Aequitas Legal
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Certain restrictions apply for persons who are non-EU residents and for persons who are EU residents but are not purchasing the property as their primary residence, or who have not resided in Malta for at least 5 years. In these cases, an Acquisition of Immovable Property (AIP) permit must be requested by the person who wishes to purchase the property. Non-Maltese residents may purchase shares in property owning companies freely, however companies where more than 25% of their share capital is owned by persons not resident in Malta require a permit in order to purchase property in Malta. Such permit is only granted if the property is required for an industrial or touristic project, or as a contributor to the development of the economy of Malta.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
From a statutory perspective, there are no limitations with respect to lending for the purchase of real estate by foreign companies. However, every bank will have its own policies and risk management procedures which may lead to certain restrictions. In practice, Maltese bank are reluctant to provide loans to non-residents for the purpose of purchasing real estate.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The rate of stamp duty amounts to 5% in cases of a transaction involving the transfer of any immovable property, or any real right over an immovable property.
The amount due as stamp duty is calculated on the value of the consideration for the transfer, or on the market value of the immovable, whichever is the higher.
Recent legislation in response to the economic impact of COVID-19, through which stamp duty is calculated at 1.5% on the first €400,000, does not apply in situations where an AIP permit is required.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner)?
Stamp duty at the rate of 5% is due when the property is bought, while sales tax of 8%, for property acquired after the 1st of January 2004, or 10%, for property acquired before the 1st of January 2004, is due when the property is sold. No further taxes are imposed due to ownership.
As part of an Economic Recovery Plan in response to COVID-19, L.N. 241 of 2020 provides that tax rates on transfers which take place on or after 9 June 2020 but before 1 April 2021, will be calculated at a reduced rate of 5% on the first €400,000 of the transfer value. The excess value of the immovable property will be taxed at the applicable rates of tax of 8% or 10%.
Income tax at the rate of 15% will also be due when the property is rented out. Please note that immovable property acquired through an AIP permit may not be rented out.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so what are they?
From a tax perspective, persons residing in Malta and non-residents are treated equally, and no incentives or tax breaks apply.
How is the ownership of Real Estate evidenced in your jurisdiction?
Any transfer of immovable property is finalised in front of a notary, and the final deed of sale is recognised as proof of ownership.
The final deed is a public document which is registered by the notary in the Malta Public Registry, or the Gozo Public Registry, and where applicable, in the Land Registry.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
The Malta Public Registry, the Gozo Public Registry, and the Land Registry are all publicly accessible, and all deeds relating to ownership of immovable property are registered in these registers.
With respect to companies which own real estate, a person holding shares in such a company may appoint a nominee in order to keep their identity confidential. However, following the promulgation of new regulations in 2018, a company registered in Malta is required to notify the identity of its Ultimate Beneficial Owners to the Registry of Companies.