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Assignments of Rights Acquired under a Promise of Sale Agreement Rules published

Kristine Attard  -  14/May/2020

The Assignments of Rights Acquired under a Promise of Sale Agreement Rules, 2020 were published in virtue of LN 191 of 2020 on the 12th May 2020.

These rules shall apply to any assignment that is made on or after 1 January 2020 of rights acquired in terms of a promise of sale of immovable property situated in Malta as referred in Article 5A (2)(d) of the Act.   

The rules, inter alia, set out the criteria that must be satisfied for an assignment to be regarded as valid for the purposes of the rules, the deductions allowable when computing the income derived from an assignment and the criteria to be satisfied for such deductions to be allowable.

  • When the consideration for an assignment to which these rules apply does not exceed €100,000, the income derived from that assignment, shall be subject to a final tax of 15%. 
  • When the consideration for an assignment exceeds €100,000, the first €100,000 shall constitute the final tax portion and the amount by which the consideration exceeds €100,000 shall constitute the excess portion.  Provisional tax of 7% is due on the excess (after taking into consideration the allowable deductions) on account of the tax chargeable in accordance with Article 56 of the Act. 

The rules furthermore prescribes that when the income is not reported fully and correctly, the full amount of the income derived from the assignment shall be charged to tax at the rate of 35%.

LN 191 of 2020 also amends Rule 9 of the Capital Gains Rules (S.L. 123. 27) and deletes Rule 24(1) of the Tax on Property Transfers Rules (S.L. 123.92).

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