European Foundation
for the Improvement of
Living and Working Conditions

The tripartite EU agency providing knowledge to assist
in the development of better social, employment and
work-related policies

EU PolicyWatch

Database of national-level policy measures

Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure MT-2021-45/2099 – measures in Malta

Exemption from Tax on Property Transfers

Eżenzjoni mit-Taxxa fuq Trasferimenti ta’ Proprjetà

Country Malta , applies nationwide
Time period Temporary, 05 November 2021 – 31 December 2022
Context COVID-19
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Support for spending, stimulus packages
Author Luke Anthony Fiorini (University of Malta) and Eurofound
Measure added 20 December 2021 (updated 07 February 2022)

Background information

Legal Notice 419 of 2021, entitled Exemption from Tax on Property Transfers (Set-off of Tax Arrears) Rules, 2021, which falls under the Income Tax Act, came into force in the beginning of November 2021. The law, which Government introduced as a temporary measures that aimed at helping enterprises during the COVID-19 pandemic, received criticism from social partners and Malta's main opposition party, the Nationalist Party (Partit Nazzjonalista - PN).

Content of measure

The Legal Notice allows for individuals and organisations with tax arrears who transfer immovable property which is subject to tax (8%) under the Income Tax Act to apply the net proceeds from the transfer to settle any tax arrears. The benefit of this Legal Notice is that the amount of property tax is considered an additional payment of tax arrears.

As an example, should a person transfer a property for €400,000 and pays 8% property transfer tax (€32,000), the net proceeds from the sale are €368,000. If the person utilises this full sum to settle their tax arrears, despite making a payment of €368,000, the deemed payment is increased by the property tax of €32,000. Thus, the person's tax arrears would decrease by €400,000.

Additional formulas are included within the Legal Notice for situations where the amount exceeds one's tax arrears, as well as when only a portion of the proceeds are transferred.

For this to be applicable, the immovable property would need to have been acquired prior to 31 March 2021, whilst the transfer must occur by 31 December 2022.

Use of measure

No information available.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Applies to all citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: N/A

Involvement

Social partners do not appear to have been involved in the design, implementation or monitoring of this measure. In fact, several professional organisations, social partners as well as the political party in opposition all voiced their displeasure at the introduction of this measure.

Views and reactions

The Malta Institute of Taxation and the Institute of Financial Services Practitioners both criticised the measure as one that favoured those defaulting on their tax obligations and who own immovable property in Malta. They also criticised the lack of prior consultation. The Malta Institute of Accountants also publicly denounced the measure stating that it rewarded those who failed to pay their dues.

The Malta Chamber also had similar criticisms, highlighting that it was unfair for employers who paid their taxes on time, and that it created an unfair playing field which favoured defaulters. The Chamber stated that legislation should instead prevent individuals from purchasing properties when they had defaulted on tax obligations. The Malta Developers Association also spoke out against the measure, stating that it created unfair competition and that it discriminated against those who did not have immovable property. Subsequently, the Nationalist Party (PN) called for the legal notice to be repealed.

Despite all the criticism, the Minister for Finance defended the measure and stated that it will not be repealed, explaining that he intended to do all he could to ensure that monies owed to the state are recovered.

Sources

  • 09 November 2021: L.N. 419 of 2021 - Exemption from tax on property transfers (legislation.mt)
  • 10 November 2021: BDO - Legal Notice 419 of 2021 exemption from tax on property transfers (www.bdo.com.mt)
  • 12 November 2021: Times of Malta - Chamber slams measure 'favouring' defaulters defaulters who are being spared property tax (timesofmalta.com)
  • 13 November 2021: Times of Malta - Amnesty that rewards property tax defaulters criticised (timesofmalta.com)
  • 19 November 2021: Times of Malta - Controversial tax scheme will not be revoked, finance minister pledges (timesofmalta.com)

Citation

Eurofound (2021), Exemption from Tax on Property Transfers, measure MT-2021-45/2099 (measures in Malta), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/MT-2021-45_2099.html

Share

Eurofound publications based on EU PolicyWatch

30 January 2023

 

Measures to lessen the impact of the inflation and energy crisis on citizens

Governments across the EU continue to implement policies to support citizens and businesses in the face of rising food and energy prices caused by the COVID-19 crisis and intensified by the war in Ukraine. As winter approaches, preventing and addressing energy poverty becomes a priority. This article summarises the policy responses as reported in Eurofound’s EU PolicyWatch database from January to September 2022.

Article

12 September 2022

 

First responses to cushion the impact of inflation on citizens

Although the worldwide pandemic situation had already disrupted supply chains and triggered increases in energy and food prices in 2021, the situation deteriorated in 2022 with the Russian invasion of Ukraine.

Article

12 September 2022

 

Policies to support EU companies affected by the war in Ukraine

This article summarises the first policy responses that governments across the EU have started to implement to support companies affected by the rising prices, and those with commercial ties to Ukraine, Russia or Belarus.

5 July 2022

 

Policies to support refugees from Ukraine

This article summarises the first policy responses of EU Member States, including those of the social partners and other civil society actors, enabling refugees to exercise their rights under the Temporary Protection Directive.

Article

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.