Inland Revenue Department

 

 

As announced in the Budget Speech for 2016, the Inland Revenue Department has issued a Guidance Note on the Urban Conservation Area Property Scheme. The below is an adaptation of this Guidance Note, edited so as to make it more understandable to everyone, not just people who are intimately acquainted with this industry, or people with a legal a background.

Duty on Documents & Transfers Act

 

If the transfer involves an immovable property in an urban conservation area or else the property is scheduled by the Malta Environment and Planning Authority in terms of article 81 of the Environment and Development Planning Act, the duty chargeable on said transfer shall be worked out at the rate of €2.50 on every €100 of the amount for the transfer of the property or of the value of the property, whichever is greater.

 

General Terms & Conditions to Qualify for the Benefits

1. The reduced rate of duty only applies to a transfer of immovable property if —
   1. the transfer is made between the 1^st January 2016 and the 1^st January 2017 (both dates inclusive), to a person who does not require a permit by the Minister for the purposes of the Immovable Property (Acquisition by Non Residents) Act.
   2. the property is certified by MEPA as falling within an Urban Conservation Area (UCA), or else is a scheduled property in accordance with article 81 of the Environment and Development Planning Act. Said certification needs to be submitted to the Commissioner for Revenue.
   3. no relief was claimed under this scheme in respect of any previous transfer of the property.
   4. no relief is claimed under article 32C of the Duty on Documents and Transfers Act.
2. The buyer of the property must submit to the Commissioner for Revenue any information, forms and documentation required by means of a notice in writing within the period specified in the notice.
3. The relief granted under this Scheme shall be forfeited in the
   case of a breach of the condition referred to in paragraph (2) or if MEPA notifies the Commissioner of Inland Revenue that illegal development has taken place on any part of the property and/or the property is not regenerated according to the characteristics of the area or restoration of the property.
4. If the relief from duty under this Scheme is forfeited as outlined in paragraph (3), the reduced rate of duty shall not apply. The duty chargeable on the transfer would then be the duty that would have been chargeable in accordance with the Duty on Documents and Transfers Act had the relief under this Order not been claimed and provided the duty chargeable shall not be less than the duty already paid when the property was acquired.
5. Provided that the duty on a transfer becomes chargeable as outlined in paragraph (4), the excess of the amount of the duty chargeable over the amount of duty that was paid on the deed of that transfer then becomes payable to the Commissioner by the person to whom the transfer was made, that is, the buyer of the property:
   1. if the buyer of the property fails to submit to the Commissioner for Revenue any information, forms or documentation requested immediately upon the expiration of that period;
   2. if MEPA notifies the Commissioner of Inland Revenue that illegal development has taken place on any part of the property and the property is not regenerated according to the characteristics of the area or restoration of the property.

Income Tax Act

 

The income tax rate on a transfer of property in an urban conservation area or one which has been scheduled by the Malta Environment and Planning Authority (MEPA), and has been restored and/or rehabilitated after the date of acquisition by the owner in accordance with a planning permit issued by MEPA, shall be at the rate of 5% of the transfer value.

General Terms & Conditions to Qualify for the Benefits

1. the transfer is made on or after the 1^st January 2016;
2. this benefit was not applied in respect of any previous transfer of the same property;
3. the restoration and/or rehabilitation works have been certified by MEPA as satisfactory;
4. the certificate referred to in (iii) is produced to the notary who receives the deed of the transfer and the notary produces a certified copy of the certificate to the Commissioner together with the notice required by article 51 of the Duty on Documents and Transfers Act;
5. the person who transfers the property must submit to the Commissioner for Revenue any information, forms and documentation required by means of a notice in writing within the period specified in the notice.