EXEMPTION FROM TAX ON CERTAIN PROPERTY TRANSFERS RULES

EXEMPTION FROM TAX ON CERTAIN

PROPERTY TRANSFERS

SUBSIDIARY LEGISLATION 123.199

EXEMPTION FROM TAX ON CERTAIN

PROPERTY TRANSFERS RULES

9th June, 2020

LEGAL NOTICE 241 of 2020, as amended by Legal Notices 459 of

2020, 129 and 325 of 2021 and 121 and 225 of 2022 and 77 of 2023.

The title of these rules is the Exemption from Tax on

Certain Property Transfers Rules.

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.

These rules apply to any transfer of property that, were it

not for the provisions of these rules, would be subject to tax in terms

of article 5A of the Act at the rate of eight percent (8%) or ten

percent (10%) of the transfer value and that is made on or after 9th

June 2020 in terms of a promise of sale or transfer notice of which

would have been given to the Commissioner for Revenue in

accordance with sub-article (6) of article 3 of the Duty on Documents

and Transfers Act by not later than 31st December 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

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

(€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 more transfers form part of a structured arrangement, he may order,

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

EXEMPTION FROM TAX ON CERTAIN

PROPERTY TRANSFERS

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

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 separately rather than by means of one single transfer

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.