Issue link: https://maltatoday.uberflip.com/i/1405706
5 29 AUGUST 2021 M alta's Duty on Documents and Transfers Act provides sev- eral schemes allowing for the reduction in duty on the acquisition of immovable property. These are some schemes available: • e First-time buyer scheme • e Second-time buyer scheme • e Gozo Property Scheme • e Urban Conservation Area Property Scheme • e Transfer of Family Business Scheme Additionally, currently both sellers and buyers can benefit from the COVID-19 measure providing for a reduced tax and duty rate of 5% and 1.5% respectively on the first €400,000 of immovable property transferred inter vivos. is scheme was initially part of Gov- ernment's Economic Recovery Plan for Malta, pursuant to the COVID-19 pan- demic, and became effective on 9 June 2020 through Legal Notices 240 and 241 of 2020. It was extended in June this year fol- lowing the recommendation of Malta Developers Association chairman Sandro Chetcuti. First-time buyer scheme Residential property purchased by first- time buyers until the end of 2021, is exce- mpt from duty on the first €200,000), or on a pro-rata portion in case of co-acqui- sition, of the aggregate value of the con- sideration paid for the acquisition of such immovable property. e scheme applies also to buyers of residential property even if they had pre- viously acquired inter vivos an undivided share of immovable property represent- ing less than 25% of the real value of the whole of such property. Second-time buyer scheme Individuals who, by 31 December 2021, replace their sole residential property with another within 12 months from va- cating the first will be refunded the duty on the first €86,000, or the pro-rata por- tion in case of co-acquisition, of the value of the replacement property. Residential property in Gozo Individuals who acquire residential property situated in Gozo by the end of 2021, including a garage as defined, or land on which only one residential unit is to be built, will also benefit. Under this incentive reduces the rate of duty is reduced from the standard 5% to 2% on the higher of the consideration or value of the property. is scheme applies if: • e final deed is notified to the Rev- enue by 28 February 2022 • e buyer does not benefit from the part-exemption from duty available on the gratuitous transfer of property to descendants in the direct line for the purposes of es- tablishing one's sole ordinary res- idence • e acquisition is not made in the course of a trade or business or for the purpose of demolition and con- struction of more than one unit Urban Conservation Area (UCA) Property Scheme Individuals who acquire residential property situated within a UCA or a property that is scheduled by the Plan- ning Authority by the end of 31 Decem- ber 2021, will benefit from a reduced rate of duty from the standard 5% to 2.5% on the higher of the consideration or value of the property. is does not apply in case of illegal de- velopment of the property or if the prop- erty is not regenerated according to the characteristics of the area or restoration of the said property. Transfer of Family Business Scheme Under this scheme, duty on the transfer of company shares and commercial ten- ements in intra-family donations is re- duced from 2% or 5% to 1.5% on the real value. is applies until the extended date of 31 December 2021, provided that the relevant notice is filed with the Revenue by the same date. COVID-19 temporary reduction in tax and duty on the transfer of immovable property On the part of the purchaser of immov- able property in Malta, the scheme pro- vides that the duty rate chargeable will be calculated at 1.5% on the first €400,000 of the higher of the consideration and the market value of such property, with the remaining duty being calculated at the applicable duty rate (normally 5% unless qualifying for some other reduced rate). On the part of the transferor of the im- movable property, where the transfer would otherwise have been subject to tax at 8% or 10%, the rate of final proper- ty tax is reduced to 5% on the same first €400,000, with the excess value taxable at the standard applicable rate. e measure applies on transfers made by 31 December 2021 or on transfers made until 30 June 2022 where, in the latter case, a promise of sale or promise of transfer agreement is entered into by 31 December 2021. Standard procedures apply for the payment of the tax by the notary publishing the promise of sale or deed of transfer. e duty reduction ap- plies provided that: • e acquirer does not require a per- mit in terms of Immovable Proper- ty (Acquisition by Non-Residents) Act. • If the property is situated in a spe- cial designated area ('SDA'), the ac- quirer would not have required a permit in terms of the Immovable Property (Acquisitions by Non-Res- idents) Act had the property been located in a non-SDA. • e reduced rate of duty is not ap- plied in conjunction with the ex- emption under Article 32C of the Duty on Documents and Transfers Act on the same transfer, applicable to donations of immovable proper- ty by a person to his descendants in the direct line for the purpose of the donee establishing therein or con- structing thereon, his sole ordinary residence. DATA: KPMG MALTA Tax and duty reduction schemes you can currently enjoy on transfers of immovable property