LIVING IN MALTA - your other home
Many of our clients who invest in Malta are interested to know what the medical services are like in Malta. Facilities are easily accessible and most of the specialists for various disciplines have obtained their higher post-graduate qualifications in the UK. Both public and private medical care is available.
The Maltese drive on the left hand side of the road, like in the UK.
English is on of the official languages, aside from Maltese making it easy for foreigners to communicate.
TRAVEL AND ACCESSIBILITY
Malta is located just at the tip of the boot of Italy, making it a very central island country in the beautiful Mediterranean. Malta is just an hour flight from Rome, 3 hours to London and there are many daily international flights in all directions. For most South Africans, flying via Dubai is the easiest route.
OTHER IMPORTANT FACTORS:
Climate, expat associations, education, religion, importation of cars and pets. Please contact one of our consultants.
WHY INVEST IN MALTA
Malta has a double taxation agreement with many countries, including South Africa, which can add an attractive advantage for some investors.
Acquiring Maltese citizenship does not in itself trigger tax residency. Individuals who are resident but not domiciled in Malta pay tax on income arising in Malta as well as income remitted to Malta from outside.
In Malta, personal income is taxed at progressive rates up to 35%. Capital Gains Tax (CGT) is levied on immovable property and shares, but it is not levied under certain prescribed conditions. Malta does not have estate duty or gift tax. Corporate tax is 35% and standard VAT is 18%. Malta has special tax concessions that apply for non –resident or non-domiciled persons.
Property Tax in Malta
There are no property taxes in Malta, i.e. no levies or rates and taxes; only water and electricity which is based on usage.
Stamp duty is 5%, and notarial/legal fees between 1-3%.
There is no inheritance tax.
Please note, we strongly encourage clients to obtain professional tax advice.
BUYING AND RENTING PROPERTY IN MALTA
PROPERTY IN MALTA
Malta has always been a good investment and a great place to live. Malta offers a vibrant lifestyle, rich culture, excellent weather and a reputation for hospitality. Thanks to successful government initiatives, Malta offers various tax advantages directed at foreign businesses, professionals and retirees, making Malta a tempting destination. This in turn has contributed to an increase in demand for property rental, making Malta more attractive in terms of property investments, securing a moderate capital growth even in the worst of times.
Buying Property in Malta
Having selected the right property, agreed on the price and the terms and conditions of acquisition, one would then move to sign what we refer to as a Preliminary agreement. The process of purchasing a property in Malta is basically a three step procedure:
Step 1:- Appointing a Notary Public to act on your behalf. Our trained staff can assist in recommending an established and reputable independent Notary able to assist the purchaser in the acquisition.
A Notary undertakes to provide a number of services, namely: -
a) Drawing up of the Promise of Sale Agreement and registration thereof;
b) Examination of title of the Property in terms of L.N. 355/2012 (Examination of Title Regulations 2012) to verify clear legal title, confirming that there are no outstanding debts, hypothecs or liens on the property;
c) Publication, enrollment and registration of the public deed of transfer;
d) Anything reasonably required for attainment of the above purposes and ancillary thereto.
Notarial fees are regulated by law and largely depend on the property and the work associated with establishing its root of title. These can be estimated using the bill calculator available on www.notariesofmalta.org
Step 2:- Signing of a Preliminary agreement (otherwise known as ‘konvenju’). At this stage the buyer commits himself/herself to purchase the property in question and in turn the seller commits himself/herself to sell the property. A preliminary agreement is normally valid for a minimum three month period unless otherwise agreed between the two parties and in general a sum equivalent to 10% of the purchase price is paid by way of deposit on account of the price to secure the eventual transfer of the property. In most cases the deposit is held by the Notary on behalf of the buyer and transferred to the seller on final deed of sale once the root of title has been satisfactorily established.
Step 3:- Deed of Sale. Once the Notary public has established the root of title and carried out the necessary public searches to confirm that the property is free and unencumbered, the Notary is now in a position to produce the final deed of sale to be signed by both parties in his/her presence. The balance due on the property i.e. purchase price less the deposit already paid on signing of the preliminary agreement is then paid to the vendor. At this stage transfer of ownership of the property has taken place and the notary will then register the contract of sale with the public registry for future reference and proof of title.
Non Maltese nationals require an AIP (Acquisition of immovable property by a non-resident) permit to be issued by the local authorities prior to purchasing a property in Malta.
This permit seeks to ensure that the purchaser is a person of good standing and is obtained by the notary once the preliminary agreement has been signed. This restriction does not apply to properties located in areas termed Special Designated Areas or to EU citizens when purchasing property which is to serve as their primary residence.
Where one of the spouses is an EU citizen and the other spouse is a non-EU citizen, both can likewise benefit from the exemption outlined above and acquire property without the necessity of obtaining an AIP permit, provided the acquisition is being made to establish therein their primary residence.
TRANSFERS BY FOREIGNER/ NON-RESIDENTS
The notary in charge of drawing up the deed of sale is required to notify the Inland Revenue in advance of all cases where non-Maltese persons are selling their property in Malta. In such circumstances the Commissioner may impose conditions on the transfer to ensure that the tax which may be due on the sale of property is paid prior to the funds being sent outside of Malta.
