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Acquisition of Immovable Property by non-Residents

Acquisition by Individuals

Citizens of European Member States who have resided in Malta for a minimum continuous period of 5 years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit. Any period totaling less than 90 days in a calendar year during which the individual was not in Malta is ignored.

Citizens of European Member States who have not resided continuously in Malta for a minimum period of 5 years may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit. Such citizens require a permit to purchase immovable property for secondary residence purposes.

The spouse, of whatever nationality and wherever resident, of a citizen of a Member State does not require a permit when acquiring on the same deed.

Individuals who are not citizens of a European Member State may not acquire any immovable property unless they are granted a permit. However there are certain exceptions to this general rule:

• The acquisition of a grave or a site for a grave.

• The redemption of any ground-rent or other burden encumbering any immovable property lawfully acquired by such non-resident person.

• Immovable property devolving causa mortis on any person, wherever resident, provided that the person from whom the property devolves had acquired such immovable property, where applicable, in accordance with the provisions of Chapter 246.

• The acquisition of immovable property by any person, wherever resident, in a special designated area. There are absolutely no restrictions to the acquisition of immovable property in the below designated areas:

Fort Chambray, Ghajnsielem, Gozo
Portomaso Development
Cottonera Development,
Manoel Island / Tigne’ Point,
Tas-Sellum Residence (Mellieha Project)
Madliena Village Complex
SmartCity
Fort Cambridge Zone, Tigne’
Ta’ Monita Residence, Marsascala
Pender Place and Mercury House site

• The acquisition of any further divided or undivided share in immovable property by any person, wherever resident, where such person had previously lawfully acquired a share in such immovable property.

• The transfer of immovable property in an inheritance between co-heirs.

• The partition of immovable property between co-owners.

• The acquisition of immovable property by a company or other commercial partnership, not being a non-resident person, from one or more of its members holding over 50 % interest in, or of its share capital.

• The donation of immovable property to a spouse, descendant or an ascendant in the direct line and their relative spouses, or in the absence of descendants to a brother or sister and their descendants, provided such immovable property had been acquired in accordance with the provisions of Chapter 246, where applicable.

Table: Acquisition of Immovable Property by Individuals

The following table illustrates the position for physical person (individuals):

	Maltese and EU Citizens - both with 5 years continuous residence in Malta	Maltese and EU Citizens - without 5 years continuous residence in Malta	Others
Primary Residence1	No restrictions - No need to apply	No restrictions - No need to apply	Prior authorisation is required*
Secondary Residence or any other immovable property2	No restrictions - No need to apply	Prior authorisation is required*	Prior authorisation is required*
Causa Mortis devolutions	No prior authorisation is required	No prior authorisation is required	No prior authorisation is required
Grave or site	No prior authorisation is required	No prior authorisation is required	No prior authorisation is required
Redemption of groundrent	No prior authorisation is required	No prior authorisation is required	No prior authorisation is required
Property in a Special Designated Area	No prior authorisation is required and no limit	No prior authorisation is required and no limit	No prior authorisation is required and no limit
Divided or undivided share in immovable property where person had previously acquired a share in such immovable property in accordance with the provision of this Act	No prior authorisation is required and no limit	No prior authorisation is required and no limit	No prior authorisation is required and no limit
Transfer of immovable property in an inheritance between co-heirs	No prior authorisation is required - No limit	No prior authorisation is required - No limit	No prior authorisation is required - No limit
Partition of immovable property between co-owners	No prior authorisation is required - No limit	No prior authorisation is required - No limit	No prior authorisation is required - No limit
Donation of immovable property to a spouse, descendant or an ascendant in the direct line and their relative spouses - in the absence of descendants to a brother or sister and their descendants	No prior authorisation is required - No limit	No prior authorisation is required - No limit	No prior authorisation is required - No limit
Immovable Property required for the person's business activities' or supply of services by such person	No prior authorisation is required - No limit	No prior authorisation is required - No limit	No permit granted unless required for an industrial or touristic project or as a contributor to the development of the economy of Malta

Acquisition by bodies of persons

Any body or other association of persons, and any authority, institution, organisation, fund, firm and any other entity whatsoever, whether corporate or not, is considered as a resident if:

• it is constituted, formed, established, incorporated or registered in, or under the laws of a European Member State; and

• it has its registered address, principal place of residence or of business in a Member State; and

• At least 75% of its share or other capital is owned by a resident person or is registered in the name of a trustee for the benefit of a resident person; and

• It is in any manner and whether directly or indirectly controlled by one or more resident persons;

For a trust to be considered as a resident of Malta the trustee has to be a Maltese resident and all the beneficiaries of the trust have to be determined resident persons. In the case of a discretionary trust, the power of appointment or any discretion must be exercised in favour of resident persons.

A body of persons, other than a commercial partnership, established in and operating from a European Union Member State may freely acquire immovable property that is required for the purpose for which it has been set up as long as it is directly controlled by citizens of a European Union Member State who have resided in Malta continuously for 5 years.

A commercial partnership established in and operating from a European Union member state may freely acquire immovable property that is required for the purpose for which it has been set up and at least 75% of its share capital is held by a person who is a European Member State citizen.

Any other body of persons will require a permit which is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta.

Negotiations with the EU

Malta is now a full member of the European Union. During pre-accession negotiations, Malta successfully reached an agreement with the EU regarding the acquisition of immovable property. As a result of this agreement, the situation regarding AIP will be retained on a permanent basis even after membership even though EU law allows EU citizens to purchase property in any EU country without restrictions.

During negotiations, the EU agreed that considering the limited number of residences in Malta and the limited land available for construction, which can only cover the basic needs of the present residents, Malta may maintain restrictions, on a non-discriminatory basis, on the right of EU citizens, who have not legally resided in Malta for at least five years, to acquire and hold secondary residences.

This means that EU citizens seeking to buy a secondary house in Malta will still need to apply for authorisation and satisfy conditions as is now. They will also not be entitled to buy more than one property unless they reside in Malta for at least five years.

The five-year period as a residence requirement was the balance that was struck between the two diametrically opposed positions in Maltese and EU law. Under Maltese law, foreigners can never have full rights to buy property in Malta unless they obtain Maltese nationality. Under EU law, EU citizens would have full rights to buy as much property in Malta as they like without any need to reside in Malta.

Instead, Malta agreed to give equal rights to EU citizens to buy property freely in Malta only if they first resided here for a period of five years. In practice, this means that only those EU citizens who settle in Malta permanently can do so.

This was done in order to eliminate the possibility of foreigners freely buying as much property in Malta as they like. More important, Malta wanted to reduce the possibility of an increase in property prices because of EU membership.

The Capital Transfer Duty Department within the Maltese Inland Revenue Division under the Ministry of Finance is in charge of the administration of the Immovable Property (Acquisition by Non-Residents) Act, (Chapter 246) which law only allows non-residents to buy immovable property in Malta subject to prior authorisation and under certain conditions.

It limits non-residents to buy just one immovable property and imposes thresholds on the minimum value of the investment. This is done in order to retain a measure of control on land use and speculation in immovable property in Malta. No authorisation is granted for the purchase of more than one immovable property.

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