I am a foreign buyer - What are the tax considerations I should make when financing my real estate acquisition in Malta?

This is a question which needs very careful consideration, in order to avoid any unnecessary Malta tax leakage.

At the outset, it is important to note that an individual may purchase property in Malta (subject to the satisfaction of the applicable AIP considerations), by using capital (typically such as a loan or savings) or income (typically such as business/employment or passive income).

It is important to point out that in terms of Malta’s basis of taxation a non-resident, should not be subject to Malta tax irrespective of whether such individual remits income or capital to Malta to purchase their property. That being said one must also consider the applicable stamp duty implications when making the real estate purchase.

If on the other hand, a resident of Malta (who is not a Malta domiciled individual) is remitting funds to Malta in order to purchase property, an assessment should be made as to whether such remittance is made out of capital OR income sources, in order to assess the Malta tax implications of the remittance. In the event that the remittance of funds to Malta is made out of funds of an income nature, in principle, such remittance should be subject to Malta tax at the individual’s progressive Malta income tax rates. If however, the funds remitted to Malta are made out of funds of a capital nature, such remittance should not be subject to tax in Malta.

The above should not be considered as tax advice and careful consideration of the individuals personal fact pattern would need to be made prior to making a conclusive assessment on their Malta tax position.

This blog was written by Zanzi Homes Co – Founder Michael Mercieca. Should you have any queries please do not hesitate to contact Michael on [email protected] or on 2010 8777.