On the 8th April 2013, the new Maltese Government presented the 2013 Budget that essentially reflects the measures that had been announced by the previous Government in its budget presented in November 2012. Below are the main tax measures announced in the 2013 Budget, most of which will be effective as of 1 January 2013 –

  • Tax on property transfers. The extension of the period for opting out of the 12% final tax on property/real estate transfers from 7 to 12 years. This measure comes into force on 8 April 2013. Transfers of immovable property / real estate situated in Malta is subject to a 12% flat rate tax on the value of the property (not on the gain) but the seller is entitled to 'opt-out' of the 12% flat rate tax regime and instead be taxed on the gain (if any) realised on the transfer - in such case, the gain will be taxed at the applicable progressive tax rates ranging between 0% and 35% (the highest rate of 35% will be reduced as form this year- see below).  The opt out period has been extended to 12 years to provide more flexibility in the light of the property sales trend. Foreigners may opt out of the 12% tax regime beyond the 12 year window - if you are a foreigner living in Malta and require further information about property / real estate taxation, please contact us.
  • Reduction in personal tax rates. The reduction in the maximum personal tax rates from 35% to 32% will be effective as from 1 Jan 2013. This forms part of a progressive reduction in the maximum rate over 3 years – the rate is expected to be reduced again from 32% to 29% in 2014 and from 29% to 25% in 2015.
  • Stamp duty exemption on inherited property. As from 1 January 2013, transmissions causa mortis of residential immovable property in favour of children will be exempt from stamp duty (5%).
  • Stamp duty exemption on donated property. As from 1 January 2013, no stamp duty (5%) will be chargeable on the first donation of immovable property from parents to a child/ren on condition that the child/ren establish/es the residence in that property. The exemption applies up to the value of Eur 250,000 with the excess being subject to duty at the applicable rates.
  • As from 2013, persons earning only employment income of not more than the minimum wage (€8950 per annum) will not be chargeable to tax.

As regards other fiscal measures contained in the Budget Speech of 28 November 2012, the Finance Minister announced that these would enter into force as from 1 January 2013. The precise manner in which the other measures will be implemented will be set out in the Budget Measures Implementation Bill and we expect the Bill to be published shortly.

In due course, we will also publish information about economic and other important measures contained in the Budget.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.