Inheritance tax and inheritance law in Malta

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The Global Property Guide looks at inheritance from two angles: taxation, and what inheritance laws apply to foreigners leaving property in Malta: what restrictions there are and whether making a will is advisable.


How high is income tax on residents in Malta?

There are no inheritance, gift, or wealth taxes in Malta. However, a transfer duty is payable by the heir at 5% of the declared property value.

If the property is jointly owned by spouses, and one of the spouses has died, 5% is levied on only half the value of the property. Note that under Maltese law, the spouse is not entitled to any inheritance. The whole estate is divided between the children or nearest of kin. To avoid such complications, make sure that a will is written and registered.


What inheritance laws apply in Malta?

The Civil Code governs inheritance.

The Maltese Civil Code is the primary legislation regulating immovable property and inheritance issues in Malta, regardless of the nationality or place of residence of the property owner.

The Civil Court in Malta is competent to deal with inheritance proceedings. An inheritance case takes a minimum of two years to complete; however it may take longer, depending upon the evidence brought forward, the nature of the inheritance, the efficiency of the legal counsel, and any appeal which may be lodged.

A reserved portion applies.

If the deceased has four or less children, born in or out of wedlock, he/she must leave one third of the estate to them. If there are more than four children, the deceased must leave them one half of the estate. If the couple have children, the reserved portion for the spouse is one fourth. If there are no children the reserved portion for the spouse is one third. Apart from the reserved portion, the surviving spouse also has the right of habitation in the principal home.

The residue of the estate outside the reserved portion may be freely disposed of. It may be given to those who have already inherited, or to persons who are not relatives of the deceased.

It is advisable for a foreigner to make a local will in Malta.

The residue of the estate should be disposed of by means of a will. The writing of a local will by a foreigner requires his/her presence in Malta. The will may be public or secret. A public will is drawn up in front of a notary in the presence of two witnesses. A secret will is drawn up by the testator, and deposited with a notary, or with the registrar of the court of voluntary jurisdiction in the presence of the presiding judge or magistrate. It is also possible for two spouses to draw up a special form of joint will known as an unica carta, wherein the spouses dispose of their respective properties in the same will.

A will made abroad is valid and effective in Malta.

To be recognized as valid under Maltese law, a will made abroad must follow the form prescribed by the law of the country where it is made. The rules regarding the reserved portion are considered to be public policy, and therefore any dispositions contrary to such rules contained in a will made outside Malta will not be given effect in Malta, if such a will is challenged.

In the absence of a will, the estate is distributed in accordance with the Civil Code.

If property situated in Malta is not disposed of by a will, then Maltese law on inheritance follows the lex situs i.e. the law of the place where the property is located. If the property is located in Malta, then Maltese rules of intestate succession apply. If there are no children, the estate goes to the spouse; or if the spouse was widowed previously, to the children. If both the spouse and children survive the deceased, then the estate is apportioned equally between the surviving spouse and the children. If the deceased had no spouse or surviving descendents, then the estate is distributed between the ascendants, or in default, between collaterals in the next degree.

Property may be given during the lifetime of the owner.

A person who is mentally sound is free to dispose of property located in Malta in any way which he/she desires. No challenges can be made if the donor is of sound mind; however, children and descendants who inherit from an ascendant, whether under a will or by rules of intestacy, must deduct from their share in the inheritance the value of everything they have received from the deceased by donation, unless the donor otherwise directed, either through a deed of donation, or a subsequent deed or will.

Property titles are registered in Malta.

The Maltese Courts do not subscribe to the concept of ´equitable ownership´ and the ownership of immovable property is determined solely by reference to the roots of title, which are registered in Malta. Searches are routinely performed by lawyers to provide evidence to the Civil Court regarding the legal ownership of property. Searches are also routinely carried out prior to the sale or other transfer of property, and to verify whether a property is encumbered by hypothecs or other charges in favour of third parties.

Ownership and inheritance rights.

In Maltese law, there are no restrictions on the ownership or inheritance of immovable property by foreigners, including non-residents.

Marital rights.

Property in Malta belonging to an individual before marriage is retained as a personal and separate asset after marriage. If such property becomes the main place of residence of a married couple, then the surviving spouse, who is not the legal property owner, obtains a right of habitation, following the death of the owner, in addition to the reserved portion to which he/she is entitled.

Property purchased after marriage automatically forms part of the so called "Community of Acquests" i.e. conjugal or joint property, unless the spouses enter into a prenuptial contract, declaring that all property acquired after marriage remains their separate and personal assets. Property inherited by one spouse after marriage does not form part of the "Community of Acquests" but is considered to be his/her separate and personal property; however, any fruits derived from such property during marriage are included in the "Community of Acquests".

To determine the legal ownership of property between spouses, the law of the country where the marriage took place is applied. If their marriage was celebrated in Malta the "Community of Acquests" automatically applies, in the absence of an agreement to the contrary, regardless of where the spouses take up their main residence. If their marriage was celebrated outside Malta, but they subsequently come to reside in Malta, then the "Community of Acqests" also applies with regard to all property acquired after their arrival. The law does not distinguish between property situated inside or outside Malta.

Property can be inherited by minors.

If the property devolves onto a minor, then a guardian is appointed either by request of the family, or if circumstances so dictate, by the court.