3. Property, Estates And Probate

A. Immovable Property

Under Maltese law, duty may be payable on the execution of certain contracts and transfers. In the case of the acquisition of immovable property situated in Malta, this duty amounts to 5 per cent of the purchase price and is payable by the purchaser; the vendor may be liable to capital gains tax.

Transfers of property between companies within a group will also not be subject to tax, with certain provisions applicable when the property is transferred out of the group.

B. Movable Property

The only property that is subject to duty on alienation is shares, where duty at the rate of 2 per cent is due on the market value of the shares.

Also note that in the case of a transfer of shares in a Maltese company to persons who are not ordinarily resident in Malta, no duty is payable.

C. Probate And Estates

The relevant provisions of the Recognition of Trusts Act 1994 have, following its repeal, been incorporated into the Trusts and Trustees Act, which now addresses the issue of trusts that are regulated by a law other than Maltese law. As regards reserved portions and forced heirship generally, the amended Civil Code provides that:

‘Where movable or immovable property situated in Malta has been settled in trust, under the laws of Malta or otherwise, by a person who is not domiciled in Malta at the time of settlement:

• such person shall be deemed to have had capacity to do so if at the time of such transfer or disposition he was of full age and sound mind under the law of his domicile and under the law of Malta, and
• no provision of Maltese law relating to inheritance or succession to such property, including rights to reserved portions or similar rights shall apply to such trust property, at such time or subsequently, and
• the beneficiaries shall be deemed to have capacity to benefit.’

Under the Trusts and Trustees Act, the validity and effects of a Maltese trust are to be governed only by the Trusts Act, ‘notwithstanding the provisions of any other law’, whether Maltese or foreign. However, nothing under Maltese law attempts to prevent a trust set up under Maltese law from being attacked in a foreign court of law. Also, although the Recognition of Trusts Act 1994 incorporated article 15 of the Hague Convention (regarding mandatory rules) and Article 18 (regarding public policy), Article 13 of the Hague Convention (which grants a state discretion not to recognise a trust if certain significant elements are more closely connected with a non-trust jurisdiction), was specifically not incorporated into Maltese law.