Issue link: https://maltatoday.uberflip.com/i/1542822
THE Commissioner of Taxes should deeply probe a con- tract when preparing a val- uation of a property after its transfer. This was held in a decision given by the Admin- istrative Review Tribunal on 13 January 2026 in Evolved Spaces Company Limited vs Tax Commissioner. The company contested a decision taken by the Tax Commissioner to impose ad- ditional tax on the purchase of a property in Qormi that was bought in June 2020. The commissioner replied that the additional tax im- posed was in line with Article 52(5) of the Duty on Docu- ments and Transfer Act. This article allows the commission- er to give an estimate of the value of the property within one year from when they are notified of the transfer. In this case, the estimate was done within the stipulated time- frame. Furthermore, the com- missioner held that the appeal had no basis at law. The tribunal analysed the contract that showed the com- pany purchasing the proper- ty in question. The contract had a detailed description of the property and a site plan attached to it. The contract was then notified to the Com- missioner of Taxes in August 2021. The Tax Department's architect finalised a report and held that the estate val- ue should be €1,800,000. This meant that the Inland Rev- enue Department (IRD) was asking for a further payment of €31,265 in taxes, since the estimate value was higher than the price sold. The com- missioner also asked for a fur- ther €6,253 in penalties. The company asked the tribunal to revoke the assessment on the grounds that it was done more than a year after the sale. Furthermore, the compa- ny claimed it never received a copy of the architect's report and the price mentioned in the contract represented the actu- al price paid. The price was triple that paid by the previous owner in 2014. The company explained that 158sq.m were not included in the 2020 con- tract. Another area of 558sq.m square meters is subject to a servitude that third parties may make use of. On the grounds that the no- tice of liquidation was sent more than a year after the con- tract, the tribunal pointed out that Article 51 of the Duty on Document and Transfer Act stipulates that the year should start from when the commis- sioner received the notice that the contract took place. The commissioner received a copy of the contract on 25 August 2021 and therefore, the year started from that day. In fact, the notice to the company was sent on 7 April 2022 and was received on 17 May 2022. Therefore, the notice was sent within the year stipulated by the law. As to the merits of the ap- peal, the commissioner stated that the property was actually worth €1.8million. The archi- tect who did the valuation did not have a copy of the contract but simply an extract. How- ever, her valuation was based also on the local plan and the potential it had in that specific area. She considered the size of the property, the fact that it was freehold and to other considerations that would af- fect its value. She had spoken to the director of the compa- ny who gave a description of the property. She did not take into account that part of the property was subject to a ser- vitude of passage. The right of passage was acquired in 2012 next door to the stores. This right of passage was again transferred in the same year. As such it was not specifi- cally mentioned in the 2020 contract, but reference was made to the previous contract. Therefore, from just reading the contract one would not have noticed that there was a servitude. The tribunal point- ed out that this was not high- lighted by the company when objecting to the additional tax. The company presented an architect's report during the tribunal's proceedings and de- scribed it as an afterthought. The tribunal held that al- though the servitude was not specifically mentioned in the 2020 contract, but reference was made to the 2012 contract, this fact effects the value of the property. The tribunal quoted the Court of Appeal judgment Joseph Abela et -v- Philip Borg decided on 29 January 2016, where the court reaffirmed, in those circumstances, that the servitude was still valid and enforceable. Therefore, when the company acquired the property, it was still bound by the servitude. Therefore, the value given by the tax authori- ties was not correct. In light of this, the tribunal ordered that the notice for ad- ditional tax be revoked. 12 maltatoday | SUNDAY • 25 JANUARY 2026 LAW IRD should take into account all aspects of a contract when making a valuation MALCOLM MIFSUD Mifsud & Mifsud Advocates The tribunal held that although the servitude was not specifically mentioned in the 2020 contract, but reference was made to the 2012 contract, this fact effects the value of the property