Property Tax in Malta
When selling property in Malta, tax is a very important consideration since most transfers of property are subject to income tax.
Transfer of immovable property in Malta
The transfer of immovable property in Malta is regulated by a system of withholding tax. The withholding tax is payable immediately upon the execution of the final deed and collected by the notary who publishes the deed.
There are various rates of withholding tax. Withholding tax is generally applied on the higher of the transfer value or the consideration paid by the buyer. The standard withholding tax rate is 8% however certain other rates may apply. When the transfer of a property falls within the scope of the withholding tax regime, selling property tax in Malta has to be applied irrespective of whether or not a profit has been made.
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Transfer of property which does not form part of project and which is transferred by not later than five (5) years from its date of acquisition – 5% withholding tax applies
Transfer of properties acquired before 1st January 2004 – 10% withholding tax applies
Transfer of property situated in an urban conservation area – 5% withholding tax applies.
Transfer of property which has been utilized by the transferor as a residence and which has not been owned by the transferor for no longer than three (3) years – 2% applies
Transfers of property which has been used as the sole residence of the transferor and which had been owned for at least three (3) years by such transferor is exempted from property transfers tax in Malta.
Persons who are not resident are may still opt out of the withholding tax regime and have the property transfers in accordance with the capital gains rules.
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When buying property in Malta tax is also an important consideration. Stamp duty is levied on the acquisition of immovable property. The standard rate for stamp duty is 5%, however certain exemptions may apply. Stamp duty in Malta of 5% is also applicable on the acquisition of shares in a Malta property company.
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