L.N. 131 of 2017 being the Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, 2017 (the “Order”) has recently been published in terms of Article 23 of the Duty on Documents and Transfers Act (“DDTA”). Family businesses can benefit from a reduced rate of duty payable on certain types of transfers within the family. This is an additional incentive forming part of the wider set of incentives introduced in 2017 when the Family Business Act was launched in January 2017 with the aim of promoting better succession planning within Family Businesses.
Aside from the fiscal and monetary assistance incentives available to family business in terms of the DDTA and through Malta Enterprise, the Order has introduced a reduced rate of duty for certain transfers which take place on or after the 1st April 2017 but prior to 1st April 2018.
Where individuals who own marketable securities in companies transfer those securities by gratuitous title to a spouse or to their descendants or ascendants in the direct line and their relative spouses, or in the absence of descendants to those individuals’ brothers or sisters and their descendants, they can benefit from a reduced rate of the duty ordinarily payable on such transfers. The same reduced rate will apply where individuals gratuitously transfer to such persons a business property (as defined in the Order) that had been used in a family business (as defined in the Family Business Act) for a period of at least three years preceding the transfer. The relief received would need to be forfeited if certain conditions are not satisfied during the three years immediately following the transfer.
Where the reduced rate is applied, no other exemption or relief from duty shall apply to the said transfer. The Order provides further details as to how relief and any forfeiture is applied.