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9.1 Payroll Taxes

There are no payroll taxes in Malta.
For information on social security contributions, see Section 6.6.

9.2 Capital Taxes (Capital Duties)

There are no taxes on capital in Malta.

9.3 Property Taxes

9.3.1. Transfer Taxes, Including Real Property Transactions

Property Transfer Tax

A property transfer tax is payable on the transfer of immovable property situated in Malta, under Article 5A of the Income Tax Act.

The following tax rates apply with respect to immovable property transferred on or after January 1, 2015:

  • A rate of 8 percent of the transfer value with respect to immovable property situated in Malta, other than immovable property forming part of a project and property situated within a Special Designated Area.
  • The rate is reduced to 5 percent of the transfer value on immovable property not forming part of a project and transferred within five years from the date of acquisition. The rate of 5 percent also applies to transfers of property situated in Valletta, acquired by the transferor before December 31, 2018 and certified as being restored and rehabilitated before 2018. In such cases, the transfer must not be made later than December 31, 2023. With effect from March 20, 2020, the reduced rate does not apply if the transferor or any related person carried out works on the property without the required development permission in terms of the Development Planning Act. This restriction does not apply if the transferor acquired the property to establish his/her sole ordinary residence.
  • A rate of 10 percent of the transfer value on immovable property acquired prior to January 1, 2004 and in respect of which a notice of promise of sale agreement has not been filed prior to November 17, 2014.
  • A rate of 2 percent of the transfer value on immovable property which immediately prior to the transfer was owned by an individual or co-owned by two individuals who had declared in the deed of acquisition that the said property had been acquired for the purpose of establishing their sole residence and the transfer is made within three years from acquisition.

For transfers made on or after January 1, 2022, reduced rates apply on the first 200,000 euro of the transfer value, as follows:

i. a 50 percent reduction in the normal rate of tax applies to the transfer of a property that has been leased for a period of at least 10 years to tenants who, during that whole period, were entitled to benefits in respect of that property under the Private Rent Housing Benefit Scheme administered by the Housing Authority (the “subsidized rent scheme”);

ii. no transfer tax is chargeable if the property meets the conditions specified in (i) above and the transfer is made to the tenant; and

iii. a 50 percent reduction in the normal rate of tax applies to the transfer of a property that has been leased under the subsidized rent scheme for less than 10 years but at least 3 years.

Temporary reduced rate

For transfers that would otherwise be subject to tax at the 8 percent or 10 percent rate, subject to certain conditions, the rate on the first 400,000 euros of the transfer value is reduced to 5 percent if the transfer is made:

  • on or after June 9, 2020, but before January 1, 2022; or
  • on or after June 9, 2020, but by no later than June 30, 2023, where;

1. a promise of sale or promise of transfer is entered into by December 31, 2021; and

2. notice of the transfer is delivered to the Commissioner for Revenue by no later than July 31, 2023.

The transfer value over 400,000 euros remains subject to the 8 percent and 10 percent rates, as applicable.

Capital gains tax

In cases where the transfer tax does not apply, the transferor will be subject to standard capital gains tax (at 35 percent), with a 7 percent provisional tax payable within 15 days from the signing of the deed.

9.3.2. Real Property Taxes

There are no real property taxes.

9.3.3. Taxes on Movable Property

There are no personal property taxes.

9.3.4. Fixed Asset Taxes

There is no fixed asset tax.

9.4 Miscellaneous Taxes

For VAT/GST and similar taxes, see the VAT Navigator.

Exit Tax

Maltese domiciled and resident individuals are subject to a light form of trailing tax for five years following their departure from Malta.

With effect from January 1, 2020, an exit taxation rule is introduced into Maltese law, pursuant to the EU Anti-Tax Avoidance Directive (Directive 2016/1164/EU) (ATAD).

