MT
CAPITAL GAINS RULES
Table of Provisions (27)
Statutory Text (27 Articles)
SUBSIDIARY LEGISLATION 123.27
CAPITAL GAINS RULES
25th November, 1992
LEGAL NOTICE 102 of 1993, as amended by Legal Notices 379 of 2002,
5 of 2005, 51 of 2006, 37, 409 of 2007, 317, 336 of 2010, 413 of 2011, 105
of 2013, 379 of 2017, 191 of 2020 and 156 of 2026.
The title of these rules is the Capital Gains Rules.
Added by
L.N. 5 of 2005.
(Rule 6(4))
Amended by
L.N. 37 of 2007.
INCOME TAX ACT
(CAP. 123)
Capital Gains Rules
Notice of transfer of immovable property , within or from a group of companies
pursuant to article 5(9), Income Tax Act
Name of transferor company: ..............................................................................................
Delivered by (officiating notary): ........................................................................................
I (a director and/or legal representative of a transferor company) .................................. on
behalf of the above-mentioned company, hereby give notice in accordance with article 5(9)
of the Income Tax Act, of the transfer of the immovable property referred to below and
assume full responsibility as to the correctness of the contents of this notice.
1. Details referring to the immovable property
Address of property
Transfer Value Name of officiating notary
Date of
of property
on this public deed
public deed
2. Details relating to transferor company appearing on this deed
Name of transferor company
Address of transferor company
Income Tax Reference no.
3. Details relating to transferee appearing on this deed
Name of transferee
Address of transferee
Income Tax Reference no.
4. Details relating to all previous transferors and transferees since the immovable property
entered the group
Name of Income Tax Name of Income Tax Date of Purchase
Value of
Total
transferor Reference transferee Reference transfer price as
improve-
purchase
company
no.
no.
appearing ments made
on public (if any) from
improve-
deed of
date of
ments
acquisition acquisition
to date of the
transfer in
each case
Signature ................................. Dated this ................. day of ............ of the year ............
(Director and/or legal representative)
5. This Notice shall be accompanied by an auditor’s signed report which shall form an integral
part of the notice giving assurance (a) as to the agreement with the deed of acquisition of the
purchase price of the relative property and (b) as to whether the values representing the said
purchase price and the relative improvements have been properly extracted from the books and
records of the company and (c) that the said values represent the historical cost of the property.
(1) In computing the gains or profits on the transfer of
immovable property the following shall be taken into
consideration
(a) the cost of acquisition which shall include
(i)
the cost of property transferred declared in a
deed of purchase and any expenses directly
related to such deed including duty under the
Stamp Duties Ordinance, the Duty on
Documents Act, the Duty on Documents and
Transfers Act, and agents’, legal and notarial
fees proved to the satisfaction of the
Commissioner;
(ii) where the immovable property in question was
acquired causa mortis or by means of a donation,
its value at the time of its acquisition, determined
in accordance with the following sub-rules;
(iii) any expenditure proved to the satisfaction of the
Commissioner to have been wholly and
exclusively incurred in developing the property
being transferred;
(iv)
duty paid in terms of the Duty on Documents
and Transfers Act on the transfer causa mortis of
the immovable property in question, including
duty paid on a deed of adjustment relating to that
property made in terms of the Adjustments to
Declared Value of Immovable Property Rules;
(v)
duty paid on the donation to the transferor of the
immovable property in question in terms of the
Duty on Documents and Transfers Act, the
Death and Donation Duty Act or any law
replaced by any of those Acts;
(b) the increase in inflation determined in accordance with
rule 8;
(c) improvements to immovable property after acquisition
if these are proved to the satisfaction of the
Commissioner; the provisions of paragraph (b) shall
also apply mutatis mutandis with respect to such
improvements;
(d) a maintenance allowance calculated at 0.4% of the
CAPITAL GAINS
value of the building, cost price or cost of completion
for every year between the year of acquisition or
completion and disposal;
(e) other expenses duly received and directly related to the
transfer and not exceeding five per cent of the sale
(2)
Subject to subrule (4) -
(a) the value of immovable property acquired causa
mortis on or after the 25th November, 2003 shall be
deemed to be the value as at the time of acquisition of
immovable property situated in Malta that was acquired
causa mortis made for the purpose of and in
accordance with the provisions of the Duty on
Documents and Transfers Act not later than six months
after the date of the relative succession, without regard
to any adjustment to or replacement of that declaration
made after the said period of six months, and notice of
which has been given to the Commissioner in
accordance with that Act by not later than either
fifteen working days after the date of the publication
of the said deed or the expiration of the said period of
six months, whichever is the later;
(b) where the notice referred to in paragraph (a) is given
to the Commissioner later than fifteen working days
after the date of the publication of the said deed and
after the expiration of the said period of six months,
the value of the property shall be deemed to be such
value which, in the opinion of the Commissioner,
represents the price which the property would have
fetched had it been sold on the open market on the date
of the transfer causa mortis;
(c) a value determined in accordance with paragraph (b)
shall be subject to appeal; provided that no evidence
shall be considered by the Administrative Review
Tribunal as sufficient to warrant any change to the
value so determined if the notice referred to in the said
paragraph is delivered to the Commissioner more than
eighteen months after the date of the transfer causa
mortis;
(d) notwithstanding the foregoing provisions of this
subrule, where the value of property acquired causa
mortis on or after the 25th November, 2003 is the
subject of an assessment made under the Duty on
Documents and Transfers Act, and that assessment
becomes final and conclusive, or is confirmed or
amended by a final decision of an appellate tribunal or
court or is withdrawn following an agreement in
writing with the Commissioner, the value of the
property shall be deemed to be the value resulting
from the said final and conclusive assessment,
decision or agreement;
(e) where, in a final and conclusive assessment made
under the Income Tax Management Act, the chargeable
gain on a transfer of immovable property that had been
acquired causa mortis on or after the 25th November,
2003 is higher than that declared by the taxpayer, and
the excess is attributable to a value of the property
exceeding the value declared by the taxpayer for the
purpose of computing that gain by not more than
twenty-five per cent of the taxpayer’s value, that
excess shall not constitute an omission for the
purposes of article 56(12) of the Income Tax Act,
hereinafter referred to as "the Act", if the value
declared by the taxpayer is supported by an Perit’s
valuation delivered to the Commissioner before that
assessment became final and conclusive.
(3)
Subject to subrule (4) -
(a) the value at the time of acquisition of immovable
property situated in Malta that was acquired causa mortis
before the 25th November, 2003 shall be deemed to be
the value declared in a notice given to the
Commissioner for the purpose of and in accordance
with the provisions of the Duty on Documents and
Transfers Act not later than the 30th June, 2005, taking
into account any adjustment to the said value made in
accordance with the Adjustments to Declared Value of
Immovable Property Rules, 2005 and delivered to the
Commissioner by not later than the 30th June, 2005
Provided that if the said property is transferred after
the 25th November, 2004 and before the 30th June,
2005, the value of the property shall be deemed to be
the value declared in a notice given as aforesaid not
later than the date of that transfer, taking into account
any adjustment made in accordance with the said
Rules not later than the date of that transfer;
(b) where the notice referred to in paragraph (a) in respect
of property acquired causa mortis before the 25th
November, 2003 is not given to the Commissioner by
30 th June, 2005 or, in the circumstances mentioned in
the proviso to paragraph (a), by the date of the
transfer, the value of that property shall be deemed to
be such value which, in the opinion of the
Commissioner, represents the price which the property
would have fetched had it been sold on the open
market on the date of the transfer causa mortis, and no
evidence shall be considered by the Administrative
Review Tribunal as sufficient to warrant any change to
the value so determined.
(3A) Subject to sub-rule (4), the value at the time of acquisition
of immovable property situated in Malta that was acquired by
means of a donation shall be deemed to be the value declared in the
deed of donation.
(3B) Subject to sub-rule (4), the value at the time of acquisition
of immovable property situated outside Malta that was acquired
causa mortis or by means of a donation shall be deemed to be
equivalent to the price which that property would have fetched had
it been sold in the open market at the date of the acquisition.
(4) When the total of the value at the time of acquisition of
immovable property that was acquired causa mortis or by means of a
donation and the other deductions allowable in terms of the foregoing
provisions of this rule exceeds the value at which that property is
transferred, the amount that shall be taken as the value of that property
at the time of acquisition shall be the value determined in accordance
with the foregoing sub-rules of this rule reduced by an amount
equivalent to that excess: provided that the value so reduced shall
never be less than zero.
Added by
L.N. 5 of 2005.
(Rule 9(2))
Substituted by
L.N. 409 of 2007.
INCOME TAX ACT
(CAP. 123)
Capital Gains Rules
Notice of transfer of a right referred to in article 5(1), Income Tax Act
This notice is to be filled in, duly signed by all parties and delivered in triplicate to the
Commissioner (Capital Transfer Duty Department) within 21 days of the relative transfer
and shall be accompanied by a provisional payment equivalent to 7% of the consideration
relating to the transfer
1. Details referring to the property in respect of which the right is being transferred
Address of immovable property
Promise of
Date of
Name of Notary
Sale No.
agreement
2. Details relating to transferor
Transferor’s name
Present address
I.T. reference no. or
I.D. card no.
