Extension For Reduced Rate Of Stamp Duty On The Transfer Of A Family Business

The reduced rate of stamp duty applicable to the transfer of shares in a family business from 2% to 1.5% has been extended for a further period of six months until 30^th September 2018, in accordance with Legal Notice 82 of 2018 entitled Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order.

The reduction in stamp duty applies in relation to:

1. ​The transfer of shares in a Maltese registered company and includes the transfer by means of donation by qualifying family members, which is defined as being a donation to one's spouse or partner in a civil union, descendants and ascendants in the direct line and their relative spouses or civil union partners, or in the absence of descendants, to one's brothers or sisters and their descendants. The reduced rate of stamp duty shall be calculated on the real value of the marketable securities transferred by means of donation; and
2. The transfer of immovable property by means of donation, which property must qualify as being a commercial tenement ¹ and which property must have been used in a family business ² for a period of at least three (3) years preceding the transfer.

The reduction in stamp duty shall be forfeited if the donee does not enter into a subsequent transfer of the marketable securities or the business property within a period of three (3) years immediately following the date of the transfer by gratuitous title. Relief granted in relation to the transfer of business property shall also be forfeited if the business property is not used within a business for a period of three (3) years immediately following the date of the transfer by gratuitous title.

The reduced rate of stamp duty shall apply to transfers made by gratuitous title on or after 1^st April 2017 but prior to 1^st October 2018.

Transfers in relation to (i) and (ii) must be made by public deed and subject to the necessary tax schedules and forms being completed and delivered to the Inland Revenue Department on or before 30^th September, 2018.

Footnotes

1 As defined in terms of the Civil Code, Chapter 16 Laws of Malta. 

2 As defined in the Family Business Act, Chapter 565 Laws of Malta. 

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.