Property purchase procedures:
Property purchase procedures:
A preliminary or “promise of sale” agreement is signed, binding the vendor to sell and the purchaser to acquire the property on terms and conditions agreed upon, subject to good title, as well as issuing of all relative permits. On signing of the agreements, a 10% - 20% deposit is usually lodged with the Estate Agent as intermediary.
The preliminary agreement is usually valid for 3-6 months, or longer, if agreeable to both parties. During this period, the Notary (Solicitor) will undertake to submit all necessary applications and conduct researches on the property to prove good title, which is guaranteed with a general hypothec by vendors on all their present and future property. Preliminary agreements and Contracts may be written in Maltese or in English. The remaining balance is paid and vacant possession is given by the vendor on contract.
Funds required:
When buying a home, it is important to be aware of the funds required so that you are not caught unawares too late into negotiations. We work with you in order to ensure that the purchase of your home is affordable, whilst still enjoying life as you know it.
Funds required upon signing the preliminary agreement:
10/20% deposit
1% pre-payment of stamp duty
€232.94 (Lm100) Monthly for A.I.P. (Application of Immovable Property)
Funds required upon signing final contract:
Balance of price
Balance of stamp duty – 4%
Legal fees and expenses – approx 2%, certain cases may require more in-depth work and knowledge, depending on the situation.
Finance and taxation:
Mortgage facilities are available for the purchase of property from a number of banking institutions
Capital gains tax may be incurred when selling your property. The taxable element is a flat rate of 12%.
Any unspent income in excess of the minimum requirement, encashment of investments, as well as proceeds of the sale of the resident’s property may be repatriated. Hence, provided that all tax due has been duly settled
In the event of death, the beneficiary is liable to 5% transfer tax on the value of immovable property
Conditions/Concessions for Non-EU citizens purchasing property in Malta:
There are certain conditions applicable to buying property on the Maltese islands.
Non-EU citizens need to apply for an Application of Immovable Property (A.I.P). This is issued by the Ministry of Finance and is applied for by your Notary or Solicitor and is granted in approximately three calendar months
The value of the property purchased is adjusted per annum according to the immovable property price index established by the Director General of the National Statistic Office
Documentary evidence proving that the funds for the purchase of property have originated from outside Malta. A bankers’ receipt is sufficient evidence
The property being purchased may only be used by the purchaser, his/her immediate family or friends
Property with the facility of a communal/private swimming pool will be granted a permit to rent
Non EU citizens may own only one property in Malta or Gozo at any given time unless the properties are situated in a “Special designated area” Presently these areas include, Portomaso, Tigne Point, Cottonera Waterfront and Chambray in Gozo
Residency Status:
It is possible to reside in Malta or Gozo and avail yourself of one of the following residence status: Permanent Residence or Temporary Residence. The following are the conditions and concessions applicable.
Permanent Residency:
Applicable only to those seeking to reside in Malta on a permanent basis.
Provided all requirements are met, the permanent residency holder will enjoy freedom of movement with no minimum or maximum lengths of stay on the islands. A fee of €116.47 (Lm50) Monthly is payable to the Director, Department of Citizenship and Expatriate Affairs once the permit is issued. At the end of each year of residence and subsequently at the end of each calendar year, you will be required to complete an Annual Declaration to confirm that you have fulfilled the conditions attached to your permit
Extremely favorable flat rate of 15% tax with a minimum liability of €4,193 (Lm1,800) per annum after double taxation relief. To qualify for this tax concession applicants need to prove an annual income of €23,294 (Lm10,000) or capital assets of €3,494,060 (Lm150,000) . In either case the whole amount is not required to be brought into the island. The purchase of the property will also be considered as part of the capital requirement
The minimum annual income to be remitted to Malta is €13,976 (Lm6,000) for one person and €2,329 (Lm1,000) for every dependant(anyone under the age of 21)
Double taxation agreements already exist with Albania, Austria, Belgium, Croatia, Czech Republic, Egypt, Finland, Germany, India, Korea, Latvia, Libya, Luxembourg, Netherlands, Pakistan, Portugal, Slovakia, South Africa, Switzerland, Tunisia, Barbados, Bulgaria, China, Cyprus, Denmark, Estonia, France, Hungary, Italy, Kuwait, Lebanon, Lithuania, Malaysia, Norway, Poland, Romania, Slovenia, Sweden, Syria, United Kingdom as well as America, Canada and Australia. The agreement enables residents in Malta to claim back tax from the country from where the income originates and double taxation relief from Malta
Residents are exempt from paying Capital gains tax if their property has been their official/ordinary residence for at least three years preceding the sale
Importation:
Understandably, when purchasing a property in Malta, non-Maltese nationals would normally need to import certain items and personal effects into the country. The following information is intended to give as clear an indication as possible of the various procedures involved.
