As a rule, a final flat rate property transfer tax of 12% is charged on transfer value (less any agency fees) which is taken to be the higher of the price paid and the market value. However, the law provides for a number of exceptions and exemptions including, for instance, an exemption from tax on the transfer of property that has been used a main residence for 3 years.
A 5% stamp duty is due on property transfers. Provisional 1% duty is payable on signing the promise of sale agreement while 4% balance is due upon the final deed. Stamp duty is usually borne by the purchaser.
In certain cases, the seller may opt to be taxed on capital gain (if any) realised on the transfer of property. Capital gains are taxed at individual tax rates ranging from 0% up to a maximum of 35%.
Sale of property is not subject to Value Added Tax (VAT).
Transfers by foreigners / non-residents
Foreigners who do not reside in Malta or who are not citizens of Malta must take into account a special procedure when they are about to sell their property. The notary in charge of drawing up the deed of sale is required to notify the Commissioner of Inland Revenue in advance about the transfer. The Commissioner may impose conditions on the transfer to the extent that these are necessary to ensure that the tax that may be due on the sale of that property or any other tax that may be due by that foreigner is paid.
There is no restriction on the transfer outside Malta of proceeds from the sale of the property, subject to the payment of any outstanding tax. No VAT is due on the transfer of property. There are no net worth, real estate tax or any local taxes in Malta
FFF Legal tax specialists can assist and provide a comprehensive package of tax consultancy, legal and related services to foreign investors wishing to buy or deal in property in Malta. Our services include:
- Individual and corporate tax planning including cross-border issues;
- Tax advice on property transfers, letting and real estate business in general.