Final withholding tax (also called property transfer tax) is a tax on Malta property transfers paid by the seller from the sale proceeds, generally at 8% of the transfer value, minus agency fees. It is payable regardless of whether the seller made a profit on the sale.
Reduced rates
- 5% - if the property is sold within 5 years of purchase and does not form part of a development project (not applicable if a planning permit application was made during those 5 years).
- 2% - if the property is transferred within 3 years of purchase, was the seller’s declared primary residence, does not form part of a project, and the seller owns no other residential property at the time of sale.
Exemptions
- Transfer more than 3 years after purchase and within 1 year of vacating the property.
- Donation to a spouse, descendant, or other direct family member.
- Assignment due to separation or divorce.
Inherited property
Different rates apply to inherited property depending on when it was inherited: 7% of the transfer value for property inherited before 25 November 1992; for property inherited after that date, the seller can choose between 12% on the gain (transfer value minus acquisition cost) or a final rate of 10%, 8% or 5% depending on the year of purchase.
See Stamp Duty & Buying Costs for how this fits into overall transaction costs, even though it is paid by the seller rather than the buyer. Given the number of exceptions, sellers should confirm their applicable rate with a notary.