All personal and household effects may be imported into the country absolutely free of charge within six months of the date of arrival in Malta of the person importing them, or within such a period allowed by the Comptroller of Customs, at his discretion. The authorities concerned will require proof that permanent residency has been obtained.
Vehicle importation:
In the event that a car is being imported, certain conditions and charges apply:
a) the vehicle must be at least 6 months old
b) the vehicle must have been registered abroad in the applicants name
c) the vehicle must be imported into Malta not later than 6 months from the date of issue of the residence permit
Charges are as follows:
a) registration tax of 11% of the assessed value up to 1500cc engine capacity
b) registration tax of 16.5% of the assessed value over 1500cc engine capacity
No duty or VAT is payable, however should the vehicle be re-sold locally, these charges shall be due in their entirety.
Importation of Pets:
Pet animals entering Malta require an Import License issued by the Director of Agriculture on application to the Government Veterinary Regulation Division. The following are required for the pet’s entry into Malta:
1. An official pet travel scheme certificate. This shows that the pet animal has been micro chipped, blood tested and vaccinated
2. An official Declaration that the pet animal has not been outside the qualifying countries
3. An official certificate signed and stamped by a Veterinarian. This shows that the pet has been treated against ticks and tapeworms
The Pet travel scheme is for those animals (cats, dogs and ferrets) originating from qualifying countries to enter Malta without quarantine as long as the requisites are satisfied, otherwise the pet travel scheme does not apply for other animals, which will be quarantined for six calendar months. Pets cannot come into Malta before a six month period of taking the abovementioned blood test showing a successful siero- neutralization titre test result.
Pets will be quarantined for 21 days should they be entering the islands from a qualifying country but have not been vaccinated against Rabies, or have not yet satisfied the six month requisite following the blood test.
Temporary Residence: Applicable only to those individuals who wish to obtain an extended tourist permit to enable them to stay on the Maltese Islands for a longer period than the 3 months allowed by law. This permit is renewable at fixed periods, presently every 6 months.
Visas are obtainable from the Principal Immigration Department at the Police Headquarters in Floriana
Proof of income is required to prove that the applicant will not be a burden on the country
Local income tax is limited to the funds brought into the country (only if temporary resident exceeds their stay of 182 aggregate days in one calendar year, otherwise exempt)
Importation of personal effects:
Overseas purchasers who are not in possession of Permanent Residency are required, upon arrival of their used effects, to pay a deposit to cover duty on all imported items. This deposit will be refunded to them either when they are granted freedom of movement or if they live in Malta for not less than 200 days in a period of one year immediately following the arrival of the goods, whichever is the earliest.
The deposit amount, when due, depends on the quantity of the imported effects. It can, however, be safely indicated that a container full of personal effects (including video and 2 TV’s) does not incur a deposit or bank guarantee of more than Lm 1,000 (one thousand Maltese Liri). In the event that a car is being imported, no charges apply. Cars may only remain on the island for a maximum of three months at a time.
Useful Addresses:
Department of Citizenship and Expatriate Affairs
The Director
3, Castille Place
Valletta CMR 02
Tel: +356 21250570/3
Importation of personal belongings/Customs Duty
The Director General (Customs)
Customs Department
Valletta CMR 02
Tel: +356 25685100
Income Tax
The Director General (Inland Revenue)
Inland Revenue Department
Floriana CMR 02
Tel: +356 21220485/9
Health Services
The Chief Government Medical Officer
Department of Health
Merchants Street
Valletta CMR 02
Tel: +356 21224071
Permit for the purchase of Property
The Director
Capital Transfer Duty Division
46, Merchants Street
Valletta CMR 02
Tel: +356 21220481/4
Local Councils
The Director (Local Councils)
Local Councils Department
Chateau de la Ville
21, Archbishop Street
Valletta CMR 02
Tel: +356 21226515
Food and Veterinary Regulation Division
Albertown
Marsa
Tel: +356 21225930
This information is correct at the time of going to print and is designed to keep readers abreast with local legislature. The information provided is not intended to be definitive and should not be acted upon without prior consultation. Sara Grech cannot be held responsible for any changes that occur from time to time.