Luxury Real Estate

By: Carl Peralta of 77 Great Estates

Although there are not any specific tax incentives relating to an investment in immovable property in Malta - whereby such investment would be due to the stability of such property’s value and as a good medium to a long term investment - there might be various tax incentives for Malta companies set up to hold immovable property outside of Malta, usually through a company in such country.

Whereas any income or gains from immovable property, and the company holding it, tend to usually be taxed in accordance with the domestic law in that country – lex situs – (although exceptions do apply), where a Malta company holds at least 10% of the equity shares in such foreign company – alternative other conditions can be satisfied where such a 10% equity holding are not achieved, such as €1.1m investment – such holding would be considered a ‘participating holding’ in terms of Malta law. Where the Malta company receives income from such ‘participating holding’ or gains from the disposal of shares in such participating holding, such profits will stand to be exempt at the level of the Malta company. Furthermore any subsequent dividend distribution to shareholders wherever they may be situated will not be taxed further in Malta – no withholding tax in terms of Malta law. This might creates an interesting manner in which to hold immovable property indirectly through a Malta company for investors around the world.

Other specific tax planning opportunities have in the past worked, for example with immovable property in Portugal. These can be considered on a case-by-case basis. One may look into setting up property funds in Malta, again for the purpose of allowing foreign investment in immovable property around the world.

The above information is merely generic and does not constitute specific financial, tax or legal advice. We suggest that each case scenario be discussed individually. Please feel free to contact 77 Great Estates on info@77GreatEstates.com or (00356) 2125 2455 or on skype: info.77greatestates should you require any further clarifications. We would be glad to analyse any specific transactions.