MALTA Law and Practice Contributed by: Rosanne Bonnici and Rebecca Diacono, Fenech & Fenech Advocates
Property Tax Malta does not currently impose any property taxes based on 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 (as widely defined) of property or, in certain instances, with respect to any capital gains realised upon inter vivos transfers of property. 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 arising from the transfer of several chargeable assets, such as securi - ties, businesses 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 those for donations between family members and spouses. 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,
further on, these “personal” assets are also not sub - ject to any form of capital or wealth tax, nor to any form of inheritance tax. The ITA caters for several exemptions from capital gains tax. One such exemption relates to a transfer of shares in a Maltese company that is not a “property company”, where: • the shareholder is not tax-resident in Malta; and • the company is not owned or controlled directly or indirectly by individuals who are resident and domiciled in Malta. Other exemptions cover the sale of a person’s resi - dence, donations of chargeable assets to family mem - bers and so forth. Transfer Duty The DDTA applies to charge transfers of marketable securities and partnership interests if the relevant document is executed in Malta or, if executed outside Malta, when the document is used in Malta (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%, increasing 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 pro - vides for reduced rates of transfer duty and several exemptions, such as the first-time buyers scheme, which applies to individuals purchasing their first res - idential home in Malta and an exemption upon the transfer of a person’s home to their heirs upon death, subject to statutory conditions.
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