Inheritance And Income Tax

9There is no inheritance tax in Malta. However, in the event of death, the beneficiary is liable to 5% transfer tax on the value of the immovable property, as at time of death. If the property is jointly owned and one of the spouses passes away, the 5% is levied on half the value of the property

This tax is not payable upon the transfer of the residential home to the surviving spouse, provided that the surviving spouse does not sell the home during his/her lifetime.

Up till September 2011, one was able to take up residence in Malta in terms of the Residents Scheme Regulations, 2004 by obtaining a certificate from the Inland Revenue Department, which certificate was issued for an indefinite period as long as certain conditions are satisfied on an annual basis. Holders could therefore reside indefinitely in Malta and could enter and leave Malta as and when required without the need of any other formalities.

In September 2011, a new Residency Scheme was set up and is referred to as the High Net Worth Individuals Rule (HNWI). Below is a list of incentives and advantages applicable to beneficiaries recognised as High Net Worth Individuals:
A flat rate of income tax of 15% with a minimum annual payment of € 20,000 after double taxation is deducted. An additional €2,500 per dependent must also be paid. Tax is calculated on foreign income (excluding capital gains) remitted to Malta.

High Net Worth Individuals are not subject to tax on worldwide income. Only the foreign income brought into Malta will be taxed.

There is no property or council tax in Malta. Tax on capital gains arising from the sale of real estate in Malta does exist but residents are exempt if they have used the property as their main residence for three consecutive years and the property is disposed of not later than one year of vacating it. If CGT is due on a secondary property, for example, this is charged at 15% of the profits registered.

Malta’s tax laws allow for deductions from double taxation, whether through negotiated double tax agreements with a substantial number of countries worldwide, or through unilateral provisions. Certain foreign income remitted to Malta qualifies for a reduced withholding rate of foreign tax. The provisions of each particular treaty entered into by Malta must, however, be consulted to determine the treatment of each item of income in each particular case.

Double taxation treaties in force as at end 2011
Albania Austria Austria Barbados Belgium
Bulgaria Canada China Croatia Cyprus
Czech Rep. Denmark Estonia Egypt Finland
France Georgia Germany Greece Hungary
Iceland India Ireland Isle of Man Italy
Latvia Lebanon Libya Lithuania Luxembourg
Malaysia Montenegro Morocco Netherlands Norway
Pakistan Poland Portugal Qatar Rep. of Korea
Rep. of Kuwait San Marino Singapore Slovakia Slovenia
South Africa Sweden Switzerland Syria Tunisia
U.A.E. U.K. U.S.A.