3. Details relating to transferee
Transferee’s name
Present address
I.T. reference no. or
I.D. card no.
4. Provisional tax payment
Consideration paid for the cession of the right
€
Provisional tax payable (7% of consideration)
€
No. of bank draft cheque
Name of Bank
Notification will be
invalid if cheque is
dishonoured
5. Signatures of parties
Signature of transferor
Signature of transferee
6. Witness to signatures
Name in block capitals of witness
Signature of witness
Rubber stamp of witness
to signatures (Notary or Advocate)
OFFICE USE
Name in block capitals of officer
Signature of officer
Official rubber stamp
receiving the notice
signifying receipt of notice
In determining what expenditure is allowable there must be
excluded any sum which has been allowed as a deduction for the
purposes of Part IV of the Act or otherwise as a deduction against
income under any other Part of the Act other than article 5 of the
Act.
Added by
L.N. 51 of 2006.
[Rule 5(10)]
Amended by
L.N. 37 of 2007;
L.N. 317 of 2010;
L.N.379 of 2017.
Notice in terms of Rule 5(10) of the Capital Gains Rules
Statement to be submitted by a transferor of shares where there is a transfer of controlling
interest
Part 1 - Details of transferor
Name
Address
ROC No. (companies only)
Income Tax Registration No.
State the number of shares held by transferor immediately prior to the transfer
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 2 - Details of Company in which shares are being transferred
Company Name
Income Tax Registration No.
Company year end
Date of incorporation
ROC No.
Authorised share capital
Issued share capital
State whether (Yes or No)
The Company holds shares directly or indirectly in other companies
(if Yes attach details)
The Company or any companies specified in (a) above own immovable
property at the date of the share transfer
(if Yes attach details)
An increase or reduction in the share capital of the company took place
within eighteen months prior to the date of the share transfer
(if Yes attach details)
Any shares have been transferred by the transferor or a related party
within eighteen months prior to the date of the share transfer
(if Yes attach details)
The company came into existence as a result of a restructuring
(if Yes attach details specifying the date and whether a merger, division)
Such shares are held by a company whose shareholders, directly or
indirectly, are all not resident in Malta
g
The transfer is a transfer to which art. 5(3)(a) of the Act applies
Part 3 - Details of share transfer
a
Date of share transfer
b
Number of shares held at date of transfer
c
Number of shares transferred
d
Consideration for shares transferred
Give details of the shares transferred
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 4 - Computation of the market value of the shares transferred
The market value of the shares being transferred is to be determined as follows
Market value of shares transferred / global transfer
Sec I. Determination of the % of the market value of the company represented by the transferred
shares
Type
Class
Company total
Transferred shares
Nominal
Voting
Nominal
Voting
% of rights to
value
rights
value
rights
profits
distributable
to ordinary
shareholders
Issued
share
capital
Total
(A)
(B)
(C)
(D)
(E)
(XX)
C/A*.4 +
D/B*.2 +
E*.4
Percentage of the market value of company
a
State whether there has been a change in the issued share
capital of the
company or in the shareholding rights during the period of
eighteen months preceding the transfer
b
If the answer to (a) is "yes", state whether the change
constituted a
transfer that was subject to duty under article 42B of the Duty
on Documents
and Transfers Act
c
If the answer to (b) is "No", give details of the capital structure
and
shareholding rights of the company as existing at the time
immediately preceding that change
Type
Class
Company total
Transferred shares
Nominal
Voting
Nominal
Voting
% of rights
value
rights
value
rights
distributab
shareholde
Issued
share
capital
Total
(E)
(F)
(G)
(H)
(YY)
G/E*.4 +
H/F*.2 +
Percentage of the market value of company
Sec II. Computation of Market value of company
a Total Net Asset Value of the company
b Market Value of shares held in another company representing at least 10%
of the nominal value of the issued share capital of that other company,
determined in accordance with rule 5
Company
Income Tax no.
Market Value
Deduct book value of shares held in the company
(as stated in the financial statements)
c Total market value of immovable property as stated in the
Perit’s Valuation (as per Part 5)
less Total book value of immovable property
Adjustment to the value of immovable property
(this adjustment can never be less than €0)
d Value of goodwill (as calculated in Sec IV below)
e Deduct book value of the shares referred to in rule 5(6)(d)
f
Total adjusted market value of the company
Sec III. Market value of shares transferred
a Adjusted market value of the company
(Sec IIe)
b % of market value as represented by shares transferred or global transfer
(higher of (XX) and (YY) in Sec I)
c Market value of shares transferred or global transfer
(a X b)
d Total value taken into account for the purpose of determining the
chargeable gain arising from each of the relevant transactions preceding
this transfer
e Market value of shares transferred
(c - d)
f Value of the consideration of shares transferred
(Part 3d)
g Value to be taken into account for the purpose of calculating any gain or
loss from the share transfer
(higher of e or f)
Sec IV. Calculation of the amount representing the value of goodwill
a Where company was in existence for the five financial years immediately preceding the
year in which the transfer is made
Year ended ....................
Total
Year 1
Year 2
Year 3
Year 4
Year 5
Profit before tax
Value of goodwill
Note: Where the transfer is made during the company’s first or second financial year the
value of goodwill above shall be zero
b Where the company has acquired its business or part thereof from another person during
the company’s first three financial years
State date when business was acquired
State consideration paid for the acquisition of the goodwill of such business
Profits of the company excluding profits attributable to business acquired
Year ended ....................
Total
Year 1
Year 2
Year 3
Profit before tax
Value of goodwill
Profits attributable to business acquired from another person
Year ended ...................
Total
Year 1
Year 2
Year 3
Year 4
Year 5
Profit before tax
A
Value of goodwill attributable to business acquired
B
Consideration paid for the acquisition of such goodwill
Value of goodwill of the business so acquired
(higher of A and B)
Total amount representing the value of goodwill
Note: Where the assets of the company include shares in another company, and such
shares represent at least ten per cent of the nominal value of the issued share capital of
the other company, the computations in this Part must be made for each such
shareholding.
Part 5 - Perit’s valuation
If the company owns immovable property at the date of the share transfer, attach a Perit’s
valuation of the market value of the immovable property taken into account in determining
the value of the said shares.
Part 6 - Declaration
I do hereby declare that the information submitted through this form is true and complete
Transferor’s signature ..................................... Transferor’s name ......................................
This Notice shall be accompanied by an auditor’s signed report which shall form an integral
part of the notice, giving assurance as to (a) the fact that the transfer is a transfer of a
controlling interest (including the grounds on which such statement is based) and (b)
whether the computation of the market value of the shares being transferred has been
properly prepared in accordance with the Capital Gains Rules.
(1) Subject to the other provisions of these rules, in
computing the gains or profits on the transfer of any asset to which
article 5(1)(a)(ii) of the Act applies, there shall be taken into
account the cost of acquisition of that asset.
(2) Without prejudice to the generality of rule 3, in the case of
a transfer of intellectual property or intellectual property rights, the
cost of acquisition shall not include any amount in respect of which
a deduction has been claimed in terms of article 14(1)(m) of the
Act.
(3) When the said asset was acquired causa mortis or by means
of a donation, the cost of acquisition shall be deemed to be an
amount equal to the price which that asset would have fetched had
it been sold on the open market on the date of that acquisition.
However, where a notice was given to the Commissioner for the
purposes of the Duty on Documents and Transfers Act in respect of
that acquisition and the value declared in that notice was lower than
the said price, the cost of acquisition shall be deemed to be
equivalent to the value so declared.
(1) In the computation of the capital gains derived by an
original shareholder from a transfer of shares that is made in
consequence of the admission of those shares for trading on an
alternative trading platform, the amount on which tax is chargeable
shall be the amount computed in accordance with the Act and the
other provisions of these rules multiplied by the percentage
indicated in the second column of the following table, depending
on the level of public participation in the company in which the
shares are held
Level of public participation
Taxable portion
Less than 10%
100%
At least 10% but less than 15%
75%
At least 15% but less than 20%
50%
At least 20% but less than 25%
25%
25% or more
0%
(2) Subject to the provisions of sub-rule (1), when a person
who is not an original shareholder transfer shares in a company that
have been admitted for trading on an alternative trading platform
and the level of public participation in the company is at least 10%,
no tax shall be chargeable on capital gains derived from that
transfer.
