Malta Property Tax & Stamp Duty
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Property Tax & Stamp Duty in Malta
Malta boasts a streamlined and investor-friendly property tax system, offering significant advantages to both buyers and sellers. With no annual property tax or council tax, the island stands out as a prime destination for real estate investment.
However, key transactional taxes apply when buying or selling property. Whether you're a first-time buyer, a second-time buyer, or selling property, understanding these tax rules can help you maximize benefits, avoid pitfalls, and make informed financial decisions.
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Malta Property Transfer Tax - Final Withholding Tax When selling immovable property in Malta, the seller is subject to a final withholding tax. The standard property transfer rate or withholding tax is 8% of the value of the property transferred. |
8%* |
Certain conditions allow for a reduced withholding tax rate. The exceptions to the final 8% withholding tax rate are as follows;
| 1. A 5% withholding tax rate applies if the property is sold (provided it is not part of a development project) and transferred before five (5) years from the date of its acquisition. | 5% |
| 2. A 10% withholding tax rate applies if the property was acquired before the 1st of January, 2004 and a promise of sale OR transfer was not registered prior to the 17th of November, 2014. Should this registration be dated before it would be subject to a charge of 12%. | 10%* |
| 3. A 2% withholding tax rate will apply if the residential property was used as a sole residence and sold within three (3) years of its acquisition. | 2% |
| 4.1 A 12% capital gains tax rate is applied on the sale of a property if the property was acquired through inheritance (Causa Mortis) and is charged on the difference between the transfer value and the acquisition value as declared in the inheritance deed. This inheritance must have taken place after 24 November 1992. This tax rate is also available, in the case of a property which was received as a donation more than five years before the date of transfer. | 12% |
| 4.2. A 7% capital gains tax rate is applicable on the transfer value if the property was inherited before the 25th of November, 1992. This tax rate also applies if the inheritance took place after this date but the transfer is done via judicial sale by auction. | 7% |
When is a property in Malta exempt from withholding Tax?
In certain scenarios, when selling immovable property in Malta, the seller may not be subject to a final withholding tax. A property may be completely exempt from transfer duty or withholding tax when;
| 1. A 0% withholding tax is applied if the residential property is sold after three (3) years of ownership AND within one (1) year of vacating the property. | 0% |
| 2. A 0% withholding tax is applicable if the immovable property is donated to a spouse, any descendants and/or ascendants. | 0% |
| 3. A 0% withholding tax is applied if the property is acquired through assignment following a separation or divorce. | 0% |
Malta Stamp Duty
When buying immovable property in Malta, the buyer is required to pay stamp duty. Stamp duty is typically paid in two stages. The first 20% of the total stamp duty is due when signing the Promise of Sale (Konvenju) and the remaining 80% is paid upon signing the final deed of sale for the property.
| The standard stamp duty rate in Malta is calculated at 5% of the property purchase price. | 5%* |
Certain conditions allow for a reduced stamp duty rate. The exceptions to the standard 5% stamp duty tax on buying property in Malta are as follows;
| 1. A 3.5% stamp duty rate will be applied if the property is purchased as a primary and sole residence. The special rate of 3.5% is charged on the first €150,000 and the full 5% will be charged on the excess. | 3.5% |
| 2. The Government "First-Time Buyers Scheme" applies a 0% stamp duty rate for first-time buyers who are buying a property as their sole residence for transfers made on or after 5 November 2013 but before 15 October 2019. In such cases no stamp duty tax whatsoever is levied on the first €150,000 of the purchase price. For transfers made from 15 October 2019 but before 20 October 2020, the value exempt from duty increases to €175,000. This is further increased to the first €200,000 for transfers made between 20 October 2020 but before 1 January 2026. A 5% stamp duty will be charged on the excess in all cases. | 5%* |
| 3. A 0% stamp duty is imposed on the assignment of immovable property between spouses who are married or formerly married. | 0% |
| 4. Individuals who buy residential property in Gozo will benefit from a reduced stamp duty rate of only 2%. | 2% |
Extension of Relief from Income Tax and from Duty on Documents and Transfers on Certain Property Transfers Rules
The Maltese Government extended several property-related tax reliefs and incentives, providing continued financial benefits for buyers, sellers, and investors in Malta and Gozo. The reliefs contemplated in the Relief from Income Tax and from Duty on Documents and Transfers on Certain Property Transfers Rules (S.L. 123.203) will be extended for another year.
Tax Exemptions on Certain Property Transfers
Transfers of properties built over 20 years ago and which have been vacant for more than 7 years. As well as the transfer of properties situated within Urban Conservation Areas (UCAs) will remain exempt from duty and property transfer tax on the first €750,000 of the transfer value.
Additionally, first-time buyers of these properties will also receive a grant of €15,000 for properties in Malta or €40,000 if the property is in Gozo.
Extensions of First-Time Buyers' and Second Time Buyers' Schemes
The First-Time Buyers' Scheme, contemplated in rule 3 of the Exemption of Duty in Terms of Article 23 Order, (S.L. 364.12)
The First-Time Buyers Scheme provides for an exemption on duty (which would otherwise have been charged) on the first €200,000 of a property's transfer value, providing the property is to be used for residential purposes. First-time buyers are also eligible for a €10,000 grant, payable over a period of 10 years.
The Second-Time Buyers' Scheme, contemplated in the Duty on the Acquisition of the Second Immovable Property to be used as Sole Residence (Exemption) Order, (S.L.364.17)
The Second Time Buyers Scheme allows individuals who sell their first residential property and purchase another within 12 months to benefit from a duty refund on the first €86,000 of the new property's transfer value.
Extension of VAT Refunds for Restoration Costs
The VAT refund scheme on restoration costs as per Government Notice No. 1,604 dated 10 December 2021 published in Government Gazette No. 20,748.
In terms of this scheme, eligible applicants may claim VAT refunds of up to €54,000 on properties with respect to restoration and finishing costs incurred, providing the property meets one of the following criteria;
- properties built over 20 years ago and which have been vacant for more than 7 years or,
- properties situated in an Urban Conservation Area or,
- newly built properties that are compliant with approved conservation criteria.
Assignment of Promise of Sale
Income derived from the assignment of rights under a Promise of Sale agreement is subject to a flat tax rate of 15%, provided that the consideration for the assignment does not exceed €100,000, meaning that if you transfer your rights under a Promise of Sale agreement (Konvenju) to someone else for €100,000 or less, the profit you make will be taxed at a flat rate of 15%.
Malta Sotheby's
International Realty
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Portomaso
The Quay, Portomaso Marina, Portomaso, St. Julian’s
T. +356 2010 8077 -
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T. +356 2010 8070
