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Key Tax Considerations When Buying or Selling Property in Malta
Buying or selling property in Malta involves several tax considerations, including stamp duty, final withholding tax, and capital gains tax. Whether the immovable property is situated in Gozo or on the mainland, tax is applicable at various stages of the transaction. From the promise of sale to the transfer of any property, understanding Malta’s property tax system helps avoid surprises and improves financial outcomes.
At A2CO, we guide buyers, sellers, and investors through every step of the property transfer process. Whether you are dealing with residential properties or commercial real estate, our support ensures you comply with local tax authorities and make the most of available exemptions.
Understanding Property Tax in Malta: Key Rules and Rates
Malta Property Tax Rules and Obligations
Malta does not impose an annual property tax. However, tax is levied at key points in the property lifecycle, including:
-
Stamp duty on inheritance or acquisition of immovable property or any real right over an immovable property
-
Final withholding tax on the disposal of immovable property or any real right over an immovable property
-
Capital gains tax in specific instances upon disposal of immovable property
-
Income tax on income generated from the immovable property
-
VAT is applicable in certain instances when property is leased
Our role is to ensure your transactions are compliant with the Income Tax Act and that you benefit from every possible tax relief.
Stamp Duty When Buying a Property in Malta
When purchasing property in Malta, buyers are required to pay stamp duty on the transaction. This duty applies to both property acquisitions and inheritances and is charged at a rate of €5 for every €100, based on the higher of the property’s declared price or market value.
Typically, 20% of the total duty is paid when the promise of sale is signed, while the remaining 80% becomes due upon the execution of the final deed.
Some buyers benefit from reduced stamp duty or full exemptions:
-
First-time buyers; are exempt from stamp duty on the first €200,000, anything exceeding that amount will be taxed at the standard rate of duty.
-
Second-time buyers; where an individual transfers his residential immovable property and acquires another within twelve months from the date of transfer of the initial property, the duty paid on the first €86,000 of the replacement property shall be refunded.
-
Acquistion of residential property in Gozo attract a reduced rate of stamp duty of 2%.
-
Properties in Urban Conservation Areas are exempt from stamp duty on the first €750,000.
-
Donation of immovable property being a commercial tenement; A transfer of business property that has been used for at least three years shall be subject to the reduced rate of duty of 1.5%.
-
Transfers of immovable property between companies may qualify for a stamp duty exemption. This applies when both entities are controlled and beneficially owned, directly or indirectly, by the same shareholders holding more than 50% ownership, or when the companies form part of the same group.
There are further stamp duty exemptions in relation to transfers arising from marriages and cohabitation, partitions between co-owners, undivided share of dwelling house between co-owners, and transfer of property by company to shareholder during winding up.
Property Transfer Tax on the Sale of Real Estate in Malta
The final withholding tax of 10% applies if the property was acquired before 1st January 2004.
In limited cases, sellers may opt to pay tax on the actual capital gain. The applicable tax rate is 35% on the net gain, after allowable deductions.
Some exemptions:
-
Own residence; This exemption applies where the principal residence owned by the taxpayer or the spouse, being a dwelling house which has been the owner's only or main residence for at least three years and disposed within 12 months that it is vacated.
-
Donations; where the property is donated to
-
his 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; or
-
Philanthropic institutions
-
Divorce or separation; assignment of property between spouse's consequent to a judicial or consensual separation or a divorce
-
Intra-group transfer; the transfer of immovable property one company to another company is exempt from income tax;
-
Controlled and beneficially owned directly or indirectly to the extent of more than 50% by the same shareholders; or
-
Forms part of a group of companies
Grants and Tax Relief When You Buy a Property in Malta
Grant for first-time buyers for acquiring properties in UCA areas or vacant, older homes; Individuals acquiring residential properties within the Urban Conservation Areas, or where the property has been built for more than 20 years and have been vacant for more than seven years, or the owner of a new private residential property developed in conformity with approved criteria as defined by the established guidelines and approved by the competent authority. There is a maximum grant of;
-
€15,000 if the property purchased is in Malta
-
€40,000 if the property purchased in Gozo
We provide full guidance on the documentation, conditions, and deadlines involved in these schemes.
