Tax rates on the purchase and sale of real estate are reduced
Property buyers and sellers in Malta retain the possibility of saving on taxes until June 2022. For the first €400,000 of transaction value, reduced rates of tax and duty apply:
- Buyers pay stamp duty of 1.5% instead of 5-7%;
- sellers pay capital gains tax of 5% instead of 8%.
Investors who purchase property for the purpose of obtaining a residence permit and permanent residence permit investment and citizenship of Malta for exceptional services can also benefit from reduced rates. The minimum value of a property for a residence permit is €220,000, for a permanent residence permit €300,000 and for citizenship €700,000.
Tax incentives for the transfer of business by inheritance have been extended
The government is extending the reduced tax rates for a year when a business is transferred from parents to children, for example, when the company owner retires. The tax is 1.5% instead of 5%. The preferential rate will remain in effect until the end of 2022.
Benefits for purchasers of historic housing
Buyers of historic properties can receive a grant of €15,000 if they choose a property on the island of Malta and €30,000 on the island of Gozo. Buyers will also be exempt from paying capital gains tax and stamp duty will be charged only on the value which exceeds €750,000.
The special tax conditions are valid until October 2024 and apply to the purchase of:
- Properties in urban historic areas which are designated as Urban Conservation Arearn(UCA). The conditions apply to the purchase of the first residence in Malta.
- Properties under renovation in any arearnof Malta. Suitable properties are those which were built over 20 years ago and have been vacant for more than seven years. The owner of such a property can offset the cost of renovation: a VAT refund of up to €54,000 on the first €300,000.
- New property in any arearnof Malta, built in the traditional Maltese style
Penalties for non-payment of income tax will rise
The period of tax amnesty, when penalties on unpaid taxes were 6.5% a year, is coming to an end. The amnesty applied to the payment of VAT and income tax. From June 2022, the rate will rise to 7.2%.
How to become tax resident in Malta
A foreigner who resides in Malta for more than 183 days may become a tax resident in Malta. This is legally possible by obtaining a residence permit, permanent residence permit or citizenship in Malta. One way of obtaining residence and citizenship in Malta is by investing in property and the economy of the country.
A residence permit in Malta can be obtained in 3-4 months if three investment conditions are fulfilled:
- Buy or rent a property. The value of the property to be purchased must exceed €220,000, the cost of renting must be €8,750 per year.
- Pay a one-off administrative fee of €5,500-6,000.
- Pay a minimum tax of €15,000 per year.
The total cost of obtaining a residence permit card is from €30,000.
An investor who obtains a residence permit and becomes a tax resident in Malta pays Maltese taxes at reduced rates:
- 0% on income from foreign sources that is not remitted to Malta,
- 15% on income that is remitted to the country.
A permanent residence permit in Malta can be obtained by an investor in 6-8 months:
- Buy a property worth €220,000 or more or rent it for five years. The minimum rental cost is €10,000 per year.
- Pay a one-off administrative fee of €40,000.
- Make a government contribution of €28,000 for a purchase and €58,000 for a rental property.
- Make a charitable donation of € 2000.
- Prove a capital of at least €500,000.
The total cost of obtaining a residence permit will be from €150,000.
Maltese citizenship for exceptional services by direct investment can be obtained by investors through naturalisation: to do so, one or three years' residence in the country is required.
Investment conditions for obtaining Maltese citizenship on exceptional merit:
- Buy or rent a property. The cost of the property to buy is from €700,000, the cost of renting is from €12,000 per year.
- Make a contribution of €600,000 or more to the National Development Fund.
- Make a charitable donation of €10,000.
Malta passport allows you to live and do business in any country of the European Union, and travel to 186 countries without a visa.
Immigrant Invest is an agent licensed by the Government of Malta to help investors obtain a residence permit, a permanent residence permit and citizenship. If you wish to become a tax resident or a citizen of an EU country, seek advice from an expert in investment programmes.