The exit tax rules impact Maltese corporate taxpayers (i.e., not applicable to individuals) whenever there is:

  • a transfer of assets by a taxpayer from its head office in Malta to its PE in another EU member state or in a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer;
  • a transfer of assets by a taxpayer from its PE in Malta to its head office or another PE in another EU member state or in a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer;
  • a transfer of tax residence of a taxpayer from Malta to another EU member state or to a third country, except for those assets which remain effectively connected with a PE in Malta; or
  • a transfer of the business carried on by a PE of a taxpayer from Malta to another EU member state or to a third country in so far as Malta no longer has the right to tax capital gains from the transfer of such assets due to the transfer.

Taxpayers are subject to tax on capital gains equal to the market value of the transferred assets at the time of exit of the asset (less the tax cost base).

The tax is due with the filing of the final tax return upon exit, although under certain circumstances taxpayers may have the right to defer the payment of the amount of tax by paying it in installments over five years subject to the payment of interest and, potentially, the provision of a guarantee.

Planning Point: Practitioners should note that on the introduction of the exit tax into Maltese legislation, the legislator made no clear reference to the existing articles in the Income Tax Act concerning the method and exemptions applicable to the computation of tax on capital gains. A certain degree of caution should therefore be exercised, and possibly a request made for the opinion of the Commissioner for Revenue before proceeding with complex transactions which might trigger an exit tax.

Inheritance Tax

Inheritance and gift tax are not imposed in Malta. However, Malta has inheritance-type taxes, including the following:

  • Tax at a rate of 12 percent is chargeable on property being transferred causa mortis which was originally acquired by the transferor under the terms of a transfer causa mortis after November 24, 1992, or acquired by the transferor in terms of a donation made more than five years before the date of the transfer in question, assuming certain conditions are met.
  • Tax at a rate of 7 percent is chargeable on property being transferred which was originally acquired by the transferor under the terms of a transfer cause mortis before November 25, 1992, assuming certain conditions are met.

See discussion of stamp duty below for exemptions from stamp duty for transfers causa mortis.

Stamp Duty

Stamp duty is levied on various transactions in Malta, the most important of which are:

  • Share transfers at a rate of 2 percent (or 5 percent in the case of a property company) of the consideration or the market value of the shares being transferred, whichever is the higher.
  • Insurance policies at a rate of 11 percent.
  • Transfers of immoveable property situated in Malta at a rate of 5 percent.

For inter vivos transfers of immoveable property, subject to certain conditions, the rate is reduced to 1.5 percent on the first 400,000 euros of the transfer amount or property value, whichever is higher, where the transfer is made:

  • on or after June 9, 2020, but before January 1, 2022; or
  • on or after June 9, 2020, but by no later than June 30, 2023, providing that:

i. notice of the promise of sale or promise of transfer is given to the Commissioner for Revenue before January 1, 2022; and

ii. notice of the final deed in relation to such transfer is given to the Commissioner for Revenue by no later than the July 31, 2023.

In general, there is a 5 percent stamp tax on the amount or value of consideration on every document, judgment, decree or order of any court or authority on transfers causa mortis. The following special rules apply to dwellings that are ordinary residences of individuals:

  • no stamp duty is chargeable on the first 35,000 euros of the transfer of a dwelling causa mortis by the deceased or others (and special rules apply if there is more than one transferor or transferee); the stamp duty on the transfer of a dwelling causa mortis with a value over 35,000 euros is taxed at 3.5 percent on the amount of dwelling value between 35,000 euros and 200,000 euros; and the 5 percent rate applies to amounts of value over 200,000 euros;
  • no stamp duty is chargeable on a transfer of an undivided share of a dwelling house, if the dwelling house was co-owned by two individuals immediately before the transfer and if the transfer is made by one of the co-owners to the other. As of January 1, 2017, if one of the co-owners dies, the exemption applies to the transfer of an undivided share of the dwelling house from the heirs of the deceased co-owner to the other co-owner if certain requirements have been satisfied;
  • no stamp duty is chargeable between persons who are married to each other on any transfer inter vivos of the ordinary residence (or part of it) of any or both of the spouses; and
  • no stamp duty is chargeable on the first 250,000 euros of the value of a property transferred gratuitously to a direct line descendant for the purpose of establishing the property as the descendant’s sole, ordinary residence. This must be the first gratuitous transfer made by the transferor to the descendant for such a purpose, and the descendant must declare that he/she does not own any other property for which he/she has claimed relief as his/her sole, ordinary residence. The value of the property above 250,000 euros is subject to stamp duty at the rate of 3.5 percent.