Grant on the restoration and finishing; Eligible expenditure that is incurred to restore and finish residential properties within the Urban Conservation Areas, or where the property has been built for more than 20 years and have been vacant for more than seven years, or the owner of a new private residential property developed in conformity with approved criteria as defined by the established guidelines and approved by the competent authority.
Eligible applicants may apply only once for each property for a grant of 18% and/or 10%, where applicable, on the costs of restoration and finishing up to an aggregate maximum of €54,000 for each property.
Grant on first-time buyers; a €10,000 grant to first-time property buyers, paid in €1,000 annual installments over 10 years.
Taxation in Malta on Rental Income from Property
For passive rental income, the following deductions are allowed:
-
Ground rent
-
Interest
-
Licence fees
-
A maintenance allowance equal to 20% of the rental income after deducting ground rent and licence fees
For trading rental income, deductions that are wholly and exclusively incurred in generating rental income are allowable. The net rental income is then added to the taxpayer’s total income and taxed at the applicable progressive or corporate rate.
Alternatively, taxpayers may opt for a final withholding tax of 15% on the gross rental income from residential or commercial property. Under this option, no deductions are permitted. The income must be declared, and tax paid through the TA24 form.
A2CO also assists clients in declaring property values in line with the Commissioner for Revenue’s tolerance rules and determining whether a transfer qualifies for relief from income tax or duty. We further advise on property transfers related to separation, donation, or assignments within a group structure.
Malta Property Tax Rules and Obligations
Malta does not impose an annual property tax. However, tax is levied at key points in the property lifecycle, including:
-
Stamp duty on inheritance or acquisition of immovable property or any real right over an immovable property
-
Final withholding tax on the disposal of immovable property or any real right over an immovable property
-
Capital gains tax in specific instances upon disposal of immovable property
-
Income tax on income generated from the immovable property
-
VAT is applicable in certain instances when property is leased
Our role is to ensure your transactions are compliant with the Income Tax Act and that you benefit from every possible tax relief.
Stamp Duty When Buying a Property in Malta
When purchasing property in Malta, buyers are required to pay stamp duty on the transaction. This duty applies to both property acquisitions and inheritances and is charged at a rate of €5 for every €100, based on the higher of the property’s declared price or market value.
Typically, 20% of the total duty is paid when the promise of sale is signed, while the remaining 80% becomes due upon the execution of the final deed.
Some buyers benefit from reduced stamp duty or full exemptions:
-
First-time buyers; are exempt from stamp duty on the first €200,000, anything exceeding that amount will be taxed at the standard rate of duty.
-
Second-time buyers; where an individual transfers his residential immovable property and acquires another within twelve months from the date of transfer of the initial property, the duty paid on the first €86,000 of the replacement property shall be refunded.
-
Acquistion of residential property in Gozo attract a reduced rate of stamp duty of 2%.
-
Properties in Urban Conservation Areas are exempt from stamp duty on the first €750,000.
-
Donation of immovable property being a commercial tenement; A transfer of business property that has been used for at least three years shall be subject to the reduced rate of duty of 1.5%.
-
Transfers of immovable property between companies may qualify for a stamp duty exemption. This applies when both entities are controlled and beneficially owned, directly or indirectly, by the same shareholders holding more than 50% ownership, or when the companies form part of the same group.
There are further stamp duty exemptions in relation to transfers arising from marriages and cohabitation, partitions between co-owners, undivided share of dwelling house between co-owners, and transfer of property by company to shareholder during winding up.
Property Transfer Tax on the Sale of Real Estate in Malta
The final withholding tax of 10% applies if the property was acquired before 1st January 2004.
In limited cases, sellers may opt to pay tax on the actual capital gain. The applicable tax rate is 35% on the net gain, after allowable deductions.
Some exemptions:
-
Own residence; This exemption applies where the principal residence owned by the taxpayer or the spouse, being a dwelling house which has been the owner's only or main residence for at least three years and disposed within 12 months that it is vacated.
