Property taxes in Malta: what buyers, owners and landlords pay

Overview of property-related taxes in Malta

Malta's property tax framework is relatively straightforward by European standards. There is no annual property tax on residential property, which is unusual among EU member states. The main taxes are:

• Stamp duty — paid by the buyer at the final deed, calculated as a percentage of the purchase price.
• Tax on the transfer of property — paid by the seller when they sell, withheld by the notary at the final deed.
• Tax on rental income — paid by the landlord on income received from tenants.

Each of these is explained in detail below. Rates, thresholds and relief schemes change from year to year through the Budget and through secondary legislation. Always verify the current position with the Commissioner for Revenue or a tax adviser before making financial decisions based on this guide.

The life of a property investment, tax by tax

Seeing the stages together helps with planning: the largest cash outlays arrive at purchase and sale, while ownership itself is relatively light on taxes. Use the calculators and your notary to put real numbers on each stage before you commit.

Where to confirm the current rules

Official sources are the Commissioner for Revenue for taxes and the Government of Malta website for general information. Use them, and your notary or a tax adviser, to check any rate or threshold mentioned in this guide, because the figures can change with each Budget.

Stamp duty for buyers

Stamp duty is charged on the transfer of immovable property in Malta. It is paid by the buyer and falls due at the final deed. The standard rate is 5% of the purchase price (or the market value, whichever is higher, where the authorities challenge an undervaluation).

For most buyers, stamp duty is the largest single cost of the purchase aside from the price itself. On a €400,000 apartment, for example, stamp duty at the standard rate is €20,000.

When stamp duty falls due

Stamp duty is payable in two stages in practice. A small stamp on the Konvenju (promise of sale) is payable early in the process. The bulk of the duty is paid at the final deed. The notary calculates the amount, the buyer transfers the funds and the notary pays the authority on the buyer's behalf.

A worked example

For a €350,000 apartment, stamp duty at the standard 5% rate would be €17,500. A first-time buyer who qualifies for a relief that exempts the first €175,000 would pay 5% on the remaining €175,000, which is €8,750, a saving of €8,750. The €175,000 figure is the threshold used in the MIRA calculator and may change, so confirm it before you rely on it.

What is included in the duty

Stamp duty is calculated on the price, or on the market value if the authorities consider the declared price too low. It is paid on the transfer of property, not on the promise of sale, apart from a small duty on that document. Costs such as notary fees, survey fees and mortgage fees are separate and are not part of the duty.

Who calculates and pays it

The notary calculates the duty, tells you the amount before the deed and collects it from you at the signing, paying it to the authorities on your behalf. Ask for the figure in writing at least a few days in advance so that you can arrange the funds, and so that any relief you expect is included.

Joint buyers, companies and gifts

When several people buy together, the duty is calculated on the whole price and shared according to the agreement, and reliefs may depend on each buyer's situation. When a company buys, different rules and costs can apply. Property received by inheritance or by gift is treated differently from a purchase, and the position depends on the relationship and the circumstances. In each case, ask the notary to explain the duty before you commit, because the structure you choose affects the amount.

• Stamp duty calculator
• Stamp duty glossary entry

First-time buyer relief

The Maltese government provides a stamp duty relief for eligible first-time buyers. The relief reduces the amount of stamp duty payable, either by exempting a portion of the purchase price or by providing a refund up to a defined ceiling. The exact mechanism and the thresholds have been revised in successive Budget speeches and may change again.

To qualify for first-time buyer relief, the conditions typically include:

• The buyer must never have previously owned immovable property in Malta.
• The property must be used as the buyer's primary residence, not as an investment or holiday home.
• The property must meet a maximum value threshold (the threshold changes, so check the current figure).
• The buyer must not have previously benefited from the scheme.
• Joint buyers: if one buyer qualifies and the other does not, a partial relief may apply — ask your notary.

First-time buyer relief cannot be assumed. Ask the notary to confirm your eligibility before the Konvenju, not after.

How the relief reduces the duty: an illustration

Use the table as a way to see the arithmetic. The conditions of the relief, including who qualifies and the exact threshold, are set by law and can change, so ask your notary to confirm your position before you rely on it.

Questions to ask your notary

• Do I qualify as a first-time buyer, taking into account any property I own or have inherited, in Malta or abroad?
• What is the threshold at the moment and does it apply to the price or to a different value?
• If we buy jointly, how is the relief shared?
• What documents do you need from me to apply it?
• How will the relief appear in the deed and in the final statement of costs?

Reduced rate for a subsequent purchase

A buyer who sells their existing primary residence and purchases a new one within a specified period may qualify for a different stamp duty treatment on part of the purchase price of the new home. This is sometimes referred to as the "second-time buyer" or "replacement home" relief.