Immovable property purchased as the sole ordinary residence of a purchaser is subject to stamp duty at 3.5 percent on the first 200,000 euros of the consideration and 5 percent on the remaining balance. This reduction is not available to non-EU residents.

First-time buyers are exempt from stamp duty on the first 200,000 euros of the transfer value of immovable property purchased as a primary residence on or after October 20, 2020, but before January 1, 2023.

Where an individual transfers his/her residential immovable property (“the replaced property”) and, in the period from October 10, 2017 through to December 31, 2022 acquires another residential immovable property (“the replacement property”) within 12 months from the date of transfer of the replaced property, they are entitled to a refund of the duty paid on the first 86,000 euros of the value of the replacement property, provided, inter alia, that:

  • the individual has not owned any residential immovable property acquired through a transfer inter vivos before the acquisition of the replacement property, other than the replaced property; and
  • the replaced property is transferred within 12 months of acquiring the replacement property.

In the case of:

  • persons who (i) are on the register of persons with a disability, (ii) possess an identity card issued by the Commission of Rights of Persons with Disability and (iii) benefit from disability assistance; or
  • the guardians of such persons residing in the same household,

this exemption applies to the first 150,000 euros of the value of the replacement property that is acquired on or after January 1, 2017. Such an individual must not own any other residential immovable property at the time of acquisition of the replacement property, other than the replaced property.

Investment funds are exempt from stamp duty on share transfers. If both the transferor and the transferee are not resident in Malta, the share transfer is similarly exempt from stamp duty.

Furthermore, in the event that the market value of shares held by a person is reduced following a change in the company’s issued share capital or voting rights and the value shifts onto the other shareholders, the transferor is deemed to have transferred the said value to the transferee(s) and such value shifting may be subject to a stamp duty liability.

Maltese legislation also provides for the possibility of a stamp duty exemption in a number of instances, subject to the satisfaction of certain conditions. This includes the acquisition or disposal of marketable securities by or in the following:

  • licensed collective investment schemes;
  • licensed persons providing management, administration, safekeeping or investment advice to collective investment schemes;
  • shares in companies that are owned more than 50 percent by non-Maltese residents (including companies not owned or controlled, directly or indirectly, by individuals resident in Malta) and which satisfy certain specified conditions, provided they have received a certificate of eligibility for the exemption prior to the date of the transfer. It must be noted that the certificate expires after three years; and
  • a company that carries on (or intends to carry on within a reasonable time frame) or has (or intends to have within a reasonable time frame) more than 90 percent of its business outside Malta.

From April 1, 2017 through to December 31, 2022, the rate of stamp duty applicable to the transfer of a business (qualified marketable securities or immovable property that has been held by the business for at least three years) by parents to their children is (subject to certain conditions) reduced to 1.5 percent. The gratuitous transfer may be made to a person referred to in Article 5(2)(e)(i) of the Income Tax Act—spouse, descendants and ascendants in the direct line and their relative spouses or, in the absence of descendants, to brothers or sisters and their descendants. The normal rates are 2 percent for the transfer of marketable securities (5 percent where such securities are held in a property company) and 5 percent for the transfer of immovable property.

Customs and Import Duties

Customs and import duties are paid at importation stage on items and goods imported from outside the EU. Different rates apply depending on the type of good being imported. A Customs Code provides for customs procedures and concepts, which are based on EU requirements.

Excise Tax

Malta imposes an excise tax on certain energy products, certain alcoholic drinks, certain manufactured tobacco products and mobile telephony services.

Tonnage Tax

For information on tonnage tax, see Section 3.1.3.

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