(3)
For the purpose of this rule -
(a) "alternative trading platform" is an alternative trading
platform, as defined in Commission Regulation (EU)
No 651/2014 of 17 June, 2014, that is operated by a
stock exchange recognized under the Financial
Markets Act;
(b) "level of public participation" means the percentage of
equity shares held by persons who are not original
shareholders at the end of the day of the transfer in
question;
(c) "original shareholder" means
(i)
a person who was a shareholder of the company
before any shares in that company were admitted
for trading on an alternative trading platform;
(ii) the spouse, a direct descendant or the spouse of a
direct descendant of an original shareholder
described in the other sub-paragraphs;
(iii) a trust or a company, partnership, foundation or
other legal person whose beneficiaries are, to the
extent of more than 50%, original shareholders
described in the other sub-paragraphs or which
is owned and controlled, directly or indirectly, to
the extent of more than 50%, by such original
shareholders; or
(iv) a shareholder in a company who acquired his
shares from an original shareholder described in
the other sub-paragraphs by means of a transfer
causa mortis or any other transfer to which sub-
rule (1) was not applicable.
Added by
L.N. 51 of 2006.
[Rule 5(10)]
Amended by
L.N. 37 of 2007.
Notice in terms of Rule 5(10) of the Capital Gains Rules
Statement to be submitted by a transferor of shares where there is no transfer of controlling
interest
Part 1 - Details of transferor
Name
Address
ROC No. (companies only)
Income Tax Registration No.
State the number of shares held by transferor immediately prior to the transfer
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 2 - Details of Company in which shares are being transferred
Company Name
Income Tax Registration No.
Company year end
Date of incorporation
ROC No.
Authorised share capital
Issued share capital
Part 3 - Details of share transfer
a
Date of share transfer
b
Number of shares held at date of transfer
c
Number of shares transferred
d
Consideration for shares transferred
Give details of the shares transferred
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 4 - Declaration
I do hereby declare that the information submitted through this form is true and complete
Transferor’s signature .................. Transferor’s name ................
This Notice shall be accompanied by an auditor’s signed report which shall form an integral
part of the notice and shall give assurance as to the fact that the transfer does not constitute
a transfer of a controlling interest. The report shall be accompanied by a valuation by the
auditor attesting the value of the said shares as required by the provisions of rule 5(10) of
the Capital Gains Rules.
(1) Where a transfer of shares in a company is a transfer of
a controlling interest in that company, the transfer shall be deemed,
for the purpose of determining the chargeable gain, to have been
made at the higher of the consideration and the market value of the
shares.
(2) A transfer is a transfer of a controlling interest when any of
the following criteria apply to the shares held by the transferor at
any time during the period of eighteen months immediately
preceding the transfer
(a) their aggregate nominal value represents at least
twenty-five percent of the nominal value of the issued
share capital of the company;
(b) the aggregate voting rights attached to them represent
at least twenty-five per cent of the voting rights in that
company;
(c) the aggregate rights attached to them give the right to
the holder to be appointed or to nominate or appoint or
to withhold the nomination or appointment of a
director of that company;
(d) the aggregate rights to profits available for distribution
attached to them represent at least twenty-five percent of
the total rights to profits available for distribution to the
ordinary shareholders of the company
Provided that, notwithstanding the provisions of this
subrule, where a transfer of shares in a company is a transfer
referred to in article 5(9A)(d) of the Act, such transfer shall be
treated as a transfer of a controlling interest in that company
Provided further that, notwithstanding the provisions in this
subrule, where a transfer of shares in a company is a deemed
transfer of a proportion of a holding as referred to in article
5(13)(b)(i) of the Act, such transfer shall not be treated as a
transfer of a controlling interest in a company.
(3) When two or more transfers of shares in the same company
("the relevant transactions") are made by the same or by related
persons within a period of eighteen months or less, then, for the
purpose of determining the chargeable gains arising from the last of
those transfers, the relevant transfers shall be deemed to be one
transfer ("the global transfer") made by the same person on the date
of that last transfer, and if the global transfer satisfies any of the
criteria listed in subrule (2), the following provisions shall apply
(a) the last of the relevant transactions shall be deemed to
be a transfer of a controlling interest;
(b) the market value of the shares transferred in the last
transfer shall be deemed to be equal to the market
value of the global transfer reduced by the total value
that was or is to be taken into account for the purpose
of determining the chargeable gain arising from each
of the relevant transactions preceding the last of those
transfers.
(4)
For the purpose of subrule (3) -
(a) an individual is deemed to be related to another person
if that other person is his spouse, his descendant in the
direct line, his adoptive child, the spouse of any such
descendant or adoptive child, his brother or sister, or a
company of which the individual is, directly or
indirectly, a shareholde;
(b) two bodies of persons are deemed to be related persons
if they are companies within the same group of
companies in terms of article 16 of the Act or are
directly or indirectly controlled and beneficially
owned as to more than fifty per cent by the same
persons.
(5) The market value of shares in a company is a percentage of
the market value of the company to be determined in accordance
with the following formula -
Y = (0.4 x A) + (0.2 x B) + (0.4 x C)
where -
(a) 'Y' represents the percentage to be determined;
(b) ‘A’ is the percentage of the issued share capital
represented by the nominal value of those shares;
(c) ‘B’ is the percentage of the total voting rights in the
company represented by the total voting rights
attached to those shares; and
(d) ‘C’ is the percentage of the profits available for
distribution to the ordinary shareholders represented
by the profits available for distribution to the holder of
those shares
Provided that -
(i)
saving proviso (ii), for the purpose of
determining the market value of the shares,
where the percentage determined by the above
formula has decreased as a result of a change in
the issued share capital of that company or a
change in rights attached to such shares, made
during the period of eighteen months preceding
the transfer, and such change was not subject to
duty under article 42B of the Duty on
Documents and Transfers Act, it shall be
deemed that such change had not taken place
and the market value of the shares shall be
determined by reference to the market value of
the company and the percentage determined by
the above formula, calculated by taking into
account the values of ‘A’, ‘B’ and ‘C’ as existing
at the time immediately preceding that change;
(ii) the market value of shares that are listed on a
stock exchange recognised under the Financial
Markets Act shall be the last quoted price of
those shares on that exchange before the date of
the transfer;
(iii) where the transferor submits, together with
Schedule C referred to in sub-rule (10), a share
valuation prepared by an expert (specialist
valuer) who is independent of the company, the
Commissioner may at his absolute discretion
accept such valuation and in such case the
market value of the shares shall be such amount
as determined by the expert. The share valuation
shall be accompanied by the expert’s report
which shall include a detailed description of the
methods of valuation which have been used in
determining the market value of the shares
Provided that the transferor shall only be
authorised to submit a share valuation where
(a) the capital gain differential exceeds ten per
centum (10%); and
(b) the capital gain differential exceeds thirty
thousand euro (€30,000).
For the purpose of this proviso "capital gain
differential" means the difference between the
capital gain computed by applying the formula
prescribed in this sub-rule and the capital gain
computed on the basis of the share valuation;
(iv) Where the Commissioner requires further
particulars for the purposes of enabling him to
make a decision on whether to accept a share
valuation submitted by an authorised transferor,
the Commissioner shall, within thirty days of the
receipt of the share valuation, or of the receipt of
any further particulars previously required under
this paragraph, by written notice, require the
applicant to furnish such further particulars, and
if any such notice is not complied with within
thirty days, or such longer period as the
Commissioner may allow, the Commissioner
need not proceed further with the application;
(v) The Commissioner shall notify his decision to
the transferor in writing within a reasonable time
of receiving the share valuation or, if he gives a
notice under sub-rule (iv), within a reasonable
time after the notice has been complied with.
(6) The market value of a company is the total of the net asset
value of the company as resulting from its financial statements for
the financial year preceding that in which the transfer is made
Provided that, where during the financial year in which the
transfer is made, but not later than the date of the transfer, the
company has transferred or acquired any immovable property or
rights over an immovable property or any shares in another company
representing at least ten percent of the nominal value of the issued
share capital of that other company, the net asset value of the
company shall be that resulting from an accounting statement
prepared by a certified public accountant holding a practicing
certificate in auditing, to be drawn up as at the date of the transfer.
The accounting statement shall consist of a balance sheet showing
the position of the company as at the date of the transfer and shall
be drawn up using the same methods and the same layout as used
for its financial statements for the financial year preceding that in
which the transfer is made
Provided further that -
(a) where the assets of the company include shares in
another company, and such shares represent at least ten
percent of the nominal value of the issued share capital
of that other company, their book value shall be
replaced by their market value determined in
accordance with this rule 5, including this proviso.
Sohowever that where the market value as determined in
accordance with this rule is a negative figure, their
market value shall be taken to be zero;
(b) where the assets of the company include immovable
property, the book value of that property shall be
replaced by its market value, that is to say, the price
that the property would fetch if sold on the open
market on the date of the transfer: provided that this
paragraph shall not apply if the market value of the
property is less than its book value;
(c) the net asset value shall be increased by an amount,
representing the value of the goodwill, equivalent to
two years’ average profits calculated by reference to
the profits of the company for the five financial years
immediately preceding the year in which the transfer is
made;
(d) where the issued share capital of the company includes
shares whose return is limited to a fixed rate of return,
the net asset value shall be reduced by the book value
of such shares
Provided that this paragraph shall not apply where the
company has applied an amount standing to the credit
of any of its reserve accounts funds, other than a
capital redemption reserve and profits available for
distribution in paying up to any extent the allotment of
the said shares.
