Maltese Property Taxes

• Buying an Immovable Property
• Renting out an Immovable Property
• Selling an Immovable Property
• Donationing or Inheriting an Immovable Property
• Conditions of Buying an Immovable Property in Malta

As trusted Malta tax advisors, we are able to assist with and advice on any Maltese income tax, VAT or stamp duty issue regarding immovable property situated in Malta.

5% Stamp Duty

A duty on transfers of property situated in Malta (stamp duty) is payable on a transfer of property. The duty is normally paid by the purchaser, and amounts to 5% of the transfer value of the property. 1% is paid on the promise of sale agreement, whilst the remaining 4% is paid on the final deed of the transfer.

Standard Progressive Tax Rate (click here)

Rental income from immovable property situated in Malta is taxable in Malta, even if the owner of the property is not resident in Malta.

The rental income would normally be taxed at the normal tax rates applicable in Malta (progressive rates up to a maximum of 35% depending on the amount of the income). Deductions for interest paid on loan financing of the purchase of the property, and some other small deductions are usually allowed against the rental income.

A special tax scheme for rental income is available whereby the rental income, without any deductions, is brought to tax at 15%. Using the special tax scheme is at the option of the owner. Short lets to tourists may be classified as a trade and result in VAT registration obligations for the owner and Malta Tourism Authority licence obligations for the property in question.

Malta Property Taxes |Papilio Services Limited

5% – 8% Sales Tax

Malta imposes a tax on the sale of properties situated in Malta. The normal sales tax rate is 8% of the transfer value of the property. This is a flat tax charged on the market value of the property (less brokerage charges) and it is charged regardless of whether the seller is making a profit on the sale or not.

The sales tax rate may be reduced in certain circumstances. These include where the property is transferred within 5 years from the date of its acquisition (the sales tax rate may be reduced to 5%).

An exemption from paying the sales tax is granted where:

1. the property has been owned and occupied by the seller (as his/her residence) for a period of at least 3 years and is transferred within 12 months of the seller vacating the property.
   
2. the property is transferred between spouses or upon a separation/divorce, transfers of property between group companies, settlement of property on trust (depending on who the beneficiaries are) and a number of other situations.
   
3. donations of property to close family members.

0% Inheritance Tax

There are no inheritance taxes in Malta. However, the duty on transfers of immovable property situated in Malta is charged on any acquisition of property, including through inheritance and donations.

Exemptions are available in some circumstances, including where property is donated to or inherited by close family members and where property is donated to a philanthropic institution.

Conditions for Buying Immovable Property in Malta

1. Citizens of the EU who have resided in Malta for a minimum period of 5 years may freely acquire property in Malta without the necessity of obtaining a permit for the purpose.
2. Citizens of the EU who have not resided in Malta for a minimum period of 5 years may only acquire property in Malta for primary residence purposes, or for the purpose of conducting a business activity (including development and/or renting out the property), without the necessity of obtaining a permit.
3. Citizens of the EU who have not resided in Malta for a minimum period of 5 years require a permit to acquire property in Malta for secondary residence purposes (e.g. a holiday home).
4. Individuals who are not citizens of the EU require a permit to acquire property in Malta.
5. There are special designated areas in Malta where no permit is needed to acquire property in Malta, regardless of the citizenship of the purchaser or the purpose of purchase and regardless of any number of properties already held in Malta. These areas include the Cottonera, Portomaso, Manoel Island, Tigne Point, Madliena Village Complex, Smart City, Fort Cambridge, Tas-Sellum, Ta’ Monita, Pender Place, Mercury House, Metropolis Plaza developments in Malta and the Fort Chambray, Kempinski Residences and Vista Point developments in Gozo.
6. A permit to acquire a primary residence in Malta for non-EU citizens for primary residence permits is normally a straight-forward procedure, subject to some minimum conditions. The official fee to obtain such permit is currently €233.

For further information, do not hesitate to contact us.

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