the transfer of assets that are subject to capital gains tax or property transfer tax, and the transfer duty due from the owner of such, into companies, trusts or founda - tions during said owner’s lifetime, for the benefit of future generations. Article 4A of the ITA provides for a so-called step-up in the value of capital assets, which is applicable to persons (individuals and entities alike) who become resident or domiciled in Malta, subject to said person having never been domiciled or resident in Malta at any point in time prior to the change in question. In such cases, said person shall have a right to obtain a
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