(7)
For the purpose of subrule (6) -
(a) where the transfer is made during the company’s first
financial year, its net asset value shall be the nominal
value of its issued share capital as adjusted in
accordance with the provisos to the said subrule;
(b) where the company has not been in existence for a
sufficient period to determine the value of the
goodwill in the manner stated in proviso (c) to subrule
(6), the average profits shall be calculated by reference
to the total profits for the years preceding that during
which the transfer is made
Provided that, subject to paragraph (c), where the
transfer is made during the company’s first or second
financial year no value is to be attributed to the
goodwill;
(c) where the company has acquired its business or part
thereof from another person during the company’s first
three financial years the value of the goodwill of the
business so acquired shall be the higher of the
consideration, if any, paid for the acquisition of the
goodwill of that business and its value determined in
accordance with the foregoing provisions by reference
to the profits derived by that other person from the
relevant business;
(d) in determining the value of the goodwill in accordance
with sub-rule (6)(c), in cases where the provisions of
sub-rule (6)(a) come into operation, any dividends
paid to the company out of profits for the years being
considered, by another company in which the company
is a shareholder, are excluded from the calculation;
(e) where the value of the goodwill determined in
accordance with the foregoing provisions is negative,
the value that shall be taken into consideration shall be
nil.
(8) Where a controlling interest includes shares in a company
that directly or indirectly owns, at the time of the transfer of those
shares, immovable property there shall be allowed a deduction for
the increase in inflation calculated in accordance with rule 8 in
respect of that immovable property or its relevant portion
Provided that no such deduction for inflation shall be
allowed where the book value of the shares has not been replaced
by their market value in accordance with proviso to sub-rule (6)(a).
(9) Where a transfer of a controlling interest is a transfer to
which article 5(3)(a) of the Act applies, the deduction allowable in
t e r m s o f su b ru le ( 8 ), wh e r e ap pl ic a bl e , is to be d e e m e d a s
satisfying the requirement for any adjustment to the value of the
immovable property that may be due in terms of that article
Provided that where the transfer is not a transfer of a
controlling interest, the adjustment required by the said article
5(3)(a) shall consist of an increase for inflation made in accordance
with rule 8 but taking index yd to be the index for 1991.
(10) The transferor in any transfer of shares shall submit to the
Commissioner a statement prepared by a certified public auditor
stating whether the transfer is a transfer of a controlling interest or
not and indicating the grounds on which this statement is based.
Where the transfer is a transfer of a controlling interest, the
auditor ’s statement shall be made on the form prescribed in
Schedule C including a computation of the market value of the
shares as required by these rules, and shall be accompanied, where
applicable, by a Perit’s valuation of the market value of the
immovable property taken into account in determining the value of
the shares, together with a site plan issued by the Land Registry,
signed and stamped by a Perit. In any other case, except as provided
in sub-rule (14), the auditor’s statement shall be made on the form
prescribed in Schedule D including a valuation of the shares.
(11) The statement referred to in subrule (10) shall be delivered
i n t r i p l i c a t e t o t h e C o m m i s s i o n e r ( C a p i t a l Tr a n s f e r D u t y
Department) and the transferor shall, together with the delivery,
pay to the Commissioner the provisional tax due on the transfer in
accordance with article 43 of the Income Tax Management Act, and
the Commissioner shall not consider that delivery or the notice of
the transfer required in accordance with the Duty on Documents
and Transfers Act as valid unless payment is made as aforesaid.
(12) The Commissioner shall stamp one of the copies of the
c e r t i f i c a t e s u b m i t t e d i n a c c o r d a n c e w i t h s u b r u l e ( 11 ) i n
acknowledgement of the receipt of same and return it to the person
who submitted it.
(13) A Perit’s valuation delivered to the Commissioner in
accordance with rule 5A and this rule ("the taxpayer’s technical
valuation") constitutes proof of the market value of the property to
which it refers unless a different value results from a valuation
prepared by a Perit appointed by the Commissioner ("the
Commissioner’s technical valuation")
Provided that -
(a) where the taxpayer’s and the Commissioner’s
technical valuations are produced in any proceedings
in the Administrative Review Tribunal, the Tribunal
shall, unless the parties otherwise agree, appoint a
third Perit to report on the value after examining the
two valuations and inspecting the property, and the
Tribunal shall decide the matter after taking into
account the third Perit’s report and any other
consideration that it may consider appropriate;
(b) where, in a final and conclusive assessment, the
chargeable gain on a transfer of shares is higher than
that declared by the taxpayer, the excess shall not, to
the extent that it is attributable to a value of
immovable property as assessed exceeding the
taxpayer’s technical valuation by not more than
twenty-five percent, constitute an omission for the
purposes of article 56(12) of the Act.
(14) Where the transferor is a person to whom the provisions of
articles 5(2)(e), 5(6)(e), 5(9), 5(14)and 12(1)(c)(ii) of the Act
apply, a valuation of shares or immovable property need not be
made, and the statement referred to in sub-rule (10) shall be made
on the form prescribed in Schedule E.
(15) For the purposes of this rule, the term "shares" or "shares in
a company" shall mean
(a) shares in a company which is resident in Malta in
terms of article 2 of the Act; or
(b) shares held directly or indirectly in any other company
the assets of which consist wholly or principally of
immovable property, provided that where such shares
are held by a company whose shareholders are, either
directly or indirectly, all not resident in Malta
(excluding the holding by any person resident in Malta
of not more than one share in the company),
immovable property situated outside Malta shall be
disregarded for the purpose of making the
determination contemplated in this paragraph; or
(c) shares in a company referred to in article 5(9A)(a) of
the Act
Provided that any shares whose return is limited to a fixed
rate of return shall be excluded.
(1) (i) Where as a result of a change in the issued share
capital of a company or a change in voting rights
attached to such shares, (hereinafter referred to as the
"change"), a transfer of value as provided for in article
5(13)(b)(ii) of the Act is deemed to have taken place,
the value transferred or acquired by a person shall be
determined in accordance with the following formula
Y = (A – B) + C – D where -
(a) 'Y' represents the amount to be determined;
(b) 'A' is the market value of the shares held in the
company immediately before the change;
(c) 'B' is the market value of the shares held in the
company immediately after the change;
(d) 'C' is the consideration paid for the acquisition
of shares or additional shares issued by the
company, where the change consists of an issue
of share capital for consideration;
(e) 'D' is the amount paid by the company in respect
of a cancellation of shares, where the change
consists of a reduction of share capital of the
company
Provided that where the market value of the company
immediately before the change does not exceed the
value of the paid up share capital of such company, the
value of 'Y' shall be taken as zero
Provided further that where such person does not hold
any shares in the company immediately before or after
the change, the value of 'A' or 'B' in the said formula,
as the case may be, shall be taken as zero
Provided also that, where the change in the issued
share capital consists of a conversion of securities, for
the purpose of paragraphs (b) and (c) the market value
of shares not being securities as defined in article
5(1)(b) of the Act shall be taken as zero.
(ii) Where the amount determined in accordance with the
said formula is a positive amount, such person ("the
transferor") shall be deemed for the purposes of article
5(13)(b)(ii) of the Act to have made a transfer of value
equal to the said amount and such value shall be
deemed for the purposes of the said article to have
passed into other shares in or rights over the company
held by any other person or persons. The amount so
determined shall be the gains or profits referred to in
the said article.
(iii) Where the amount determined in accordance with the
said formula is a negative amount, such person ("the
transferee") shall be deemed to have acquired value
equal to the said amount and such value shall be
deemed to have passed into shares in or rights over the
company held by him.
(2)
For the purpose of sub-rule (1)
(i)
the market value of shares held in a company is a
percentage of the market value of the said company
corresponding to the percentage of the issued share
capital represented by the nominal value of those
shares;
(ii)
where the issued share capital of the company is made
up of different classes of shares (whether before or
after the change in the issued share capital) or where
the change consists of an alteration of voting rights,
the market value of shares held in the company shall,
notwithstanding paragraph (i), be the percentage of the
market value of the said company corresponding to the
percentage of the total voting rights in the company
represented by the total voting rights attached to those
shares;
(iii)
notwithstanding paragraph (ii), where the value of 'Y'
as determined by the application of paragraph (i) is
higher than the value of 'Y' as determined by the
application of paragraph (ii), the value of 'Y' is to be
determined by the application of paragraph (i).
(3) The market value of a company shall, for the purpose of
sub-rule (2), be determined in accordance with rules 5(6) and (7)
Provided that in determining the market value of the
company the total net asset value referred to in rule 5(6) shall be
that resulting from an accounting statement prepared by a certified
public accountant holding a practicing certificate in auditing, to be
drawn up as at the date of the deemed transfer of value. The
accounting statement shall consist of two balance sheets showing
the position of the company immediately before and after the
change and shall be drawn up using the same methods and the same
layout as used for its financial statements for the financial year
preceding that in which the change takes place.
