Procedures when buying property in Malta

Maltese income tax payable by a holder of a Residence Scheme Certificate

An individual qualifying for the scheme may take up residence permanently or indefinitely in Malta on obtaining the certificate issued under the Residents Scheme Regulations, 2004. The certificate entiftles the holder to a flat income tax rate of 15%, subject to a minimum annual tax liability (after taking into account any double taxation relief) of €4,150. The tax is calculated on chargeable income and capital gains arising in Malta and on foreign income (excluding capital gains) remitted
to Malta.

Double Taxation Relief

Double taxation relief is available to a certificate holder in respect of tax levied outside Malta on any income remitted to Malta which is subject to tax in Malta. Relief is normally granted under the ordinary credit method. This means that the foreign tax is first added to the income remitted to Malta and the grossed up amount is subject to tax in Malta at the rate of 15%. The foreign tax paid is then granted as a credit against the Malta tax, up to the Malta tax payable (i.e. 15%), so however that the extent of tax paid cannot be reduced below the minimum of €4,150 referred to above. In terms of a number of treaties concluded by Malta certain foreign income remitted to Malta qualifies for a reduced withholding rate of foreign tax (typically to dividends, interest and royalties) or is exempt from foreign tax (typically to private pensions and to certain capital gains). The provisions of each particular treaty entered into by Malta should naturally always be consulted to determine the treatment of each item of income or gains in each particular case.

Malta has concluded double taxation treaties with the following countries:

Albania Denmark Jordan* Pakistan Sweden
Australia Egypt Korea (Republic of) Poland Switzerland***
Austria Estonia Kuwait Portugal Syria
Barbados Finland Latvia Romania Thailand*
Belgium France Lebanon Russia* Tunisia
Bosnia* Germany Libya San Marino Turkey*
Bulgaria Greece* Lithuania Serbia & Montenegro* Ukraine*
Canada Hungary Luxembourg Singapore* United Arab Emirates*
China Iceland Malaysia Slovakia United Kingdom
Croatia India Morocco Slovenia USA**
Cyprus Ireland* Netherlands South Africa
Czech Republic Italy Norway Spain
*Not yet in force ** Restricted to profits derived from the operation of ships or aircraft in international traffic *** The current treaty with Switzerland is restricted to profits derived from the operation of ships or aircraft in international traffic but a new comprehensive treaty was initialled in 2006. When income is derived from a country with which Malta does not have a double taxation agreement in force, double taxation relief may be available under the unilateral relief provisions of the Income Tax Act.

Other tax considerations when buying property in Malta

There is no estate duty in Malta. Duty on Documents and Transfers (stamp duty) is however payable on the transfer, (whether on death or otherwise), of immovable property situated in Malta and shares in Maltese companies, unless the respective companies are quoted on the Malta Stock Exchange or are otherwise exempted from stamp duty. Duty on the acquisition of immovable property is levied at 5% (with a reduced rate being possible on part of the value in certain instances). For persons transferring their residence from a country outside the EU to Malta, used household
and personal effects, car, furniture and other domestic articles (unless subject to excise duty, e.g. on alcohol) may be imported free of duty and VAT if imported within 12 months of the certificate holder’s arrival in Malta, subject to the relevant conditions. Private motor vehicles should be subject to a motor vehicle registration tax. For persons transferring their residence from a country in the EU to Malta, no import duty or VAT should be chargeable on used household and personal effects, cars (which are more than 6 months old and have travelled more than 6,000 kilometres), furniture and other domestic articles (unless subject to excise duty, e.g. on alcohol). Private motor vehicles should be subject to a motor vehicle registration tax.

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