Commercial Property

The key reasons foreign business owners choose Malta to set up or expand their business are:

• The favourable tax system and the stable legal and economic environment.
• Lucrative property sector (high ROI, at the excavation stage can reach 50%, diverse market, prices / value of property rising 5-7% per year, good locations such as St Julien’s and Silema, 15-50% per year)
• Tax benefits (No annual property tax, inheritance tax, estate duty, wealth taxes or property ownership tax. Stamp Duty (purchase of property) is 5%, and 2.5% in Gozo and 2% in heritage sites. Sale of a property is 8%.)
• Tax on rental income is 15% (flat rate for non-residents and residents, which covers all types of properties and the number of them)
• Tax on rental income is 15% (flat rate for non + residents, which covers all properties and the number of them)
• EU Residency (access to live, work and study across 27 member states)
• Stable political, legal and economic climate
• Flourishing industries, such as fintech, igaming and maritime.
• Thriving tourism sector (growing, diverse landscape of investment opportunities, hotels, accommodation etc.)
• Attractive climate, living standards and access to free healthcare
• A reputable place to do business within the European Union
• Strong relations with the EU, Asia and the US
• A strategic location within the European Union, the mid-way point from Africa and the Middle East.
• Low cost of living in Malta is low, but the standard of living is very high making it very appealing to businesses and their employees.
• Real estate is regarded as a lucrative investment, which is a testament to the jurisdictions construction and real estate sectors.

Costs are calculated on a per m2 basis

The process of owning property in Malta is a lot easier if you are an EU citizen, or if you have lived in Malta for more than 5 years. There are residency and citizenship schemes available, such as the citizenship by naturalization. If criteria is met, successful applicants are granted with a Maltese passport.

Corporate tax is levied at 35%, however foreign shareholders of Maltese companies, or a holding company, can qualify from the 6/7ths tax relief which results in tax levied as low as 5% depending on the business income.

(Many investors prefer to rent at first and then to buy commercial business premises later on, this allows them to assess their choice of location and the physical space they are operating in, without it being permanent.)

Consider the type of property you want to purchase, including the amount of space, number of meeting rooms, board rooms and communal areas. It is also important to consider the businesses future plans, and prospects of growth or expansion.

Once a property has been selected, the buyer they will require their agent or representative, such as Affinity to handle the process and negotiate the terms of the lease on their behalf.

The representative will also guide the buyer through all the paperwork required and applications to meet the criteria, in addition to reaching out to notaries and relevant departments.

The representative will work with the notary who will handle the transaction, deposit, tax’s/fees, drafts the contracts and oversees all the legality’s. The investor is unable to purchase real estate without a notary.

A Preliminary Sales Contract, known as the promise of sale, will be drawn up which is a legally binding contract which states the date in which the transaction has to be completed by. The contract also outlines the conditions under which the property will be purchased, which include;

-Costs involved

-Condition and description of the property / any repairs

-The term of contract by which the seller has to complete any repairs (3-12 months)

-Land tax

-Reason for purchasing the property (if purchasing real estate to obtain permanent residence or citizenship, must be outlined)

-Furniture and appliances, if included in the transaction price

-Deposit

After the preliminary sales contract is signed, the notary checks all legal aspects of the property, then submits a notice of the pending transaction and pays 1% of the stamp duty on behalf of the investor to the Maltese Ministry of Finance.

If a foreign buyer needs a purchase permit (AIP), the notary will apply for it at this stage.

The notary prepares the purchase sales contract, and pays the remaining 4% stamp duty on behalf of the investor. The investor will also pay the notary fees and registration fees.

The transaction will then be registered on the land register and the buyer will receive a certificate of ownership. This can be done without the owner present in Malta.

It’s also crucial to remember that having the right permits for your business is your responsibility to obtain, this is due to the Maltese property sector being divided into category’s based on the property type. A representative can guide the buyer through the classes to ensure that the business obtains the corrects permit.

The Commercial Property Categories in Malta are as follows;

Category A

Class 1 – Dwelling for residential accommodation, lodging, or personal residence, part of which is also used for a commercial occupation or to render a service.

Category B

Class 2A – Residential Institution – Residence for people in need of care on a temporary or permanent basis, such as a hospital or nursing home.

Class 2B – Non-residential Institution – museum, library, or public hall.

Class 2C – Educational Institution – school, nursery, day centre, etc.

Category C

Class 3A – Guesthouse, Palazzino, Boutique Hotel, hostel, etc.

Class 3B – Hotel

Class 3C – Assembly & Leisure Premises – cinema or theatre, health club, etc.

Class 3D – Marine Leisure Premises for mooring, sailing, diving, or any marine-based sport or recreation.

Category D

Class 4A – Offices

Class 4B – Retail premises of all retail goods and their display except motor vehicles.

Class 4C – Food & Drink Establishment wherein no cooking is allowed.

Class 4D – Food & Drink Establishment wherein cooking is allowed.

Category E

Class 5A – Light Industry including product/process development, crafts, etc

Class 5B – General Industry as in the industrial process.

Class 5C – Specialised Industry as in the processing of metals, minerals, etc.

Category F

Class 6A – Storage & Distribution

Class 6B – Boatyards

Category G

Class 7 – Agriculture – crops or animals

Category H

Class 8 – Aquaculture

https://www.dhalia.com/resources-info/buying-guide/buy-commercial-property