(4)
(i) For the purpose of determining the chargeable gain
there shall be allowed as a deduction against the gains
or profits determined in accordance with sub-rule (1)
of this rule, a portion of the cost of acquisition of the
shares held by the transferor immediately before the
CAPITAL GAINS
change in the issued share capital or voting rights
(hereinafter referred to as the "change"), to be
determined in accordance with the following formula -
Z = ((A – B) / A) x E where -
(a) 'Z' represents the amount to be determined;
(b) 'A' is the market value of the shares held by the
transferor immediately before the change as
determined in sub-rule (1);
(c) 'B' is the market value of the shares held by the
transferor immediately after the change as
determined in sub-rule (1); and
(d) 'E' is the cost of acquisition of the shares held by
the transferor immediately before the change
Provided that the deduction to be allowed against the
said gains or profits, shall in no case exceed such gains
or profits
Provided further that where the amount determined in
accordance with the said formula is a negative amount,
such amount shall be taken to be zero
Provided also that no such deduction shall be allowed
where the gains or profits determined in accordance
with sub-rule (1) of this rule arise as a result of a
change in the issued share capital consisting of a
reduction of share capital.
(ii) On a subsequent transfer of the shares held by the
transferor immediately before the change, the cost of
acquisition shall be deemed to be the portion of the
cost of acquisition not taken into account in
determining the chargeable gain referred to in
paragraph (i) of this subrule, and proviso (ii) of rule
5(5) shall not apply to the said transfer.
(iii) The acquisition cost of shares held by the transferee
acquiring value referred to in subrule (1)(iii) shall be
increased by the amount referred to in the said
paragraph, which shall for such purpose be treated as a
positive amount, and the aggregate amount so obtained
shall, for the purpose of determining the chargeable
gain on a subsequent transfer, be the cost of
acquisition of the said shares
Provided that where the said transferee, held shares in
the company immediately before the change in the
issued share capital and acquired further shares as a
result of a change in the issued share capital consisting
of an increase in the share capital of the company, the
acquisition cost of the shares held and acquired shall
be increased pro rata by the said amount
Provided further that the acquisition cost of shares, not
being securities as defined in article 5(1)(b) of the Act,
held by the transferee immediately before the change
in the issued share capital shall, for the purpose of
determining the aggregate amount referred to in this
paragraph, be taken to be zero
Provided also that this paragraph shall only apply
where the said transferee acquiring value has paid the
relative duty as determined in accordance with article
42 of the Duty on Documents and Transfers Act in
respect of the value so acquired.
(iv) On a subsequent transfer of the shares held by the
transferor and transferee immediately after the change,
made before the end of the financial year in which the
change took place, the market value taken into account
in
determining
the
chargeable
gain
shall,
notwithstanding the provisions of rule 5, not be lower
than the value of 'B' referred to in sub-rule (1)(i)(c) of
this rule, being the value that was taken into account in
determining the value transferred or acquired, as the
case may be.
(5) The transferor in any transfer of value referred to in this
rule shall submit to the Commissioner a computation of the market
value of the shares, made on the form prescribed in Schedule F,
accompanied, where applicable, by the accounting statement
referred to in sub-rule (3) and by a Perit’s valuation of the market
value of the immovable property taken into account in determining
the value of the company, together with a site plan issued by Land
Registry, signed and stamped by a Perit.
(6) The form referred to in sub-rule (5) shall be delivered in
triplicate to the Commissioner and the transferor shall, together
with the delivery, pay to the Commissioner the provisional tax due
on the transfer in accordance with article 43 of the Income Tax
Management Act.
(7) The Commissioner shall stamp one of the copies of the
form submitted in accordance with sub-rule (5) in
acknowledgement of the receipt of same and return it to the person
who submitted it.
(8) For the purposes of this rule, the term "shares" or "share
capital" shall exclude shares which do not participate in any way in
the profits of a company other than by way of a fixed rate of return.
The provisions of article 5(9) of the Act shall not apply
where the asset transferred from one company to another company
consists of value in securities as provided for in article 5(13)(b)(ii)
of the Act.
For the purposes of identifying shares acquired with shares
subsequently disposed of, in so far as the shares are of the same
class, shares acquired at an earlier time shall for the purposes of
determining the gains or profits referred to in article 5(1)(a)(ii) of
the Act be deemed to have been disposed of before shares acquired
at a later time.
(1) The adjusted cost of a partner’s interest in a
partnership shall be the cost of such interest determined in
accordance with article 5(3A)(a) of the Act, and -
(a) increased by the sum of
(i)
any additional capital contributions made by the
partner to the partnership during the period he
was a partner,
(ii) the partner’s total share of partnership profits for
the period during which he was a partner, and
(b) reduced by (but not below zero) the sum of
(i)
the amount of capital contributions drawn out or
received back,
(ii) all partnership profits distributed to the partner
during the period he was a partner,
(iii) the partner’s total share of partnership losses for
the period during which he was a partner.
For the purpose of this sub-rule
(i)
"partnership profits" means the income of the
partnership as referred to in article 27 of the
Income Tax Management Act, declared by the
partners in a return of income;
(ii) "partnership losses" means the amount of losses
incurred by the partner from the partnership as
referred to in articles 5(10)(a) and 14(1)(g) of
the Act;
(iii) "partner or partners" means any person holding
an interest in a partnership
Provided that where the transfer is a transfer of a partial
interest the adjustments referred to in paragraphs (a) and (b) shall
be made pro rata
Provided further that where it is not practical to apply the
said adjustments or where it is reasonable to conclude that the
result will not vary substantially from that which would be obtained
by applying such adjustments, the Commissioner may in his
absolute discretion accept such other adjustments as the transferor
of the interest in the partnership may determine.
(2) Gains or profits relating to a transfer of an interest in a
partnership shall be determined by deducting, from the transfer
value of the interest, the adjusted cost of acquisition of the interest
determined in accordance with sub-rule (1). The transfer value of
the interest is the higher of the market value of that interest and the
consideration paid or payable for the transfer.
(3) The market value of an interest in a partnership is the
percentage of the market value of the partnership corresponding to
the share to which the transferor is entitled to assets available for
distribution on the winding up of that partnership
Provided that -
(a) for the purpose of determining the said percentage, the
value of the assets available for distribution shall be
deemed to be the market value of the partnership as
determined in accordance with sub-rule (4), which
shall, unless otherwise provided in the contract of
partnership, first be allocated between the partners to
satisfy each partner’s capital and current account
balances as at the date of the transfer, and any
remaining balance of market value shall be allocated
among the partners in proportion to their share of the
profits of the partnership. The provisions of article
1666 of the Civil Code shall apply where the contract
of partnership does not fix the share of each partner in
the profits of the partnership.
Where the share of the profits of the partnership, as
fixed in the contract of partnership, cannot be readily
ascertained due to such share being dependent either
on a particular condition or a set of conditions, or a
formula the attributes of which are dependent on a
particular condition or set of conditions, such share
shall be determined by reference to the actual
apportionment of profits or losses made in the last
complete financial year preceding the transfer;
(b) where the market value of the interest of the transferor
has been reduced, as a result of any alteration or
addition to the contract of partnership including any
change in the manner in which the assets of the
partnership are to be distributed between the partners
upon winding up and to the profit sharing
arrangements, made during the period of eighteen
months preceding the transfer, the market value of the
interest shall be determined by reference to the terms
of the contract of partnership, as existing at the time
immediately preceding that alteration, addition or
change;
(c) where the transfer is a transfer of a partial interest, the
market value of the part transferred is to be calculated
by reference to such portion of the market value of the
whole interest as corresponds to the portion of the
interest transferred.
(4) The market value of a partnership is the total of the net
asset value of the partnership as resulting from a balance sheet
showing the state of affairs of the partnership as at the date of the
transfer, to be prepared by a certified public accountant, and drawn
up using the same methods and the same layout as used for its
financial statements for the financial year preceding that in which
the transfer is made
Provided that -
(a) where the assets of the partnership include shares in a
company, and such shares represent at least ten percent
of the nominal value of the issued share capital of that
company, their book value shall be replaced by their
market value determined in accordance with rule 5. So
however that where the market value as determined in
accordance with rule 5 is a negative figure, their
market value shall be taken to be zero;
(b) where the assets of the partnership include immovable
property, the book value of that property shall be
replaced by its market value, that is to say, the price
that the property would fetch if sold on the open
market on the date of the transfer;
(c) the net asset value shall be increased by an amount,
representing the value of the goodwill, equivalent to
two years’ average profits calculated by reference to
the profits of the partnership for the five financial
years immediately preceding the year in which the
transfer is made;
(d) where the partnership has not been in existence for a
sufficient period to determine the value of the
goodwill in the manner stated in paragraph (c), the
average profits shall be calculated by reference to the
total profits for the years preceding that during which
the transfer is made;
(e) in determining the value of the goodwill, in cases
where the provisions of paragraph (a) come into
operation, any dividends paid to the partnership out of
profits for the years being considered, by another
company in which the partnership is a shareholder, are
excluded from the calculation;
(f)
where the value of the goodwill determined in
accordance with the foregoing provisions is negative,
the value that shall be taken into consideration shall be
nil.
