The general rule is that stamp duty is payable by the buyer at the rate of 5% on the value stated on the Final Deed of Sale. However in the case of the acquisition of a property within which the buyer intends to establish his/her ordinary residence the rate of stamp duty is payable at the rate of 3.5% on the first Eur150,000 and the balance is repayable at the rate of 5%.
All non-EU nationals must pay stamp duty at the rate of 5%. However EU citizens who have sold their property overseas and intend to take up permanent residence in Malta and acquire the immovable to establish their ordinary residence may also benefit from paying 3.5% on the first Eur150,000 and 5% on the balance of the purchase price.
Provisional duty at the rate of 1% is payable upon signing of the Promise of Sale Agreement.
It is noteworthy that in 2014 the government launched an incentive for “First-Time Buyers” in terms of which there is an exemption from stamp duty on the first Eur150,000 thereby saving a maximum of Eur5,250 on the acquisition of the immovable property. This would be applicable to deeds of purchase which are concluded up to the 31st December 2016.
Steps following the signing of PoS Agreement/Final Deed
- A promise of sale agreement, once signed must be submitted to the Capital Transfer Duty Department within 21 days together with payment of the 1% provisional duty.
- After the final deed of sale is executed between the parties, the notary publishing the deed submits the relative ‘DDT1’ form at the Capital Transfer Duty Department together with the appropriate site-plans, the balance of the stamp duty due by the buyer and the capital gains tax due by the seller. An internal departmental board will decide whether to send a government architect to inspect the property and establish the market value of the property which value may not necessarily be the same as the price declared on the agreement.
- A 15% variance in the market value is allowed. However if the difference between the market value as established by the architect is more than 15% of the price declared on deed, the department issues a claim (assessment) on the buyer and on the seller accordingly.
- In the case of the buyer, the claim issued will include the duty due together with the additional duty (penalty). In the case of the vendor only the additional duty (penalty) is charged.
- However the additional duty (penalty) is reduced to 10% if the claim is paid within 90 days from the date of the claim. If no payment is effected within 90 days, the additional duty will increase at the rate of 10% every 30 days.
- An objection against such claim or assessment is to be submitted within 30 days from the date of issue of the assessment.
- A Refusal may be appealed within 30 days before the Administrative Review Tribunal.
- If a claim is not settled or not objected to, the Department may commence legal action for collection of the duty plus legal fees.