On the 7th November 2014, the Government of Malta published the forms pertaining to the recently introduced final withholding tax on rental of residential tenements. This system is currently complementing the current legislation (Deduction of Expenses in Respect of Immovable Property Rules) which allows for the deduction of interest allowable, any rent, licence fees and 20% maintenance deduction on the income remaining with the result taxed at your applicable rate of income tax."
Alternatively, should the following conditions be satisfied, one may opt to tax the gross rental income (i.e. no deductions allowed) at a flat rate of 15%. The following are the salient features of the final withholding tax on rental income as provided for under Article 31D of the Income Tax Act:
- A qualifying property is a property which consists of a dwelling house or part thereof which is to be occupied or is occupied as a home or residence by the occupier, excluding a tenement which, for the purpose of the said letting, is required to be under the Malta Travel and Tourism Services Act and which is being rented out to an individual or individuals who occupy such tenement as a home or residence;
- The landlord has the option to tax rental income derived from the qualifying property at the rate of 15% of the gross rental income received;
- Such tax shall be final and no set-off or refund shall be granted to any person in respect of the tax so charged;
- The person exercising the option shall not be required to declare such income, in any return made pursuant to the Income Tax Acts.
- If the person is deriving rental income from more than one residential property, the option shall be applied to the total rental income received in the said year from all the residential tenements let out by such person;
- Payment of tax due under this option shall be made by not later than the 30 June of the year following the relevant year, in which the relevant rental income received during the period January to December of the relevant year. This payment shall be accompanied by the relevant form (in LN 393).
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For more information about the Letting of Residential Tenement Rules or Purchasing or Letting of Property in Malta, kindly direct your request to relocation[at]csbgroup[dot]com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