(5) In the case of a transfer of an interest in a partnership that
directly or indirectly owns, at the time of the transfer of that
interest, immovable property, there shall be allowed a deduction for
the increase in inflation calculated in accordance with rule 8 in
respect of that immovable property or its relevant portion to be
determined on the percentage determined in accordance with sub-
rule (3)
Provided that no such deduction for inflation shall be
allowed where the book value of shares has not been replaced by
their market value in accordance with paragraph (a) of the proviso
of sub-rule (4).
(6) The transferor in any transfer of an interest in a partnership
shall submit to the Commissioner a statement prepared by a
certified public accountant holding a practicing certificate in
auditing made on the form prescribed in Schedule G including a
computation of the market value of the interest as required by sub-
rule (4), and such statement shall be accompanied, where
applicable, by an a Perit’s valuation of the market value of the
immovable property taken into account in determining the value of
the interest.
(7) The statement referred to in sub-rule (6) shall be delivered
i n t r i p l i c a t e t o t h e C o m m i s s i o n e r ( C a p i t a l Tr a n s f e r D u t y
Department) and the transferor shall, together with the delivery,
pay to the Commissioner the provisional tax due on the transfer in
accordance with article 43 of the Income Tax Management Act, and
the Commissioner shall not consider that delivery or the notice of
the transfer required in accordance with the Duty on Documents
and Transfers Act as valid unless payment is made as aforesaid.
(8) The Commissioner shall stamp one of the copies of the
certificate submitted in accordance with sub-rule (7) in
acknowledgement of the receipt of same and return it to the person
who submitted it.
(9) The provisions of rule 5(13) shall, mutatis mutandis, apply
to this rule.
(10) Where the transferor is a person to whom the provisions of
article 5(2)(e) or (6)(e) of the Act apply, no valuations need to be
made, and the statement referred to in sub-rule (6) shall be made on
the form prescribed in Schedule H.
(11) For the purpose of the Act and these rules, "contribution"
means the amount of capital that a person contributes to the
partnership on his own account consisting of money or other
property but does not include a contribution consisting in personal
services.
(1) Where a person (hereinafter referred to as "the
transferee") acquires or increases a partnership share (hereinafter
referred to as "the change"), other than by way of an acquisition of
an interest in the partnership from another partner or partners, it
shall be deemed that a transfer of an interest in the partnership has
been made by the other partner or partners (hereinafter referred to
as "the transferor") to that person. For the purposes of this rule,
"partner or partners" means any person holding an interest in a
partnership.
(2) The chargeable gain arising from the transfer referred to in
sub-rule (1) shall be determined in accordance with the following
formula
Y = A – B where -
(a) 'Y' represents the amount to be determined;
(b) 'A' is the market value of the interest held by the
partner in the partnership immediately before the
change;
(c) 'B' is the market value of the interest held by the
partner in the partnership immediately after the
change.
For the purpose of sub-rule (1), where the value of 'Y' in the
formula results in a positive amount such partner shall be deemed
to have transferred an interest in the partnership
Provided that where the value of 'Y' is a negative amount or
is below one hundred euro (€100), it shall be taken to be zero
Provided also that where the deemed transfer is made by the
transferor to a person referred to in article 5(2)(e)(i) of the Act, the
value of 'Y' shall be taken to be zero and the statement referred to
in sub-rule (4) shall not be required to be submitted
Provided also that, where a person ("the transferee")
acquires or increases a partnership share, any payment made
outside of the partnership accounts by such person to any other
p a rt n e r o r p a r t n e r s s h a ll , w h e r e s uc h p a ym e n t e x c e e d s t he
chargeable gain as determined by the said formula, be the amount
chargeable to tax.
(3) For the purpose of sub-rule (2), the market value of the
interest in the partnership, immediately before and after the change,
is to be determined in accordance with the provisions of rule 5D(3)
and (4)
Provided that -
(a) paragraph (b) of the proviso of rule 5D(3) shall not
apply for the purpose of determining the value of 'B' in
the formula referred to in sub-rule (2);
(b) for the purpose of determining the value of 'B' in the
formula referred to in sub-rule (2), any contribution
consisting of money or other property made to the
partnership by the transferee, which is credited to the
capital or current accounts of the other partner or
partners, shall be treated as being credited to the
capital or current account of the transferee;
(c) for the purpose of carrying out the allocation of the
market value of the partnership between the partners to
satisfy each partner’s capital and current account
balances, whether immediately before or after the
transfer, as the case may be, any revaluations or
goodwill adjustments credited to such accounts shall
be disregarded and shall form part of the remaining
balance of the market value.
(4) The transferor in any deemed transfer of an interest in a
partnership shall submit to the Commissioner a statement prepared
by a certified public accountant holding a practicing certificate in
auditing made on the form prescribed in Schedule I including a
computation of the market value of the interest as required by rule
5D(4), and such statement shall be accompanied, where applicable,
by a Perit’s valuation of the market value of the immovable
property taken into account in determining the value of the interest.
(5) The statement referred to in sub-rule (4) shall be delivered
i n t r i p l i c a t e t o t h e C o m m i s s i o n e r ( C a p i t a l Tr a n s f e r D u t y
Department) and the transferor shall, together with the delivery,
pay to the Commissioner the provisional tax due on the transfer in
accordance with article 43 of the Income Tax Management Act.
(6) The Commissioner shall stamp one of the copies of the
certificate submitted in accordance with sub-rule (5) in
acknowledgement of the receipt of same and return it to the person
who submitted it.
(7) The provisions of rule 5(13) shall, mutatis mutandis, apply
to this rule.
(8)
(a) A reduction in the contribution of a partner in a
partnership shall be deemed to be a transfer of such
proportion of the partner’s interest in the partnership as
is equal to the proportion of the reduction in the
contribution of the partner and shall constitute a gain
or loss in the year in which such reduction is effected
Provided that where there is a proportionate reduction
in the contribution of all the partners, such that the
proportion of the interest of each partner with respect
to profit sharing ratios and share of assets on winding
up is equal both before and after the reduction is
effected, it shall be deemed that no loss or gain has
arisen from the transfer
Provided further that the provisions of sub-rule (2)
shall not apply in the case where this sub-rule applies.
(b) On any subsequent transfer of the remaining interest of
such partner, the cost of acquisition shall be deemed to
be the residual part of the cost of acquisition not taken
into account on the reduction of the contribution.
(c) The provisions of rule 5D shall, mutatis mutandis,
apply for determining the chargeable gains or profits
derived from a deemed transfer of an interest in a
partnership resulting from a reduction in the
contribution of a partner
Provided that the provisions of rule 5D(6) to (11) shall
also apply to the said transfer.
Added by
L.N. 51 of 2006.
[Rule 5(14)]
Amended by
L.N. 37 of 2007;
L.N. 317 of 2010.
Notice in terms of Rule 5(10) of the Capital Gains Rules
Statement to be submitted by a transferor of shares where the transfer is exempt from tax in
the circumstances mentioned in Rule 5(14)
Part 1 - Details of transferor
Name
Address
ROC No. (companies only)
Income Tax Registration No.
State the number of shares held by transferor immediately prior to the transfer
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 2 - Details of Company in which shares are being transferred
Company Name
Income Tax Registration No.
Company year end
Date of incorporation
ROC No.
Authorised share capital
Issued share capital
Part 3 - Details of share transfer
Date of share transfer
Number of shares held at date of transfer
Number of shares transferred
Consideration being paid for shares transferred
Give details of the shares transferred
Type
Class
Votes
Nom. Value
Number
Date of
per share
per share
acquisition
Part 4 - Details of exemption
State under which of the following provisions the share transfer is exempt
Article 5(2)(e) Income Tax Act
Article 5(6)(e) Income Tax Act
Article 5(9) Income Tax Act
Article 5(13) Income Tax Act
(please quote specific paragraph)
Article 5(14) Income Tax Act
Article 12(1)
(please quote specific paragraph)
Rule 3(1): Merchant Shipping
(Taxation ana Other Matters relating to
Shipping Organisations) Regulations
Part 5 - Declaration
I do hereby declare that the information submitted through this form is true and complete
Transferor’s signature ............. Transferor’s name .............
This Notice shall be accompanied by an auditor’s signed report which shall form an integral
part of the notice and shall give assurance as to the fact that the transfer is exempt from tax
under one of the circumstances mentioned in rule 5(14) of the Capital Gains Rules.
(1) The provisional tax payable in terms of article 43 of the
Income Tax Management Act in respect of immovable property is
to be collected from the vendor and, or, transferor by the notary on
publication of the relative deed of transfer. This payment is to be
made by means of a bank draft or a cheque drawn by the notary
who published the transfer deed payable to the Commissioner for
Revenue
Provided that no provisional tax shall be collected by the
notary where the parties declare on the deed that the provisions of
article 5(5)(b) of the Act apply to them.
