Capital Gains and Property Transfer Tax in Malta

Introduction

The transfer of immovable property in Malta attracts an amount of tax which is imposed on the person transferring the property to the other party.  In this regard the term “transfer” includes any assignment or cession of any rights over property.[1]

Upon the transfer of immovable property, the transferor will either be subject to ‘property transfer tax’ (PTT) or ‘income tax on capital gains’ (CGT); each form of tax is calculated differently, as will be seen below. Property transfer tax and capital gains tax are both regulated by the Malta Income Tax Act. [2]

Property Transfer Tax

Property transfer tax (PTT) is the default transaction-based tax that affects transfers of any real right over immovable property from one party to another. It is calculated at the rate of 12% of the transfer value of the immovable property involved in a given transaction.[3] The transfer value of a property is the higher of the following: the market value of the property or the consideration paid or payable for the transfer.

Exceptions

The law provides for different rates of tax in certain defined cases:

1. 12% tax on the profits[4] made from the transfer