-
Donations; where the property is donated to
-
his 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; or
-
Philanthropic institutions
-
Divorce or separation; assignment of property between spouse's consequent to a judicial or consensual separation or a divorce
-
Intra-group transfer; the transfer of immovable property one company to another company is exempt from income tax;
-
Controlled and beneficially owned directly or indirectly to the extent of more than 50% by the same shareholders; or
-
Forms part of a group of companies
Grants and Tax Relief When You Buy a Property in Malta
Grant for first-time buyers for acquiring properties in UCA areas or vacant, older homes; Individuals acquiring residential properties within the Urban Conservation Areas, or where the property has been built for more than 20 years and have been vacant for more than seven years, or the owner of a new private residential property developed in conformity with approved criteria as defined by the established guidelines and approved by the competent authority. There is a maximum grant of;
-
€15,000 if the property purchased is in Malta
-
€40,000 if the property purchased in Gozo
We provide full guidance on the documentation, conditions, and deadlines involved in these schemes.
Grant on the restoration and finishing; Eligible expenditure that is incurred to restore and finish residential properties within the Urban Conservation Areas, or where the property has been built for more than 20 years and have been vacant for more than seven years, or the owner of a new private residential property developed in conformity with approved criteria as defined by the established guidelines and approved by the competent authority.
Eligible applicants may apply only once for each property for a grant of 18% and/or 10%, where applicable, on the costs of restoration and finishing up to an aggregate maximum of €54,000 for each property.
Grant on first-time buyers; a €10,000 grant to first-time property buyers, paid in €1,000 annual installments over 10 years.
Taxation in Malta on Rental Income from Property
For passive rental income, the following deductions are allowed:
-
Ground rent
-
Interest
-
Licence fees
-
A maintenance allowance equal to 20% of the rental income after deducting ground rent and licence fees
For trading rental income, deductions that are wholly and exclusively incurred in generating rental income are allowable. The net rental income is then added to the taxpayer’s total income and taxed at the applicable progressive or corporate rate.
Alternatively, taxpayers may opt for a final withholding tax of 15% on the gross rental income from residential or commercial property. Under this option, no deductions are permitted. The income must be declared, and tax paid through the TA24 form.
A2CO also assists clients in declaring property values in line with the Commissioner for Revenue’s tolerance rules and determining whether a transfer qualifies for relief from income tax or duty. We further advise on property transfers related to separation, donation, or assignments within a group structure.
VAT Considerations upon leasing of immovable property
The letting of immovable property is generally exempt from VAT, unless it falls under the below situations;
-
The letting of property by a limited liability company registered to a person registered under article 10
-
The letting or accommodation of premises, whereby the lessor is required to be licenced under the Malta Travel and Tourism Services Act
-
The letting of premises and sites for parking vehicles where such premises have been designated as parking areas
-
The letting of property for not more than thirty days in specific instances
Our Malta Property Tax Services
At A2CO, we provide comprehensive guidance to individuals and businesses on the tax implications relating to property ownership and transactions in Malta. Our expertise ensures that clients are not only compliant with their tax obligations but also benefit from the most tax-efficient structuring available.
Our services include:
-
Income Tax on Sale of Property – Advising on the income tax implications upon disposal of property, including assistance with applying for any available exemptions or reduced tax rates.
-
Stamp Duty Guidance – Providing clear advice on stamp duty obligations, assisting with calculations, and ensuring that all required formalities are properly handled.
-
Rental Income Compliance – Supporting clients in declaring rental income, whether under the standard tax system or the 15% final withholding tax regime, while advising on the most advantageous option.
-
Tax Efficiency Planning – Structuring property ownership and transactions in a manner that achieves the most tax-efficient outcome, tailored to each client’s circumstances.
-
VAT Implications – Advising on when VAT applies to property transactions or rentals (such as commercial leases and short-term accommodation) and assisting with VAT registration, compliance, and periodic filing
Why Choose A2CO
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Extensive knowledge of property tax in Malta
-
Support for both local and international clients
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End-to-end service from promise of sale to final filings
-
Clear, practical advice
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Trusted by buyers, developers, and tax professionals across Europe
Frequently Asked Questions
You may pay final withholding tax instead, unless eligible for capital gains reporting.
Yes. Stamp duty is usually 5%, but exemptions and reduced rates are widely available.
The standard tax rate upon sale of property is 8%, different rates and exemptions may apply depending on the situation.
Yes. Malta has tax treaties that help prevent double taxation. Our team can assist with the details.
Certain donations are exempt from income tax, but always subject to stamp duty.
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