(2) The bank drafts or cheques are to be presented with the
notice contained in the First Schedule to the Duty on Documents
and Transfers Rules, and the notice shall be presented in triplicate.
One of the notices shall be stamped by the Commissioner in
acknowledgement of the receipt of the same notice and of the draft
or cheque, and shall be returned to the notary to be annexed to the
relative deed.
(3) In calculating the provisional tax payable by the vendor
and, or, transferor, the resulting amount is to be rounded down to
the nearest euro. This rounding down may be made in respect of
each vendor and, or, transferor if there is more than one vendor or
transferor on the particular deed of transfer.
(4) The notice referred to in article 5(9)(ii) of the Act shall be
made on the form prescribed in Schedule A and shall be presented
in triplicate together with the notice referred to in subrule (2). One
of the copies shall be stamped by the Commissioner in
acknowledgement of the receipt of the same notice and shall be
returned to the Notary to be annexed to the relative deed.
Added by
L.N. 317 of 2010.
[Rule 5A(5)]
The provisions of article 5(14) of the Act shall apply where
the exchange of the shares does not produce any change in the
individual direct or indirect beneficial owners of the companies
involved or in the proportion in the value of each of the companies
involved represented by the shares owned beneficially directly or
indirectly by each such individual.
Added by
L.N. 105 of 2013.
[Rule 10A]
Amended by
L.N.379 of 2017.
Notice submitted to the Registrar of Courts in terms of Rule 10A
of the Capital Gains Rules
Statement to be submitted in respect of sales by judicial auction of immovable property and
any rights thereon the transfer of which is subject to tax on capital gains or to the final tax on
property transfers under the Income Tax Acts.
Part 1 – Details of Third party referred to in article 66 of the Duty on Documents and
Transfers Act, as applicable by article 43(9)(c) of the Income Tax Management Act or by
rule 10B of these rules. (claimant)
Name
Address
ROC No (companies only)
Income Tax Reg. No
Part 2 – Details of Transferor
Name
Address
ROC No (companies only)
No of legally valid
identification
document
(individuals only)*
Part 3 – Details of Immovable Property or any rights thereon which are being
transferred
Part 4 – Details of Transfer
Date of transfer
Consideration
Details of judicial auction
Part 5 - Details of rights held by third party
(a)
State which of the following is applicable in the circumstances
(1) Holder of real rights over the property in question
(2) Third party in possession of the property
(3) Holder of a privilege or hypothec registered by a creditor/s of the
transferor of the immovable property and/or any right thereon
(4) Holder of rights of creditors who have demanded the separation of the
transferor’s estate from that of his heirs
(b) Indicate the amount due by the transferor to the third party
Attach documentary evidence (appropriately numbered and described) to support your claim.
DOCUMENT REF
DESCRIPTION
Indicate any relevant facts as well as the legal reasoning for the choice set out above
Relying on the documentation
listed above and attached here-
with, I hereby confirm that the
legal reasoning for the above
selected option is sound.
Advocate
Part 6 - Transferor’s Declaration
The transferor hereby declares that the transfer of immovable property or any rights thereon
referred to above is subject to the following tax treatment
(i) Exempt from tax in terms of article 5(5)(b) of the Income Tax Act, being
property or an undivided part thereof which has been owned and occupied for a
period of at least 3 years as the transferor’s own residence immediately
preceding the date of transfer and the property is disposed of within 12 months
of vacating the premises
(ii) Provisional tax equivalent to 7% of the consideration relating to the transfer of
the property or any rights thereon under article 43(1)(b) of the Income Tax
Management Act
(Note: where this paragraph (ii) applies, the transfer must be declared in the
relative income tax return for the year).
(iii) Full and final payment equivalent to 7% of the consideration or the value of the
transfer of the property or any rights thereon under article 43(1)(a) of the
Income Tax Management Act
(iv) Provisional tax equivalent to 7% of the consideration relating to the transfer of
the property or any rights thereon is due under article 43(1)(b) of the Income
Tax Management Act but the Commissioner has issued a permit for reduction in
terms of article 43(3).
(Note: where this paragraph (iv) applies, the permit issued by the Commissioner
is to be attached to this Schedule).
If none of the above is marked by the transferor or if this part is not completed
in full, it shall be deemed that option (ii) has been selected.
Indicate any relevant facts as well as the legal reasoning for the choice set out above
Relying on the information
provided to me, I hereby
confirm that the legal basis
for the above selected
option is correct.
Transferor
Advocate
Part 7 - Declaration
For all intents and purposes of law any and all signatories of this form hereby declare that the
entire contents hereof and all declarations made in this Schedule are true and correct and that
they are hereby furnishing all facts relevant to determine whether the relevant provisions of
the Income Tax Acts (Cap. 123 and 372 of the Laws of Malta) and the Duty on Documents and
Transfers Act (Cap. 364 of the Laws of Malta) and any rules issued thereunder are applicable.
The signatories of this form further declare that they are fully aware of the impact and
consequences of this declaration in terms of law and of the statutory rights of the
Commissioner in this respect.
Third party
Transferors
The completed Schedule shall be accompanied by a report signed by the holder of a warrant to
exercise the profession of Advocate in the Courts of Justice of Malta, which report shall give
assurance in respect of the legal applicability of the claims made herein by the signatories
hereto.
NOTE: Third parties and transferors have the option of filing separate forms in respect of the
same judicial sale by auction. Whenever any specific third party or transferor decides to file a
form separately from that of any other third party or transferor he may complete only the parts
relative to his claim. In the case of the Third party, all parts except part 6 must be completed;
in the case of a transferor, all parts except parts 1 and 5 must be completed.
FOR OFFICIAL USE: ................DETAILS OF JUDICIAL AUCTION: ............
CONSIDERATION OF JUDICIAL SALE
AMOUNT PAYABLE TO CREDITORS
AMOUNT DUE TO THE COMMISSIONER
AMOUNT REMITTED TO THE COMMISSIONER
Registrar of Courts
(1) The increase for inflation of the value of immovable
property is to be determined by using the index of inflation
established in terms of article 13 of the Housing (Decontrol)
Ordinance and applying the following formula
cost of acquisition/improvements
x
index yd – index ya
index ya
Where -
cost of acquistion/improvements is the cost as computed in
accordance with rule 2(1)(a) but excluding any expenses related to the
deed or any duty or fees;
index yd is the index for the year immediately preceding that
in which the transfer is made;
index ya is the index for the year immediately preceding that
in which the property in question had been acquired or completed,
whichever is the later, or, when it relates to improvements, for the
year immediately preceding that in which the cost for carrying out
the improvements was incurred
Provided that -
(a) where, in terms of the Act, the cost of acquisition of
immovable property that is transferred by a person is
to be determined by reference to an acquisition
happening before the acquisition of that property by
that person, index ya is the index for the year
immediately preceding that in which the earlier
acquisition took place;
(b) the deduction for inflation shall not exceed -
TP – CA- D
where -
(i) TP = the transfer price of the property
(ii) CA = the cost of its acquisition, taking into
account any reduction in the value of property
that may be required in terms of rule 2(4)
(iii) D = the other deductions, excluding the
deduction for inflation, allowable in terms of
these rules.
(2) Where the increase in inflation is to be calculated in
connection with a transfer of a controlling interest in a company in
the circumstances mentioned in rule 5(8), or a transfer of an interest in
a partnership, the formula referred to in sub-rule (1) shall apply
subject to the following provisions
(a) index yd is the index for the year immediately
preceding that in which the said transfer is made;
(b) the increase is to be calculated by reference to such
portion of the cost of the acquisition of the immovable
property as corresponds to the portion of the
immovable property represented by the shares
transferred;
(c) if the property was acquired or completed by the
company before the interest or shares were acquired by
the transferor, the increase in inflation computed in
accordance with the foregoing provisions of this sub-rule
shall be reduced by the amount corresponding to the
increase in inflation from the date of the acquisition or
completion of the property by the company or partnership
to the date of the acquisition of the interest or shares by
the transferor; and when the interest or shares were
acquired in different years the reduction shall be
calculated up to each year of acquisition. The cost of
acquisition to be taken into account in each such
calculation shall be such percentage of the cost of
acquisition of the property as corresponds to the portion
of the immovable property represented by the interest or
shares acquired in each year;
(d) the deduction for inflation computed in accordance
with this subrule shall not exceed -
MV – CA – R
where -
MV = the market value, determined in accordance with
rule 5, of the portion of the immovable property
represented by the interest or shares transferred
CA = an equivalent portion of the cost of acquisition
or completion of that property
R = the amount of the reduction, if any, computed in
accordance with paragraph (c).
(3) Where the increase in inflation is to be calculated in
connection with a transfer of an immovable property acquired
causa mortis after the 24th November 1992 but before the 25th
November 2003, and in respect of which an adjustment to the value
thereof is made in accordance with the Adjustments to Declared
Value of Immovable Property Rules, index ya shall be deemed to be
the index for the year 2003.
