RELIEF FROM INCOME TAX AND FROM DUTY ON DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY TRANSFERS RULES

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

SUBSIDIARY LEGISLATION 364.19

RELIEF FROM INCOME TAX AND FROM DUTY ON

DOCUMENTS AND TRANSFERS ON CERTAIN

PROPERTY TRANSFERS RULES

26th November, 2021

LEGAL NOTICE 461 of 2021, as amended by Legal Notice 11 and

204 of 2022, 363 of 2024, 93 and 284 of 2025.

The title of these rules is the Relief from Income Tax and

from Duty on Documents and Transfers on Certain Property Transfers,

Rules.

In these rules, unless the context otherwise requires

"competent authority" means a board or other entity designated

or appointed by the Minister for the purpose of these rules;

"duty on documents and transfers" means duty chargeable on

sales and other transfers in terms article 32 of the Duty on Documents

and Transfers Act;

"income tax" means tax chargeable on property transfers in

terms of article 5A of the Income Tax Act;

"Planning Authority" means the planning authority established

under the Development Planning Act;

"property" means immovable property situated in Malta;

"transfer value" means the market value at the time of the

transfer or, when property is transferred under an onerous transfer for a

consideration that is higher than the market value, the consideration

for that transfer;

"transferable unit" means property having an identified

delineated boundary and includes a defined airspace or area of subsoil.

(1)

Subject to the other provisions of these rules, no

income tax and no duty on documents and transfers shall be payable on

the first seven hundred and fifty thousand euro (€750,000) of the

transfer value of any transfer to which rule 4 or rule 5 applies that is

made on or after 12 th October 2021 but not later than 31st December

2026

Provided that no relief from income tax and from duty on

documents and transfers shall be allowed in terms of this rule where

the transfer is made to a person who requires a permit by the Minister

for the purposes of the Immovable Property (Acquisition by Non-

Residents) Act or who would have required such permit had the

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

property acquired not been situated in a special designated area

Provided further that in the case of a transfer made on, or

after 1st January 2025

(a)

no relief from income tax and from

duty on documents and transfers shall be allowed

in accordance with this rule if the property that is

transferred consists of immovable property

intended for the storage of goods or materials;

(b)

when the property that is transferred

consists of a garage, relief from income tax and

from duty on documents and transfers in

accordance with this rule shall be allowed only if

that garage is transferred by means of the same

deed together with residential property and to the

same person to whom such residential property is

transferred, and is a garage attached to or

underlying that residential property or a garage

situated in the same block of residential apartments

of which that property forms part or a garage of not

more than thirty square metres (30m 2 ) situated

within five hundred metres (500m) of such

residential property or block of apartments.

(2)

The relief mentioned in sub-rule (1) shall be allowed only

as long as all the parties entitled to it declare that they wish to claim the

relief and the notary who publishes the deed makes a record of that

declaration in the deed, and as long as the notice of the transfer referred

to in article 51 of the Duty on Documents and Transfers Act is

delivered to the Commissioner by not later than 31st January 2027.

(3)

When the transfer value of a transfer referred to in sub-

rule (1) exceeds seven hundred and fifty thousand euro (€750,000), the

income tax and the duty on documents and transfers on the excess shall

be chargeable at the rates that apply in terms of the relevant provisions

of the Income Tax Act and the Duty on Documents and Transfers Act,

and for the purpose of determining the said rates that portion of the

transfer value that is relieved from tax on income and from duty on

documents and transfers in terms of these rules shall be deemed to

constitute the first part of the transfer value.

(1)

This rule applies to any transfer of property that

satisfies all the following conditions

(a)

the property transferred is a building and its

construction was completed at least twenty (20) years before the

date of the transfer;

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

(b)

the property transferred is vacant on the date of

the transfer and has been vacant for a period of at least seven

(7) continuous years immediately preceding that date;

(ba) the parties to the deed of the transfer or any of

them produce a Planning Authority site plan of the property

with an indication of the boundaries of the site as plotted by the

Planning Authority and an indication inserted by an architect of

the distance of the property from the nearest street corner;

(c)

the transferor declares to the notary who publishes

the deed of the transfer that the conditions mentioned in

paragraphs (a) and (b) are both satisfied and that declaration is

confirmed by an architect’s report relating to the date of the

completion of the construction of the property and a report by

ARMS Ltd (a limited liability company with registration

number C46054) relating to the period for which the property

has been vacant and/or such further or alternative documents

and evidence as the Commissioner may determine by means of

guidelines published for the purposes of article 96 of the

Income Tax Act and article 22A of the Duty on Documents and

Transfers Act and the notary makes note in the deed of the said

declaration and documents;

(d)

the reports and evidence mentioned in sub-

paragraphs (ba) and (c) are delivered to the Commissioner on

such form and in such manner as he may approve together with

the notice of the transfer referred to in article 51 of the Duty on

Documents and Transfers Act.

