Property Tax when Buying Property in Malta

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There are a number of factors that make Malta an appealing and rewarding place to stay for locals and foreigners alike. Not only is this archipelago nestled in the beautiful Mediterranean, enjoying 300 days of sun and surrounded by crystal clear blue seas, but the island’s growing GDP and favourable tax laws have also seen it become a magnet for foreign investment, this is especially true when looking at the property tax in Malta.

 

Unlike many other countries, there isn’t a long list of taxes associated with purchasing property in Malta. There are no VAT implications on the purchase or sale of any immovable property situated in Malta or Gozo however the property is subject to Stamp Duty which is payable by the purchaser.

 

What is Stamp Duty in Malta?

 

Stamp Duty is a transaction-based tax which is only payable on the transfer of the deed from one party to another. The duty is calculated on the value of the consideration for the transfer of the property, or on the market value of the property, whichever is higher and is paid by the purchaser. However, a POS or Konvenju will not be considered valid unless a provisional payment equivalent of 20% of the total stamp duty fee is paid to the Commissioner for Inland Revenue.

 

Recent changes to the stamp duty have been made by the Maltese government in light of the 2020 Covid-19 pandemic. As part of the country’s stimulus package, the government has implemented changes to the stamp duty which see a huge reduction in property purchases under Promise of Sale (POS) and or, on property contracts that will be finalised between 9 June 2020 and 30 April 2021.

 

The new regulations will see stamp duty reduced from 5% for buyers with the first 20% payable upon signing of the POS, to 1.5% for the buyer, while the withholding tax for the seller will drop from 8% to 5%.

 

This is of course providing that the person acquiring the property is a Maltese resident and does not require an AIP permit in order to purchase the property. No relief may be claimed under article 32C of the Duty on Documents and Transfers Act on the same transfer.

 

There are however certain circumstances where exceptions can be made with regards to stamp duty.

 

Exceptions to the Payment of Stamp Duty in Malta

 

In certain circumstances, the Stamp Duty can be waived and need not be paid by the seller in the event that the sale of immovable property is between spouses who;

 

  • Sell the immovable property to one another;
  • Sell the property due to a divorce or separation between them;
  • In the event of the dissolution of the community assets between them;
  • The partition of property held between them;
  • In the event of the death of a spouse.

 

Quick Facts on Tax when Buying Property in Malta

 

  • VAT is not payable when purchasing property
  • Previously the Stamp Duty was 5% of the purchasing price with 20% payable upon signing of the POS.
  • Under the new regulations, the Stamp Duty is 1.5% up until 30 April 2021.
  • Terms and conditions apply

 

It is always important to work with a registered and accredited Real Estate company such as Malta Sotheby’s International Real Estate, to ensure that you are guided and introduced to the correct people in order to comply with Malta Tax regulations. For more information on buying property in Malta click here, or take a look at the additional property tax information we have available. (link to tax table)

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Malta Sotheby's International Realty

Launched on the Maltese islands in 2013, Malta Sotheby's International Realty had one clear vision and goal in mind – to offer our clients the highest level of commitment and quality of service in the high-end residential and commercial real estate market throughout the Maltese Islands. We derive our success from local expertise, professionalism, commitment, and discretion to meet any client’s needs. We understand the importance of finding a home that not only suits your needs but suits your vision for the future – a place that facilitates comfort, creativity and familiarity. We realise that a home is much more than a place to live - it is a sanctuary from where we build families and dreams. Our real estate professionals will guide you towards finding your ideal home throughout the entire buying and selling process. The culture of Malta SIR is defined by our knowledgable and dedicated diverse team which spans over multiple nationalities, whether you are a vendor or a buyer we speak your language.

The listing information set forth on this site is based upon information which we consider reliable, but because it has been supplied by third parties to our franchisees (who in turn supplied it to us) , we cannot represent that it is accurate or complete, and it should not be relied upon as such. The offerings are subject to errors, omissions, changes, including price, or withdrawal without notice. All dimensions are approximate and have not been verified by the selling party and cannot be verified by Sotheby’s International Realty Affiliates LLC. It is recommended that you hire a professional in the business of determining dimensions, such as an appraiser, architect or civil engineer, to determine such information.