(1) A transfer of any rights acquired under a promise of
sale or transfer of immovable property or any rights over
immovable property, including a promise of an emphyteutical
grant, shall not be valid unless it is made by means of a written
a g r e e m e n t s i g n e d b y t h e t r a ns f e r o r a n d t h e t r a n s f e r e e a n d
authenticated by a notary or an advocate and notice thereof is given
to the Co mm ission er tog ether w ith t he relativ e payment in
accordance with subrules (2) and (3).
(2) The notice referred to in subrule (1) shall be signed by the
transferor and the transferee and authenticated by the notary or the
advocate who authenticated the relative written agreement and
shall be in the form set out in, and contain the information required
by, Schedule B.
(3) The notice referred to in subrule (2) shall be delivered to
the Commissioner (Capital Transfer Duty Department) in triplicate
within twenty-one days of the relative written agreement and shall
be accompanied by a payment of provisional tax equivalent to 7%
of the consideration for the transfer.
(4) In computing the gains or profits on the transfer of any
right to which this rule applies, the only deductions that shall be
taken into account shall be in respect of
(a) where the transferor had acquired that right from
another person, the consideration, if any, which he had
paid to that other person for that acquisition, to the
extent that the consideration is supported by a receipt
and results from an agreement that complies with this
rule and in respect of which notice has been given and
payment of provisional tax has been made as provided
for in this rule
Provided that where the transferor had acquired that
right under an agreement made before the date on
which this rule came into force a deduction for the
consideration paid for that acquisition shall be
allowable if proof thereof is submitted to the
satisfaction of the Commissioner;
(b) brokerage fees paid in respect of the said transfer, to
the extent that they result from documentary evidence
and supported by a receipt.
(5) This rule shall not apply to any transfer made on or after
the 1 January 2020.
(1) When a notary is engaged to publish a deed of transfer of
immovable property and the transferor is a person who is about to
leave Malta, that notary shall give the notice referred to in sub-rule (3)
not less than two months before the date set for the publication of that
deed.
(2) When a notary is engaged to publish a deed of a transfer of
immovable property and the transferor is a person who is either not
resident in or not a citizen of Malta, that notary shall give the
notice referred to in subrule (3) not less than two months before the
date set for the publication of that deed.
(3) The notice required to be given by a notary in terms of
subrule (1) or (2) shall state the details of the proposed transfer,
including the details identifying the parties and their addresses, a
description of the property, the date of the proposed transfer and
the consideration at which the proposed transfer is to be made, and
where an agreement for promise of sale or transfer has been
concluded in writing, it should be accompanied by a certified copy
of that agreement
Provided that, for the purposes of this sub-rule, the notary
shall not be obliged to give notice of any change in the acquirer of the
property after the initial notification.
(4) A notary who is required to give a notice in accordance
with subrule (1) or (2) may not publish the deed of the relative
transfer before the expiration of two months from the date on which
he gave the said notice to the Commissioner or before the date
given in the said notice as the date of the proposed transfer unless
he is so authorised in writing by the Commissioner
Provided that in any case the notary may not publish the
deed of the relative transfer
(a) unless the transfer is made for a consideration not
exceeding the consideration notified to the
Commissioner as aforesaid; and
(b) unless he complies with any conditions that may have
been imposed in the authorisation in writing given by
the Commissioner before the publication of that deed;
and
(c) if the Commissioner refuses to give the said
authorisation and notifies the notary of that refusal
before the publication of the deed
Provided also that if the notary publishes the deed of
transfer without the said authorisation where such authorisation
was required, such deed shall not be rendered null, but the notary
shall be responsible for any tax which may result to be uncollected
by the Commissioner from the transferor.
(5) The Commissioner may refuse to give the authorisation
mentioned in subrule (4) if, in the circumstances mentioned in
article 46 of the Income Tax Management Act and subject to the
procedures provided for in that article, the transferor has not made
such payment, and, or made such return, and, or given such security
as the Commissioner may have requested in accordance with that
article
Provided that the Commissioner may give the said
authorisation on condition that on the deed of transfer the notary
collects, by means of a deduction from the transfer price, an
amount equivalent to the payment or security that the
Commissioner requests in accordance with the said article and
remits that deduction to the Commissioner within fifteen days of
that transfer.The deduction shall be remitted together with the notice
that is required to be presented in accordance with rule 6.
(6)
For the purposes of this rule
(a) "a person who is about to leave Malta" is a person who
will leave Malta before the tax return date of the year
immediately following that in which the transfer is
made with the intention to establish his ordinary
residence outside Malta;
(b) a transferor who is a resident of Malta and is not a
person who is about to leave Malta shall make a
declaration to this effect to the notary engaged to
publish the deed of transfer and the notary shall record
such declaration in the deed;
(c) where the transferor makes the declaration required by
paragraph (b), the notary shall not be required to give
the notice referred to in sub-rule (3) unless the
transferor is not a citizen of Malta;
(d) where it results that the declaration referred to in
paragraph (b) is not a correct declaration, the
transferor making the said declaration shall be liable to
the penalties contemplated in article 52 of the Income
Tax Management Act in terms of the provisions of the
said article, and the provisions of the second proviso to
sub-rule (4), to the extent that it refers to the
responsibility of the notary for any tax which may
result to be uncollected by the Commissioner from the
transferor, shall not apply
Provided that, if the transferor proves, to the satisfaction of
the Commissioner, that the declaration required by paragraph (b)
was a correct declaration, because at the time of such declaration
the transferor had no intention to leave Malta to establish his
ordinary residence outside Malta, the Commissioner shall refrain
from invoking the provisions of article 52 of the Income Tax
Management Act.
(1) Any third party claiming that he holds security or
rights which are not affected by the rights of the Commissioner in
respect of withholding and payment of tax in terms of article
43(9)(c) of the Income Tax Management Act in respect of transfers
of immovable property and any rights thereon in a sale by judicial
auction, shall complete the relevant parts of the form prescribed in
Schedule J and file the said form in triplicate with the Registrar of
Courts, together with such documents as may be required to be
attached thereto in terms of the said form. One of the copies of the
form shall be stamped by the Registrar of Courts in
acknowledgement of the receipt of the said notice.
(2) Within a period of two (2) months from the date of a sale by
judicial auction, any transferor of immovable property and any
rights thereon in a sale by judicial auction shall be entitled to
complete the relevant parts of the form prescribed in Schedule J,
either separately or concurrently with the use of the same form as
set out in sub-rule (1), in order to indicate the tax treatment that
should be applicable to the said transfer, and such form shall be
filed in triplicate with the Registrar of Courts, together with such
documents as may be required to be attached thereto in terms of the
said form. One of the copies shall be stamped by the Registrar of
Courts in acknowledgement of the receipt of the said notice. Where
any transferor does not file the duly completed form prescribed in
Schedule J with the Registrar of Courts in terms of this sub-rule,
any tax deducted by the Registrar of Courts hall be deemed to
constitute final tax or provisional tax relating to the transfer of the
property or any rights thereon in terms of paragraph (a) or (b), as the
case may be, of article 43(1) of the Income Tax Management Act. This
is without prejudice to any tax payment or reporting obligations
applicable to the transferor in terms of any of the provisions of the
Income Tax Acts.
(3) On receipt of the form prescribed in Schedule J in the
circumstances set out in sub-rules (1) and, or (2), the Registrar of
Courts, after ascertaining that the relevant parts thereof are duly
completed and that any documents required to be attached thereto
in terms of the said form are duly annexed, shall forward them,
together with the application for withdrawal of funds, to a judge of
the Superior Courts for his decree thereon. One of the copies of the
duly completed form prescribed in Schedule J, together with the
documents attached thereto and the Court decree, shall, within a
period of not more than three (3) months after the Court’s decree is
issued, be forwarded by the Registrar of Courts to the
Commissioner.
(4) Where any third party holds any security or rights which are
not affected by the rights of the Commissioner in respect of
withholding and payment of tax in terms of article 43(9)(c) of the
Income Tax Management Act or rule 10B of these rules in a transfer
of immovable property and any rights thereon in a sale by judicial
auction, but after the satisfaction of all amounts due in respect of
such security or rights any funds remain from the proceeds of the
sale by judicial auction, the obligations of the Registrar of Courts
in terms of article 43(9)(c) of the Income Tax Management Act
shall be applicable and any tax due to the Commissioner shall be
paid out of such remaining funds.
Without prejudice to rule 10A, where any asset the transfer
of which is subject to tax on property transfers under article 5A of
the Act is sold in a judicial auction, the Registrar of Courts shall
have the same duties with regard to the withholding and payment of
the tax as those that are imposed on him by article 66 of the Duty
on Documents and Transfers Act in relation to the duty leviable on
transfers causa mortis under the said Act.
These rules shall be without prejudice to article 43(1)(a)
Rules to be without
prejudice to certain
and (4)(a) of the Income Tax Management Act.
provisions of
article 43 of the
Income Tax
Management Act.
Added by
L.N. 5 of 2005.