Purchasing

GENERAL
PURCHASE CONDITIONS FOR NON-RESIDENTS
PROCEDURE AND COST
RENTING PROPERTY IN MALTA
RESIDENCE STATUS AND TAX

GENERAL

As a matter of policy the Government of Malta encourages non-Maltese to purchase property for use as a residence or holiday home.  To this end, successive Governments have implemented schemes that make Malta an attractive destination.  Financial advantages of owning property and / or taking up residence in Malta include the following:

  1. Property in Malta is exceptionally good value for money and residents enjoy a relatively low cost of living.

  2. There are no property rates in Malta.

  3. Malta has a Double Taxation Agreement with most Western Countries and these generally ensure that a move to Malta results in tax advantages.  Pensions are freely transferable to Malta.

  4. Residence requirements are modest and offer appreciable tax advantages.

  5. There is a sizable community of foreign residents (mainly British) who are warmly welcomed by the Maltese people, most of whom speak English and Italian. French, German and Arabic are also spoken.  Integration in the local social and cultural scene is easy.

  6. Death duties have been abolished with effect from 24th November 1992, however, on immovable property, a transmission tax of 5% is payable by the estate on the share of the deceased.  In the case of a residence, the first €23,293.73 (Lm10,000) are tax exempt.

PURCHASE CONDITIONS FOR NON-RESIDENTS

Link to Acquisition of Immovable Property: http://www.aip.gov.mt

Non-Maltese may own a property in Malta for use as a holiday home or permanent residence, under the following conditions:

  1. The purchase price of the property for a non-resident must be in excess of €69,881.20 (Lm30,000) for an apartment, penthouse or maisonette and €116,468.67 (Lm50,000) for any other property. The funds must originate from outside Malta.

  2. The property must be used:

    • as a holiday home or residence by the purchaser or his immediate family.  Guests may only be accommodated when the owner or a member of the family is in residence. Only villas with their swimming pool may be granted a renting license;

    • for an industrial or touristic project or for any other approved project of purpose which is considered to contribute to the development of the Maltese economy.

  3. Proceeds of property sales are freely transferable from Malta after payment of Capital Gains Tax on the net profit.

  4. Mortgage facilities are available in Malta through leading Banks.

  5. Permanent residence permit holders must purchase either a flat valued in excess of  €69,881.20 (Lm30,000) or a house valued in excess of €116,468.67 (Lm50,000).  Alternatively, they may rent a property at a minimum of €4,192.87 (Lm1,800) per annum.

PROCEDURE AND COST

A preliminary of promise of sale agreement (convenium) is signed binding the vendor to sell and the purchaser to acquire the property under the terms and conditions agreed upon subject to good title and issue of all relevant permits.  A 10% deposit is usually lodged with the Estate Agent on signing of this agreement.  All agreements are written and read in English.

The preliminary agreement is usually valid for three months or longer if agreeable to both parties. During this term, the notary public will undertake searches to prove clean title, as well as submit applications to the relative Government departments.

The final contract is entered into by the parties or their attorney once researches have proved satisfactory and permits are issued.  The full price is paid and the vendor gives vacant possession on contract.

The expenses payable on the signing of the contract are as follows:

  1. Government Stamp Duty: 5%

  2. Ministry of Finance fee: €232.94 (Lm100) 

  3. Legal fees (approx.): 1% - 2%

  4. Searches, registrations, etc.:  between €174.70 (Lm75) and €349.41 (Lm150)

  5. If the property being purchased is subject to ground rent (usually not exceeding €116.47 {Lm50}) this amount is to be paid yearly in advance in perpetuity. A perpetual ground rent is redeemable at any time at the rate of 5%. Some ground rents may require the payment of a recognition fee (laudemium) for every transfer. This is equivalent to one year's ground rent, payable once to the original ground owner. 

An important point to note is that estate agent brokerage fees are borne by the vendor.


RENTING PROPERTY IN MALTA

Apart from the case of Permanent Residents (who have to rent a property exceeding €4,192.87 {Lm1,800} per annum), there exist no restrictions on the renting by foreigners in Malta.   Letting periods are usually of one year but shorter periods may be negotiated.  Commission payable to an estate agent is of one month's rent - equally shared by the owner and lessee.


RESIDENCE STATUS AND TAX

Click here to go to the Citizenship Department

Non-Residents are persons who visit Malta as tourists and whose stays do not exceed 3 months.   These are not subject to local tax conditions.

A large number of residents live in Malta on the strength of a renewable visa.  These are called Temporary Residents.  Renewal of the permit is usually a formality and the stay may be virtually indefinite.  Such residents are subject to local tax conditions, on income brought into Malta only, if their stay exceeds six months in a calendar year.  Property purchased must exceed €69,881.20 (Lm30,000) for an apartment, penthouse or maisonette and €116,468.67 (Lm50,000) for any other property.

Permanent Residence Permits are primarily of interest to the high-income group due to the unusually low tax rate of 15%.  To qualify for a permit one must have a capital of €349,406.01 (Lm150,000), held anywhere in the world, or an annual income of more than €23,293.73 (Lm10,000) of which €13,976.24 (Lm6,000) plus €2,329.37 (Lm1,000) per dependent must be remitted to Malta.  Tax payable is at 15% with a minimum of €2,329.37 (Lm1,000).  Accumulated unspent income and capital may be repatriated.  Property purchased must exceed €69,881.20 (Lm30,000) in the case of an apartment and €116,468.67 (Lm50,000) in the case of a house, alternatively one must rent a property at a minimum of €4,192.87 (Lm1,800) per annum.  One car and all personal and household goods are exempt from customs duty.

In most cases Double Taxation Agreements ensure that no income is chargeable twice and a move to Malta should result in appreciable tax savings.  There are no property rates or taxes in Malta.