Conditions are specific and tied to timing — the sale and purchase must happen within a defined window. If you are in this situation, ask your notary whether the relief applies and what documentation you need to preserve.

An example of the timing issue

Imagine a homeowner who sells their current home and buys another. The relief, where it applies, depends on the sale and the purchase being linked in time and on the buyer using the new property as their main home. If the two deeds are separated by a long gap, or if the buyer already owns another property, the relief may not apply. Ask the notary to review both transactions together, ideally before you sign either promise of sale.

Keep the paperwork

Keep copies of the deed of the property you sold, the deed of the property you bought, the dates and proof that the new property is your main residence. The authorities may ask for evidence, and having it ready avoids delays and disputes.

Tax when you sell property

Sellers pay a tax on the transfer of property at the final deed. This is distinct from stamp duty, which is a buyer cost. The seller's tax is calculated and withheld by the notary before the proceeds are handed over.

How the seller's tax is calculated

The method of calculation depends on several factors, including:

• Whether the property was the seller's primary residence.
• How long the seller has owned the property.
• When the property was originally acquired (properties acquired before certain dates may be taxed differently).
• The cost of any improvements made to the property that can be set against the selling price.

The standard approach for most transfers is a final withholding tax calculated as a percentage of the transfer value. A different method may apply if the seller opts to be taxed on the actual gain — this option can be advantageous when the gain is small or there is a loss.

Notary's role

The notary is legally required to withhold the applicable tax at the deed and pay it to the Commissioner for Revenue. Sellers do not receive the full gross proceeds — they receive the amount net of the tax. This should be factored into negotiations over the sale price.

An illustration of the seller's tax

For a property sold at €420,000, a tax of 8% of the transfer value would be €33,600, while a reduced rate of 5% would be €21,000 and a rate of 2% would be €8,400. The rate that applies depends on the circumstances, including how long you owned the property and how it was used. These percentages illustrate how much the rate matters; confirm which one applies to you before you set your price.

What to do before you sell

• Ask your notary which method and which rate apply to your sale.
• Gather the documents that show when and how you acquired the property and what improvements you made.
• Keep invoices for improvements, in case they can be taken into account.
• Allow for the tax in your calculation of net proceeds and in the price you ask.
• If you will buy another home with the proceeds, ask about any relief for reinvestment and its timing conditions.

• Selling property in Malta: the complete guide

• Commissioner for Revenue — property transfer tax

Annual property tax

Malta does not levy a recurring annual tax on residential property. This is a significant difference from many European countries (where council tax, taxe foncière or property taxes are levied annually regardless of sale or rental activity) and is one of the factors that makes Malta attractive to property buyers.

Ground rent

Ground rent (in Maltese: ċens) is a separate matter and is not a tax. It is an annual payment owed by the owner of a property that was historically sold on an emphyteutical basis — a long-term lease of land where the buyer owns the building but pays a periodic sum to the owner of the underlying land. Many properties in Malta were sold this way historically.

Ground rent can be a very small amount (sometimes just a few euro per year) or a more substantial sum. It is registered and runs with the property, meaning the buyer takes it on when they purchase. The notary will identify any ground rent during due diligence. In many cases ground rent can be redeemed (bought out) for a lump sum.

What owners do pay each year

• Electricity, water and internet, billed according to use.
• Building insurance and, if you wish, contents insurance.
• Ground rent, where the property is subject to it.
• Service charges and contributions to the common fund in an apartment block or managed development.
• Maintenance and repairs, which are higher for older buildings.

None of these is a tax on the ownership of the property, but together they form the running costs of a home, and you should include them in your budget. If you let the property, add the tax on the rental income.

• Ground rent

Tax on rental income

Landlords who let property in Malta must declare their rental income and pay tax on it. Two broad approaches are available:

Flat-rate option for residential lettings

Qualifying residential landlords can elect to pay a flat-rate final withholding tax on gross rental income, in place of income tax calculated on net profit. This is administratively simpler and, for landlords with relatively high rental income and few deductible costs, can be advantageous. The flat rate and the conditions for eligibility are set by law and should be confirmed with the Commissioner for Revenue.

Standard income tax treatment

Alternatively, rental income is included in the landlord's taxable income and taxed under the normal income tax rules. Allowable deductions include expenses incurred in producing the income: maintenance, repairs, insurance and other running costs. Net rental income is taxed at the applicable marginal rate.

Which option to choose

The right choice depends on the level of rental income and the costs. Landlords with significant maintenance costs or financing costs on a mortgage may benefit from the standard treatment. Those with older properties held outright and high occupancy rates may benefit from the flat rate. A tax adviser can model both scenarios for your specific situation.

