Malta: Overview

RENTAL YIELDS

Last Updated: Mar 24, 2009

Highest yield at 3.55% in Malta but still poor

Gross rental yields on apartments in Malta average 3.07%. The highest gross rental yields we found were 3.55%, on 320 square metre (sq. m.) properties.

The price of apartments in Malta averages around €3,042 per sq. m. The smallest of the apartment sizes we surveyed, 50 sq.m., are the most expensive, at an average selling price of €3,638 per sq. m. for a used apartment in good condition.

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TAXES AND COSTS

Last Updated: Nov 10, 2008

Taxes are moderate to high in Malta

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	17.8%	25.5%	26.7%
Click here to see a worked example
Source: Disclaimer

Rental Income: Net rental income is taxed at progressive rates, from 20% to 35%.

Capital Gains: Capital gains are generally taxed at a flat rate of 12%, levied on the transfer value or the selling price of the property.

Inheritance: There are no inheritance taxes in Malta, but there is a transfer duty payable by the heir at 5% of the declared property value.

Residents: Resident citizens are taxed on their worldwide income. Resident foreigners are liable to tax only on their income sourced in Malta.

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BUYING GUIDE

Last Updated: Jul 01, 2008

Buying costs are low to moderate in Malta

Roundtrip transaction costs ranges from 6.8% to 25.8% of property value. The buyer usually pays for the stamp duty (3.5% - 5%). Seller pays 5% real estate agent commission (plus 18% VAT) if the buyer is found through the services of a Registered Real Estate Agency. The seller also pays 12% Capital Gains Tax if the property is held for more than 5 years. For properties held for less than 5 years, there is an option of paying progressive rates at a maximum of 35% of net gains.

Non-residents can only sell their properties in Malta to Maltese citizens. They can only sell to other foreign nationals if they cannot find a buyer who is either a Maltese citizen or an EU citizen.

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LANDLORD AND TENANT

Last Updated: Jul 18, 2006

Law is pro-landlord in Malta, but courts are impossibly slow

Maltese rental market practice is pro-landlord.

Rents: Rents and rent increases can be freely negotiated, except for rental agreements entered before 1st June 1995.

Tenant Eviction: Maltese law operates extremely slowly. Hugh Peralta & Associates estimate that a contested eviction could take between 690 and 1,915 days, and the enforcement of a judgment to collect rent could take even longer.

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ECONOMIC GROWTH

Last Updated: Jul 02, 2008

Economic revival

Malta is composed of two main islands and several smaller islands. It is home to about 404,000 people with a GDP per capita of US$15,500. Valleta, the capital, is located in the biggest island also called Malta. Gozo is the second major island.

After 2000, the Maltese economy entered a period of stagnation, recording on average zero growth in GDP from 2001 to 2004. This was the result of an over-expansionary fiscal policy in an earlier period, which created unsustainable external and internal imbalances. In 2004, it was the smallest country to join the EU.

In recent years these imbalances have been partially unwound. Real GDP recovered in 2005 and 2006, expanding by 3% and 3.2% respectively. In 2007, the economy expanded by 3.4%.

On 1 January 2008, Malta adopted the euro as its official currency.