Malta, an island nation in the Mediterranean Sea offers far more than plentiful sun and idyllic sea. The country has history and charm to spare and investing in property continues to make sense.
1. A Resilient Property Market
As an island that is geographically small, Malta has a limited footprint that may be built up. This restricted supply has given rise to a persistently strong demand for residential and commercial properties. Even during times of global recession, the value of Malta property has held stable or dipped only very slightly, backed by a prudent banking system.
As Malta’s population continues to expand, both with locals moving out to their own place as well as an influx of expats, so the demand for rental units remains strong.
2. Range of Target Investments
Malta offers an array of different investment opportunities. Property investment may begin with an apartment or commercial premises all the way up to large scale mixed-use developments. Malta offers small rural villages to larger cosmopolitan towns, with properties ranging from traditional buildings or palazzos dating back several hundred years, to modern builds with all amenities and luxuries.
3. Reduced Transfer Tax and Stamp Duty, 15% Flat Tax on Rental Revenue,
Malta’s tax agency, the Commissioner for Revenue (CfR) offers the possibility to apply a flat tax rate of 15% to all rental revenue. Expenses incurred in maintaining the property or operating the rental may not however be deducted. No further taxes are applied in Malta to the rental revenue, nor to dividends paid out from the company to the shareholder.
Investments made to improve the building may be set off against capital gains on the eventual sale of the property.
In addition to the above, a temporary COVID recovery measure has been extended, as a result of which reduced rates of tax and stamp duty will apply to the first € 400,000 of transfers taking place before 1 January 2022.
4. Corporate Structuring Opportunities
As a key business centre in Europe, Malta offers scope for property investors and other corporations to optimise their operational efficiency. A number of large property investment houses have selected Malta as the base of their operations in Europe, the MENA region and beyond.
Apart from the property holding entity/ies, businesses often set up trading companies to organise their management and marketing operations.
5. REITs Legislation
The Malta Stock Exchange (MSE) permits companies to be set up as Real Estate Investment Trusts (REITs) and listed on the MSE. These companies invest in property and are required to return an annual dividend to the shareholders of at least 85% of the profits arising from the property rental business. A REIT must invest no less than €9,000,000 in a portfolio of no less than 3 properties. Other conditions also apply and REITs are attractive for operators with experience in managing rental properties.