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10 June, 2020

Malta: reduced tax on property purchases

Malta has reduced stamp duty for buyers and sellers of real estate. The new rates apply to homes worth up to €400 thousand and are valid until March 2021. The tax reductions are part of the new economic stimulus package following the pandemic.

Malta: reduced tax on property purchases
Photo: Adobe Stock

Malta reduces stamp duty on the purchase and sale of real estate. This is one of the measures in the " A Better Tomorrow " package, which aims to stimulate the country's economy after the COVID-19 pandemic. The launch of the package was announced by Malta Prime Minister Robert Abela.

New stamp duty rates

The new tax rates apply to transactions with assets of up to €400 thousand concluded before March 2021. Housing in this price category is suitable for purchase under Malta citizenship and residence permit programmes for investment. Applicants' costs under the programmes are thus significantly reduced.

For buyers, the stamp duty will be reduced from 5% to 1.5%. For sellers - from 8% to 5%, provided that the property was owned for at least five years.

If the value of the object exceeds €400 thousand, the buyer pays 1.5% fee from €400 thousand and an additional 5% fee  一 from an amount above the threshold. Here is the calculation of cost savings in the table.

Savings when buying property with benefits

The cost of propertyReduced rate stamp dutyStandard stamp duty

€350 thousand

€5,25 thousand

€17,5 thousand

€500 thousand

€11 thousand

€25 thousand

There is an exception to the rule. If the buyer sells a property that he bought less than five years before the sale, he will not be able to take advantage of the benefit. He will have to pay a stamp duty at a standard 5% of the transaction amount.

Reduced tax rates apply only to residential properties. They apply not only to future sale and purchase transactions, but also to those that are already at the stage of signing a preliminary agreement.

How much does it cost to stimulate the economy

A reduction in stamp duty will cost Malta €32 million. The entire stimulus package will cost €900 million. In addition to the new tax rates, it includes the issuance of vouchers, lower fuel prices, increased benefits, assistance to homes for the elderly and other measures to support people and businesses.

Malta Finance Minister Edward Scicluna said that the package and other measures will lead to a 7% budget deficit. The government is going to cover it with local borrowings.

Earlier we told you that in Malta property market prices have decreased. Now investors can benefit from buying housing for citizenship and residence programs. In July, the country will restore flight service, and prices will begin to rise.

At the same time, Malta's citizenship programme for investment has almost exhausted its quota limit. Investors can apply for a residence permit under the current programme until 31 July 2020, and for citizenship - until 30 September 2020. It is expected that the next programme will be more expensive by €200-300 thousand. Thus, June 2020 一 is the best time to participate in investment programs of Malta.

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Malta: reduced tax on property purchases