Extension for Reduced Rate of Stamp Duty on the Transfer of a Family Business

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The reduced rate of stamp duty applicable to the transfer of shares in a family business from 2% to 1.5% has been extended further until 31st December 2018, in accordance with Legal Notice 320 of 2018 entitled Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) (Amendment No.2) Order, 2018 which was announced on 9 October 2018.

The reduction in stamp duty applies in relation to:

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

the transfer of immovable property by means of donation, which property must qualify as being a commercial tenement and which property must have been used in a family business 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 1st April 2017 but prior to 1st January 2019.

The transfers referred to in paragraphs (i) and (ii) above must be made by public deed and subject to the necessary tax schedules and forms being completed and delivered to the Commissioner for Revenue on or before 31st December 2018. 


Disclaimer
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Christina Scicluna.

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