There is no restriction on the transfers of proceeds from the sale of the property outside Malta, subject that the payment of any outstanding tax is settled beforehand. No VAT is due on the transfer of property. Malta has no net worth, real estate tax or any local taxes other than the capital gains tax mentioned above.
Our property partners do not just offer to find or sell your property but will also guide you and recommend a number of reputable firms to assist with your financial and tax requirements depending on your specific needs.
STAMP DUTIES AND TAXES
When acquiring a property (STAMP DUTY)
When acquiring a property the purchaser is to settle stamp duty fees amounting up to a maximum of 5% of the purchase price. This fee is paid in two stages being:
a) An initial stamp duty amounting to 1% of the purchase price is paid to the Notary on signing of the preliminary agreement. This fee will be passed on to the Inland Revenue and a subsequent receipt will be issued confirming payment.
b) The remaining 4% of the purchase price is to be paid on the date of the final deed and handed over to the Notary for onward registration with the Inland Revenue. A full receipt will be issued by the IR Commissioner once the funds have cleared.
It is important to note that Stamp duty is only charged on Immovable Property. In the event that the property being sold includes furniture and fittings these may be quoted separately in the final deed of sale. No Stamp Duty is payable on any movable items (furniture and fittings) being transferred together with the immovable property.
When the property being purchased is to be used as purchaser's ordinary place of residence, stamp duty is charged at 3.5% on the first € 150,000 of the purchase price and 5% on any amount over €150,000. However, for any other property purchase, Stamp Duty is charged at 5% on the total value of the property.
When selling a property (TAX)
When selling a property in Malta the tax to be paid depends on two main factors:
a) If the property is your sole and ordinary residence:
When selling one’s ordinary residence that has been owned for a period of more than three years, no tax on Capital Gains is paid on the transfer of that property, as long as the sale is made within twelve months of the owner vacating the property. If the property is sold before 3 years, and the owner does not own any other residential property, then the owner has to pay 2% Final Withholding Tax (FWT). This reduction only applies to EU & EEA citizens. A 3rd country citizen, will need to pay 5% FWT if sold before 3 years.
b) Whether the property is not a person’s sole and ordinary residence:
In this event then there is a Final withholding Tax (FWT) of 8% on the value of the property (excluding Movables & Agency Fees).
If sold before 5 years of ownership and property was not split into more than 1 unit, then FWT payable is 5%.
If the property was purchased prior to 1 Jan 2004, then FWT payable is 10%
Letting property in Malta
Renting a property is often a daunting task with so many properties on offer. Where to start? Firstly, its important to work with the right agency having the right properties. Secondly its important to have the right person to show you the right properties and not waste your precious time.
General letting procedure (Residential)
A long let is usually for a period of not less than 6 months and the rental price is often substantially lower than the short let price. This is why a contract binds the lessee to take the property for a minimum period.
Most contracts (unless agreed otherwise) include a 'force majeure' clause which gives the Lessee the right to terminate the lease before it's lapse, should he/she have to leave the island for a valid reason. Standard requirements found in most letting agreements:-
1. Refundable security deposit - usually equivalent to one month's rent
2. Rent in advance – the standard is one month’s rent paid in advance, however this can vary depending on the landlord.
3. Agency fee - The standard agency fee is equivalent to half of the first month's rent plus 18% VAT, however we also offer various discounts and benefits to our clients as part of our Belair corporate letting pack. This fee is only payable once you have signed the contract on a rental property.
4. Other expenses – In addition to your monthly rent, other expenses one would expect to incur are: water and electricity consumption (this is approximately €40 - €60 per person per month), internet and cable TV service charge (various packages available).
Malta Country INFO
Malta, officially the Republic of Malta, is an archipelago of 7 islands located in the Mediterranean Sea. The archipelago consists of three islands: Malta, Gozo and Comino with a total population of over 400,000 inhabitants.
Malta is the largest island and known as the cultural, commercial and administrative centre. Gozo, the second largest island, is more rural, and can be characterised by fishing, tourism, crafts and agriculture. Comino, which is the smallest of the trio, has one hotel and is largely uninhabited.
The country lies 80 km south of Sicily and 284 km East of Tunisia. With a tiny area of 316 square kilometres, it is one of the world’s smallest and most densely populated countries and has the smallest capital city in the EU. Malta gained independence from the United Kingdom in 1964 and then became a republic in 1974. Malta and Gozo more famously known as investment and lifestyle destinations and the country is known to have one of the best climates in the world.
The University of Malta is one of the oldest universities in Europe and was founded in 1592.
Malta’s Grand Harbour boasts of being one of the best natural deep-water harbours in the world.
The megalithic temples in Malta boast of having a lineage older than England’s Stonehenge.
Malta is believed to have served as the site of the legendary city of Atlantis.
Mosta Dome is the third largest unsupported church dome in Europe.
Calypso Cave is said to be the cave that Homer wrote about in The Odyssey.
Valletta, its current capital, is one of the most concentrated historical areas in the world, according to UNESCO.
Malta receives almost triple of its population in tourist arrivals per year: from slightly more than 414,000 people working and living on the island to 1,242,000 of tourist arrivals.