MALTA Law and Practice Contributed by: Rosanne Bonnici and Rebecca Diacono, Fenech & Fenech Advocates
Separation of estates Under this system, each spouse retains their part of the estate, with full control and administration over it. If a couple wishes to apply the separation of estates as their matrimonial regime, they must appear before a notary to enter into a marriage contract to this effect; such contract is to be registered in the Public Registry. Community of residue and separate administration Under the community of residue system, property that a spouse has and/or acquires prior to marriage remains their own. In contrast, property acquired dur - ing marriage by each spouse is held and administered by the spouse who made the acquisition as the sole owner. In practice, this system is rarely applied by couples. Prenuptial, Antenuptial and Postnuptial Agreements The Civil Code caters for prenuptial, antenuptial and postnuptial agreements, subject to such agreements complying with the formalities prescribed by law. With reference to prenuptial agreements specifically, spouses may enter into a prenuptial agreement with other stipulations as to which system of property (matrimonial regime) will prevail during the marriage. Certain clauses (primarily relating to inheritance) may be included in this agreement and are deemed to be valid on the basis that they are included in a prenuptial agreement; their inclusion in a contract other than a prenuptial agreement would be null. Foreign Marriages A marriage, whether celebrated in Malta or abroad, shall be valid for all purposes in Malta if: • the formalities required for its validity according to the law of the country where the marriage is cel - ebrated are observed; and • each of the persons to be married is capable of contracting a marriage, according to the law of the country of their respective domicile. A decision of a foreign court on the status of a married person or affecting such status, shall be recognised in Malta. The decision must have been handed down by a competent court of the country in which either of
the parties to the proceedings is domiciled or of which either of the parties is a citizen. However, this is subject to Council Regulation (EU) 2016/1103 on implementing enhanced co-operation in the area of jurisdiction, applicable law and the rec - ognition and enforcement of decisions in matters of The donation of immovable property to an individual’s spouse, descendants in the direct line or ascend - ants in the direct line or to an individual’s siblings or their descendants in the absence of ascendants and descendants in the direct line, is exempt from capi - tal gains tax in the hands of the transferor in Malta. However, transfer duty is still payable on any such donation. On a subsequent transfer of that property, the donee is deemed to have acquired the property on the date the donor originally acquired it. If the transfer is made more than five years after the date of donation, the transferor may either: • opt to be taxed at 12% of the excess, if any, of the transfer value over the market value; or • pay property transfer tax (ranging from 8% to 10%) on the transfer value of the property. These conditions apply solely where the property does not form part of a project, as defined. matrimonial property regimes. 2.5 Transfer of Property If the transfer is made less than five years after the date of donation, the transfer is not subject to capital gains tax, but the transferor must pay property trans - fer tax. Accordingly, the transferor shall pay a final withholding tax (again ranging from 5% to 10%) on the transfer value of the property so transferred. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms Capital gains tax and transfer duty are both levied on a very limited number of assets (see 1.1 Tax Regimes ). In addition, the ITA provides a number of generous capital gains tax exemptions that incentivise asset owners to transfer their wealth to younger genera -
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