Non-resident landlords

Rental income from a Maltese property is taxable in Malta whether the landlord is resident or not. Non-resident landlords should also check whether they have reporting obligations in their country of residence — Malta has double taxation agreements with many countries, but these do not eliminate the Maltese tax, they prevent being taxed twice on the same income.

A rental example

Suppose a landlord lets an apartment for €1,200 a month. The annual rent is €14,400. If the flat-rate option applies at 15% of gross rent, the tax would be €2,160, with no deduction for expenses. Under the ordinary rules the landlord would instead pay tax at the marginal rate on the net income, after deducting allowable costs such as repairs and insurance. Which is better depends on the costs and on the landlord's other income, so ask a tax adviser to compare both for your case.

Things landlords should do

• Keep the lease, receipts for rent and invoices for expenses.
• Find out whether the flat-rate option is available to you and how to elect it.
• Meet the filing deadlines and keep copies of what you submit.
• Check whether short lets and holiday lets are treated differently or need a licence.
• If you are non-resident, check your obligations in your country of residence as well.

Short lets and holiday lets

Letting a property to tourists for short stays can involve additional registration, licensing and tax rules compared with a long let. Check whether your type of letting needs a licence, how the income is taxed and whether the building allows it. Rules in this area change more often than the basic property taxes, so check the current position before you buy a property mainly for short lets and again from time to time.

• Rental yield calculator
• Rental yields in Malta

AIP permit fee

Non-EU buyers who need an AIP permit pay an application fee in addition to stamp duty and notary fees. This fee is set by the authorities and can change. It is not a large amount in the context of a property purchase, but it should be included in your cost budget.

Budgeting for it

The permit fee is small compared with stamp duty, but it is an upfront cost, payable when the application is made. Ask your notary what the current fee is and when it is due, and whether the notary charges separately for preparing the application. Include both in your budget for the purchase.

Do not forget the other permit costs

Besides the application fee, remember the cost of certified copies and translations of documents issued abroad, and any fee charged by the notary for preparing the application. These are small individually but add up, and they are easy to overlook when you total the costs of the purchase.

• AIP permit guide

VAT on new property

In some circumstances, particularly on the first sale of newly developed commercial property or certain types of development, VAT may be applicable rather than (or in addition to) stamp duty. The rules on when VAT applies are technical and turn on the nature of the property and the buyer. For residential property sold by a developer, the typical position is stamp duty, not VAT, but confirm with your notary for the specific transaction.

Questions to ask a developer

• Is the price shown inclusive or exclusive of VAT, if VAT applies?
• Which taxes apply to this unit and who pays them?
• Is stamp duty payable on the transfer, and on what value?
• Are there any other charges, such as connection fees or contributions to the common fund?
• Will all of this be set out in the promise of sale?

Ask for the answers in writing, and ask your notary to confirm them before you sign.

Tax planning considerations

This guide covers the structure of Maltese property taxes, not tax planning advice. Buyers and investors who want to optimise their tax position should speak with a qualified Maltese tax adviser before committing to a transaction. Points worth raising with an adviser include:

• Whether holding property through a company affects stamp duty or other taxes.
• How your home country taxes Maltese property income and gains.
• The interaction of Maltese and EU rules for EU residents.
• Inheritance and succession planning for Maltese property.
• The tax treatment of renovation costs and whether they can be set against a future sale.

Plan before you commit, not after

The best moment to think about tax is before you sign the promise of sale. Decisions about who buys, in what shares, with what use and through what structure are hard to change later. A short consultation with a qualified adviser costs little compared with the amounts involved.

A checklist of tax questions at each stage

1. Before buying: which reliefs might apply, and what will stamp duty and fees total?
2. At purchase: how should the property be held, and who signs?
3. While owning: what are the running costs, and how is any rent taxed?
4. Before selling: which rate of transfer tax applies, and what documents prove it?
5. Throughout: what are my obligations in my home country?

Records worth keeping for life

Keep the deed of purchase, the promise of sale, receipts for stamp duty and notary fees, invoices for works that improve the property, rental records and the deed and tax statement when you sell. These documents prove your costs and dates, which can matter for reliefs and for questions from the authorities years later. A simple folder, kept up to date, is one of the best tax tools an owner has.

When to get professional advice

Take advice if you own property in more than one country, if you buy through a company, if you inherit or are given property, if you expect to let on a large scale, or if you plan to move your tax residence. These situations involve rules that go beyond this guide.

Related

• Complete buying guide
• Stamp duty calculator

Frequently asked questions