(2)

When there is a transfer to which this rule applies, and the

owner subsequently transfers a divided part of the property in

question, the latter transfer shall not be treated as a transfer to which

this rule applies.

(1)

This rule applies to any transfer of property that

satisfies all the following conditions

(a)

the property transferred is situated, at the time of

the transfer, within an urban conservation area;

(aa) the parties to the deed of the transfer or any of

them produce a Planning Authority site plan of the property

with an indication of the boundaries of the site as plotted by the

Planning Authority and an indication inserted by an architect of

the distance of the property from the nearest street corner;

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

(b)

the parties to the deed of the transfer or any of

them declare that the condition mentioned in paragraph (a) is

satisfied and that declaration is confirmed by a certificate issued

by the Planning Authority and, or such further or alternative

documents and evidence as the Commissioner may determine by

means of guidelines published for the purposes of article 96 of

the Income Tax Act and article 22A of the Duty on Documents

and Transfers Act and the notary makes a note in the deed of the

said declaration and the documents;

(c)

the documents and evidence mentioned in sub-

paragraphs (aa) and (b) are delivered to the Commissioner on

such form and in such manner as the Commissioner may

approve together with the notice of the transfer referred to in

article 51 of the Duty on Documents and Transfers Act.

(2)

When there is a transfer to which this rule applies, and the

owner subsequently transfers a divided part of the property in

question, the latter transfer shall not be treated as a transfer to which

this rule applies.

(1)

The relief from income tax and from duty on

documents and transfers mentioned in rule 3 shall be subject to the

condition that, at any date after the transfer, but not after the date when

the property is transferred again inter vivos or causa mortis

(a)

the property is not demolished; and

(b)

the property is not subjected to structural alterations

or additions as a result of which it is divided into

more transferable units than the number of

transferable units that comprised the property at the

time of the transfer; and

(c)

no permit is issued by the Planning Authority, upon

an application made by the owner who benefited

from the said relief, for the demolition of the

property or for works described in paragraph (b);

and

(d)

no transfer is made of any divided part of that

property.

(2)

If the condition mentioned in sub-rule (1) is in any way

breached, the relief from income tax and from duty on documents and

transfers granted by these rules on the said transfer shall be forfeited

and the total of the amount of such income tax and duty that was so

relieved shall become payable to the Commissioner forthwith.

(3)

The person who acquired the property at the time that the

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

relief from income tax and from duty on documents and transfers was

allowed shall be liable for the payment of the amount mentioned in

sub-rule (2).

(1)

Subject to the other provisions of these rules, no

duty on documents and transfers shall be payable on the first seven

hundred and fifty thousand euro (€750,000) of the transfer value of

any transfer to which rule 8 applies that is made on or after 12 th

October 2021 but not later than 31st December 2026.

(2)

The relief mentioned in sub-rule (1) shall be allowed

only as long as the notice of the transfer referred to in article 51 of the

Duty on Documents and Transfers Act is delivered to the

Commissioner by not later than 31st January 2027.

(3)

When the transfer value of a transfer referred to in sub-

rule (1) exceeds seven hundred and fifty thousand euro (€750,000), the

duty on documents and transfers on the excess shall be chargeable at

the rates that apply in terms of the relevant provisions of the Duty on

Documents and Transfers Act, and for the purpose of determining the

said rates that portion of the transfer value that is relieved from duty

on documents and transfers in terms of these rules shall be deemed to

constitute the first part of the transfer value.

This rule applies to any transfer that satisfies all the

following conditions

(a)

it is a transfer to a person who does not require a

permit by the Minister for the purposes of the Immovable

Property (Acquisition by Non-Residents) Act or who would not

have required such permit had the property acquired not been

situated in a special designated area;

(b)

it is a transfer of property that is developed after

the date of the transfer and the development is approved as

provided in rule 9;

(c)

evidence of the approval referred to in paragraph

(b) is produced to the Commissioner by not later than three (3)

months from the date on which it is issued, together with such

information and further evidence as the Commissioner may

require

Provided that duty on documents and transfers on a

transfer to which this rule applies shall be payable at the time of the

transfer without reference to these rules and the relief from the said

duty allowable under these rules on that transfer shall be given effect

to, subject to the other provisions of these rules, by means of a refund

of the amount so relieved once the conditions in this rule have been

satisfied.

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

(1)

Approval of the development of property for the

purpose of rule 8 shall be sought by the developer from the competent

authority.

(2)

The competent authority shall grant its approval when it

is satisfied that the application has been made and the development has

been completed in conformity with such guidelines as it may publish

and as it may update from time to time.

(3)

Subject to the terms of reference of the competent

authority, guidelines published by it for the purpose of these rules may

include guidelines on

(a)

the procedure relating to the application, including

the information and documents to be submitted;

(b)

conditions on the architectural design and other

features that the development must conform with;

(c)

other conditions that are considered necessary for

the proper implementation of the measure announced in this

respect by the Minister in the speech on the budget for 2022.

