BCMS Limited
243/1 Constitution Street
Mosta, MST 9052

T: +356 2142-1111
M: +356 9947-5566
F: +356 2141-7118
E: rkg@bcmsltd.com

Reduced stamp duty on donations of business properties and marketable securities

By virtue of LN 131 of 2017 a special reduced rate of stamp duty shall apply on donations of shares in a company as well as commercial property subject to certain conditions.

The standard rate of stamp duty in such cases is 2% on the value of the shares or 5% if the company is a property company (special definitions apply to determine if a company is a property company).

In terms of this new legislation,  the reduced rate of stamp duty shall be 1.5% provided that the donation:

  • Consists of shares in a company or a commercial property;
  • Is made between 1 April 2017 and 31 March 2018
  • Property has been used in a family business for at least 3 years;
  • Is by virtue of a public deed and notified to the DGIR by no later than 31 May 2018;
  • is between and individual to the spouse, descendants and ascendants in the direct line or their spouses. In the absence of of descendants the reduced rate applies to donations to brothers and sisters and their spouses;

The following conditions must also be satisfied:

  • Individual receiving the property cannot resell the property within 3 years from the date of donation;
  • Property must continue to be used commercially for at least 3 years;

If one of these conditions is not honoured, the person would be obliged to refund the the Revenue the difference between the duty paid and the duty payable had this benefit not been availed of. The legislation also caters for the benefit not to be lost if although the commercial property is sold within 3 years, a replacement property is acquired for the same purpose. These cases will require the Commissioner’s authority such that the value of the benefit refunded is deducted from the stamp duty on the purchase of the recplacement property.

We can help you manage the succession planning of your business, minimizing tax considerations and improving corporate governance as well as managing the change that ensues.