Property Tax when Buying Property in Malta

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 property 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.

In 2020 the Maltese government implemented a number of tax relief measures pertaining to the property market in light of the Covid-19 pandemic. As part of the country’s stimulus package, the government has implemented changes to the stamp duty payable when purchasing a property in Malta.  

The new regulations saw 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% the reduced rates originally applied to property purchases under Promise of Sale (POS) and or, on property contracts that will would have been finalised between 9 June 2020 and 30 April 2021. These regulations have now been extended and will remain valid until the end of September 2022.

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 September 2022.
• 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.