An application for a refund of the duty on documents and

transfers that was paid on a transfer to which rule 8 applies shall be

made by the person who paid the said duty in such manner and on such

form as the Commissioner may approve.

(1)

The relief from duty on documents and transfers

on a transfer to which rule 8 applies shall be subject to the condition

that, unless otherwise expressly allowed by the competent authority,

the developed property is not, at any date after the approval of the

development, but not after the date when the property is transferred

again inter vivos or causa mortis

(a)

demolished; or

(b)

subjected to structural alterations or additions that

result in material changes to the architectural design approved

by the competent authority; or

(c)

divided into more transferable units than the

number of transferable units that comprised the property at the

time that the approval of the competent authority was granted.

(2)

If the condition mentioned in sub-rule (1) is in any way

breached, or if there is a breach of any condition imposed by the

competent authority for the approval of the development, the relief

from duty on documents and transfers on the said transfer shall be

forfeited and the amount that was refunded in accordance with rule 8

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shall be paid back to the Commissioner forthwith.

(3)

The person who is the owner of the property at the time

that the approval of the development is granted shall be liable for the

payment of the amount mentioned in sub-rule (2).

Notwithstanding the other provisions of these rules,

when a transfer to which rule 4 or rule 5 or rule 8 applies is also a

transfer to which article 32C of the Duty on Documents and Transfers

Act applies, the relief from duty on documents and transfers shall not

be available under these rules in conjunction with the relief available

under the said article 32C but shall be available only as provided in

these rules or only as provided in the said article 32C depending on the

election made by the transferee by means of a declaration to the notary

who publishes the deed of the transfer and recorded in that deed.

(1)

When a person acquires property under a transfer

to which one of these rules applies and that acquisition is also an

acquisition that qualifies for relief of duty on documents and transfers

as provided in article 3 of the Exemption of Duty in Terms of article 23

Order, he shall submit legal evidence that no other property had been

acquired by him inter vivos before and that evidence shall be

submitted to the Commissioner together with the form or other means

provided by the Commissioner for the purposes of article 51 of the

Duty on Documents and Transfers Act by not later than 31st January

2027. (2)

A person who fails to comply with the provisions of sub-

rule (1) shall not forfeit, solely by reason of that failure, the benefit

under these rules, but that failure may be considered as a breach of a

condition for the grant or other benefit that may be given under any

law, rules or scheme to persons who make an acquisition mentioned in

sub-rule (1)

Provided that the notary publishing any such subsequent

deed of transfer shall not be liable for any tax not so collected by

reason of the said failure or breach on any subsequent deed and the

other party to the deed shall not be liable for any such breach by the

said person and may continue to benefit from the said exemptions

granted under this rule.

(3)

This rule is without prejudice to all the terms and

conditions of any law, rules or scheme mentioned in sub-rule (2).

Notwithstanding the other provisions of these rules,

when a transfer of property to which rule 4, 5 or 8 applies is made to a

company, and that company then transfers the property to another

company by means of a transfer that is relieved from income tax and

from duty on documents and transfers in terms of articles 5(9) and

5A(4)(f) of the Income Tax Act and article 32(6) of the Duty on

DOCUMENTS AND TRANSFERS ON CERTAIN PROPERTY

TRANSFERS

Documents and Transfers Act, the condition mentioned in sub-rule (1)

of rule 6 or the conditions mentioned in sub-rule (1) and (2) of rule 11,

as the case may be, shall continue to apply as if the latter transfer has

not taken place, and in the event of a breach in any way of any

applicable condition, the two companies shall be jointly and severally

liable for the payment of the amount mentioned in sub-rule (2) of rule 6

or in sub-rule (2) of rule 11, as the case may be.

(1)

The Commissioner shall inform the Planning

Authority of every transfer of property on which income tax and, or

duty on documents and transfers has been relieved in accordance with

rule 3, and the competent authority shall inform the Planning Authority

of every approval of a development that it issues in accordance with

rule 9.

(2)

The Planning Authority shall inform the Commissioner

whenever it issues a permit for the demolition of property in respect of

which it has received information as provided in sub-rule (1) or for

works that involve structural alterations or additions as a result of

which that property may be divided into more transferable units than

the number of transferable units that comprised the property at the time

of the transfer or more than the number of units included in the

approved development, as the case may be.

(1)

Any amount that becomes payable to the

Commissioner on account of a breach of a condition as provided in rule

6 or rule 11 shall be deemed as an amount that was due by the person

liable for the payment thereof in terms of the said rules on the date

when the condition in question was breached and shall be payable

forthwith upon demand of the Commissioner with interest running

from the said date at the rate determined in accordance with the Income

Tax (Rate of Interest) Rules.

(2)

Sub-rule (1) shall be without prejudice to any further

liability of any person arising in terms of any provision of the Income

Tax Acts or the Duty on Documents and Transfers Act in connection

with the transfer of the property in question, sohowever that the breach

of a condition set out in the said rules 6 and 11 shall not, of itself, be

treated as giving rise to any such further liability.