MALTA Law and Practice Contributed by: Rosanne Bonnici and Rebecca Diacono, Fenech & Fenech Advocates
step-up in the value of all assets to market value upon relocation to Malta. 1.4 Taxation of Real Estate Owned by Non- Residents No taxes are levied on the owners of real estate in Malta. Tax is levied in the form of tax on capital gains or property transfer tax on transfers of real estate – likewise transfer duty – subject to several exceptions and exemptions. 1.5 Stability of Tax Laws Maltese tax laws offer a significant level of stability, having been subject to relatively few changes over the last few decades, with the majority of the amend - ments being those harmonised at EU level. This has also been the case with the laws affecting the tax rules applicable to high net worth individuals, trusts, foun - dations and estates in general. 1.6 Transparency and Increased Global Reporting Malta has transposed the EU Directive on administra - tive co-operation in the field of taxation (DAC) and all amendments thereto (including the Common Report - ing Standard and the Tax Intermediaries Directive (DAC6)) into domestic law. The US Foreign Account Tax Compliance Act has also been transposed into Maltese law, with intermediaries being required to report financial account information to the US authorities. Following the CJEU judgment in Joined Cases C-37/20 Luxembourg Business Registers and C-601/20 Sovim , beneficial ownership information on companies is no longer available to the public. However, subject per - sons registered with the Malta Business Registry may still access this information. 2. Succession 2.1 Cultural Considerations in Succession Planning Over the past few years, there has been an increase in families wishing to plan the succession of their family business. This has led to the introduction of the Family
Business Act, which introduces a regulatory frame - work for registered family businesses (as defined), catering, inter alia, for several fiscal incentives linked to facilitating a successful business transfer during the lifetime of the owners, and for support measures post-transfer. Older generations often intend to plan for a transfer of wealth but are psychologically less prepared to do so than they think, and the plan in question is rarely executed. That said, it is quite common for older gen - erations to donate shares in family businesses to their children during their lifetime (because such a donation may be subject to a capital gains tax exemption in the hands of the transferor and a reduced rate of transfer duty in the hands of the transferee), with the older generation retaining the right of usufruct over those shares for a period of time or, at times, for their life - time. It is also common for older generations to retain a minority percentage shareholding with quasi-full control over the business, through the introduction of weighted voting rights at board level or veto powers. 2.2 International Planning Previously, the rules of British private international law have traditionally been applied by Maltese courts when dealing with cross-border property and succes - sion law matters. Therefore, Maltese courts previously opted for the system of scission, whereby immovable property is regulated by the lex situs and movable property is regulated by the lex domicilii at the time of death. Following the introduction of Regulation (EU) No 650/2012 on jurisdiction, applicable law, the recogni - tion and enforcement of decisions, and the accept - ance and enforcement of authentic instruments in matters of succession and on the creation of a Euro - pean Certificate of Succession (the “Regulation”), which applies to persons who died on or after 17 August 2015, the rules of British private international law no longer apply and the applicable law is to be determined in accordance with the Regulation (as elaborated on below). The Regulation is binding throughout the EU, with the exception of Denmark and Ireland (which have opted out of its application). The participating remaining EU
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