Exemption from Tax on Certain Property Transfers Rules, 2020

L.N. 241 of 2020

INCOME TAX ACT

(CAP. 123)

Exemption from Tax on Certain Property Transfers Rules, 2020

IN EXERCISE of the powers conferred by articles 12(2) and 96

of the Income Tax Act, the Minister for Finance and Financial Services

has made the following rules:-

(1) The title of these rules is the Exemption from Tax on

Certain Property Transfers Rules, 2020.

(2) These rules shall be deemed to have come into force on the

9 June 2020.

In these rules, unless the context otherwise requires

"Act" means the Income Tax Act;

"property" means immovable property situated in Malta and any

real right over such property.

(1) These rules apply to any transfer of property that

satisfies all the following conditions:-

(a) the transfer is made on or after 9 June 2020 but before

1 April 2021;

(b) in terms of article 5A of the Act, and were it not for

the provisions of these rules, the transfer would be subject to tax

at the rate of eight percent (8%) or ten percent (10%) of the

transfer value;

(c) the notice of the transfer that is required to be given

in terms of rule 22(2) of the Tax on Property Transfers Rules is

delivered to the Commissioner by not later than 30 April 2021.

Subject to the provisions of rule 6, a person who makes a

transfer to which these rules apply shall be exempt from the tax

otherwise chargeable on that transfer in terms of article 5A of the Act

to the extent that it exceeds the tax calculated for the purpose of these

rules in accordance with rule 5 on condition that the tax so calculated

is paid in accordance with the provisions of sub-article (11) of the said

article 5A.

For the purpose of these rules, in the case of a transfer to Calculation of

which these rules apply, the tax on the first four hundred thousand euro the tax.

(€400,000) of the transfer value shall be calculated at the rate of five

percent (5%) and the tax on the remainder of the transfer value shall be

calculated at the rate of eight percent (8%) or ten percent (10%)

according to the applicable provisions of article 5A of the Act

Provided that in the case of a transfer of an undivided share

of property, the rate of five percent (5%) shall apply only to such

portion of four hundred thousand euro (€400,000) as corresponds pro

rata to the share that is transferred.

(1) When the Commissioner is of the opinion that two or Structured

more transfers form part of a structured arrangement, he may order, arrangements.

within five (5) years from the date of the last of the said transfers, that

the exemption granted under these rules shall not apply to any of those

transfers and in such a case the tax shall be chargeable on each of those

transfers in accordance with the provisions of article 5A without

reference to these rules.

(2) The tax chargeable as provided in sub-rule (1), net of any

tax that would have already been paid on the transfers in question,

shall become payable by not later than the last day of the month

following that in which a notice of the said order is served on the

transferor.

(3) A person served with a notice of an order made under sub-

rule (1) shall have the same rights of objection and appeal in

accordance with the provisions of the Income Tax Management Act as Cap. 372.

if that order were an assessment made under article 31 of that Act.

(4) For the purpose of this rule, "structured arrangement"

means a series of two or more transfers of portions of the same

property made between the same parties within a period of six (6)

months which are executed by two or more deeds, rather than by one

single deed, solely or mainly for the purpose of inflating the benefit of

the exemption that would otherwise be available in terms of these

rules.

(5)

For the purpose of sub-rule (4)

(a)

"portions of the same property" includes

(i)

adjacent parcels of land;

(ii) portions of developed property or of property

under construction that are not identifiable as separate

units;

(iii) the airspace and the property beneath it;

(iv) portions of the airspace overlying the same

property.

(b) transfers made by two persons shall be deemed to be

transfers made by the same person if one of them had acquired

the property that he or it transfers from the other on or after 9

June 2020 in terms of a transfer that qualified for a fiscal

exemption or benefit in terms of any provision of the Act or of

any other law;

(c) transfers made to companies or other bodies of

persons that are directly or indirectly as to more than fifty

percent (50%) controlled and beneficially owned by the same

persons shall be deemed to be transfers to the same person.

€0.27