Duty on Business Related Donations Exemption Order
By virtue of a legal notice published recently – L.N. 82 of 2018 entitled Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) (Amendment) Order, 2018 – the Government has extended the validity of a previous order allowing for reduced stamp duty payable on business related donations. The previous order published last May (L.N. 131 of 2017 entitled Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, 2017 and issued under the Duty on Documents and Transfers Act (Ch.364), was about to lapse at the end on March 2018. With this new order one may avail of these reduced duty rates up to the 30th September 2018.
Reduction of Duty to 1.5%
By way of exemption, donations to family members made up to the 31st September 2018 shall be charged a reduced rate of stamp duty of 1.5%. Family members shall include one’s spouse, descendants and ascendants in the direct line, including their spouses. In the absence of descendants it shall include one’s siblings and their own descendants. This applies to :-
- Donations of shares in companies – stamp duty shall be payable at a reduced rate of 1.5% of the shares’ value;
- Donations of immovable property/ies used in family businesses, as defined in the Family Business Act, provided such property was used for the business for at least 3 years prior to the donation – stamp duty shall be payable at a reduced rate of 1.5% of the property’s market value;
The reduced rates shall apply only if the donation is executed by means of a public deed, and provided the donee retains the shares or property for at least 3 years thereafter, and provided further the property continues to be used for the business for at least 3 years. Failure to do so would entail a forfeiture of the benefit enjoyed from such reduction.
The vast majority of Maltese businesses are family owned and run. Family businesses form part of Iuris’ client base. The firm therefore regularly offers advice on a variety of business issues, from the more direct corporate matters, taxation, and succession planning, to related areas such as property matters, employment issues and intellectual property.