What is Succession?
Succession is when the estate or belongings of a deceased individual are passed on to somebody else or inherited.
Article 585 of the Civil Code states that an inheritance is the estate of a person deceased, and devolves either by the disposition of man or, in the absence of any such disposition, by operation of the law.
The transfer of estate occurs either when a successor is identified, in a will for instance or by following the Succession Law. The Estate of the deceased includes both passive and active items at the time of death, that is, those that were used and those that were not used when the deceased was alive.
What happens after a person dies?
- When a person dies the first step is to submit his / her identification document to the Public Registry. The Public Registry registers the death of the individual and within a few weeks a death certificate may be collected / ordered (https://secure2.gov.mt/certifikati/)
- When the death certificate has been collected / received, Testamentary Searches are ordered from the Public Registry as well as the Court of Voluntary Jurisdiction.
- Normal Public Registry searches may also be conducted in order to ensure that all the transfers and liabilities that the deceased got involved in during their lifetime are included in the causa mortis
- Other searches with Banks, The Malta Stock Exchange, Insurances and other institutions are also conducted. The relative financial institutions will then be instructed to release and distribute the assets of the deceased according to the instructions from the Notary. The notary will have based their advice on the deceased’s will or in the absence of a will, in accordance with the law.
Inheriting Movable Property
When an individual dies, there are no death duties payable. Moreover, no tax is due on monies and movable assets. However, a Notary would be needed to provide proof of inheritance to the relative financial institution.
Inheriting Immovable Property
Immovable property is property which is fixed, such as a piece of land or a house. Upon someone’s death, when an immovable property is transferred to an heir, “it shall be the duty of every person to whom immovable property is transferred causa mortis (…) to make a declaration of such transfer by means of a public deed within such term as may be prescribed”. This means that a beneficiary or heir needs to be declared in writing via a public deed.
The Causa Mortis Declaration (Denunzja)
A Causa Mortis Declaration must contain the following details:
- Particulars of the heir and of the deceased in line with the Notarial Law Formalities laid down in Chapter 55;
- The date and place of death of the deceased
- The Particulars of the immovable property and their value
- Details on the how the property is to be transmitted (either testate – with a will or intestate – without a will)
There exists in Maltese law an inheritance tax on inherited property, which is calculated per hundred euro (€100) of its declared value. The tax is due to be paid by the heir at a standard rate of €5 for every €100.
General Tax Exceptions
- If the immovable property transferred causa mortis was, at the time of death and for three years prior to death, the ordinary residence of the deceased, the heir is exempted from paying tax, this is often referred to as the own residence exemption.
- If the heir or legatee (beneficiary) resided in the immobile property being inherited then a mitigated tax rate applies;
- If the property is transferred directly from the proprietor (the person from whom the transfer causa mortis originates) to their descendants.
Tax Exemptions for the surviving spouse
- If the immovable property was the residence of the deceased and the beneficiary is the surviving spouse, no tax/duty shall be charged at the time of the causa mortis
- There is no duty imposed on the value of immovable property left by the deceased in favour of their surviving spouse.
If the Causa Mortis declaration is made within six months of the death, and the tax payable by each individual beneficiary does not amount to more than €2,300, there will be a refund of €250 granted to each beneficiary.
The International EU Succession Laws
Since there has been increasing mobility of citizens in last few years, the EU Regulation 650/2012 on international successions was adopted on 4 July 2012, so that local rules of succession could be adapted accordingly. There was also a regulation which came into force on 16 August 2012 and only applies to successions opened after 17 August 2015 – so, successions opened before this date should follow the previous framework.
This EU Regulation provides a simplified system for people who have private and financial interests in at least two countries, both within and outside the European Union. The regulation applies to all the aspects of a succession: from its opening to its settlement, including delegation of power and administration. However, it does not include anything related to donations, life insurance contracts, trusts, matrimonial property, maintenance obligations, rights of the property and its taxation.
The International successions law also introduces the law of the last residence of the deceased. An appropriate jurisdiction and law can be chosen for an entire succession. On top of that, one can choose the law of the state corresponding to their nationality as the law applicable to the succession. A person who has multiple nationalities is free to choose either law of state they wish, and the choice must be declared in the form of a will conforming to the laws of the country where it is published.
The biggest difference between this new EU legislation and the current succession laws in Malta is that in the EU law, (unless stated in the law itself) the law applicable to succession in general will be the law of the State, in which the deceased had their residence at the time of death.
Finally, the regulation creates the European Certificate of Succession, which is automatically recognised in all member states. The purpose of this is to simplify the procedures for heirs when it comes to gaining possession of the property that makes up the estate.
The regulation is also available for viewing at the following address: