Special Designated Areas

 

Malta is rapidly becoming one of the prime destinations in the Mediterranean for expats who are seeking to invest in property abroad. Over the years, Malta has become an attractive and very competitive economy. This is due to new benefits such as increased accessibility, reduced red tape and favourable tax schemes have made

Malta is heavily invested in attracting international individuals looking to move abroad. Both EU and non-EU individuals can purchase property in Malta. This has become simplified through the establishment of Special Designated Areas.

These locations are prime residency areas where conditions for purchase are equal both for Maltese and foreigners. These particular properties are the following:

   •    Portomaso Development, St. Julians, Malta

   •    Tigne Point, Tigne, Malta

   •    Tas-Sellum Residence, Mellieha, Malta

   •    Madliena Village Complex, Malta

   •    SmartCity, Malta

   •    Fort Cambridge Zone, Tignè, Malta

   •    Ta’ Monita Residence, Marsascala, Malta

   •    Pendergardens, St. Julians, Malta

   •    St Angelo Mansions, Vittoriosa

   •    Vista Point, Marsalforn, Gozo

   •    Fort Chambray, Ghajnsielem, Gozo

   •    Kempinski Residences, San Lawrenz, Gozo

For all of these properties, a permit will not be required from the Maltese government for foreigners. Hence, the purchaser does not need to obtain an Acquisition of Immovable Property (AIP) permit.  Contrastingly, properties outside these areas would require this particular permit. The AIP permit is issued by the Minister of Finance, Economy and Investment.

This scheme also allows EU nationals to buy a secondary home without a permit. However, prior to purchasing a second property, a distinction must be made between a ‘primary residence’ and a ‘first residence. The former refers to a person’s main dwelling whereas the latter is a person’s first purchase. A purchaser can only have one primary residence and if the second property is not being bought to serve as such, then an AIP permit would be necessary.

This scheme also allows EU nationals to lease their property to others if the property falls under the Special Designated Areas. Therefore, property owners can benefit from the rental returns these upmarket properties offer. Tax on rental income is charged at 15%. The properties available in this area are diverse and range from single bedroom apartments to large dwellings.

In 2011, the High Net Worth Individuals Residency Scheme was launched. This allows foreigners who meet certain criteria to benefit from special tax rates on their property. However, the property must be worth not less than €400,000 and must serve as the applicant’s main dwelling and that of any family members. Other conditions such as health insurance and annual income thresholds must also be fulfilled. Afterwards, the applicant may benefit from a flat rate of 15% tax on foreign source income received in Malta, together with the possibility of claiming taxation relief.

Most of the properties available in the Special Designated Areas are upmarket properties. Therefore it is likely that if property in these areas is purchased, the purchaser will have the opportunity to apply for this advantageous tax status.