Reduced duty rate on intra-family transfers

Deloitte Malta Tax Alert

Reduction in the rate of duty on qualifying intra-family donations of company shares and business property

A legal notice has been issued on 2 May 2017, introducing a reduced rate of duty for intra-family donations of company shares and immovable property used within a family business.

The salient features of this measure are outlined below:

  • The 2% or 5% standard rate of duty generally applicable to transfer of company shares shall be reduced to 1.5% for intra-family donations, i.e. donations by individuals to qualifying family members (being one’s spouse, descendants and ascendants in the direct line and their relative spouses, or in the absence of descendants to his brothers or sisters and their descendants);
  • The reduced 1.5% duty rate shall also apply for intra-family donations of ‘business (immovable) property’ which was used in a family business (as defined in the Family Business Act) for at least three years prior to the donation;
  • The reduced duty rate shall only apply for donations effected (through a public deed) between 1 April 2017 and 31 March 2018, and provided that the applicable schedules prescribed under the Duty on Documents and Transfers Rules are delivered to the Commissioner for Revenue by 31 May 2018;
  • The benefit of the reduced duty rate would be forfeited (in which case the standard duty rates would apply for the intra-family donation) if the donee transfers the donated shares or business property within 3 years from the donation, or if the business property is not used as such within 3 years from the donation.
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