What We Think

April 10, 2020

Reduced rate of Duty on donations of shares and property

The reduced rate of duty of €1.50 on every €100 or part thereof, in accordance with the Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, applicable on transfers of certain assets, will apply on transfers which take place prior to 31 December 2020.

In accordance with the above-mentioned Order, transfers by gratuitous title of marketable securities by an individual to persons referred to in article 5(2)(e)(i) of the Income Tax Act (ITA), will be subject to the reduced rate of duty of €1.50 on every €100 or part thereof. The persons referred in the above-mentioned ITA article include: the transferor’s spouse, descendants and ascendants in direct line and their relative spouses, or in the absence of descendants, to his/her brothers or sisters and their descendants.

The reduced rate of duty, of €1.50, would also apply where an individual transfers by gratuitous title immovable property, being a commercial tenement as defined in article 1525 of the Civil Code, that has been used in a family business, as defined in the Family Business Act, for a period of at least 3 years preceding the transfer. For the reduced rate of duty to apply, the property must be transferred to the same individuals mentioned in the previous paragraph.

Any transfers claiming this reduced rate of duty shall be made by public deed. A report by a certified public accountant or an individual holding a practicing certificate in auditing would need to be provided to the notary, for transfers of immovable property. Such report would give assurance that the business property being transferred has been used in the family business for a period of 3 years.

The relief shall be forfeited if the individual to whom the transfer was made, transfers (inter vivos) the marketable securities or property, within a period of 3 years immediately following the date of transfer by gratuitous title.

For further information on the above kindly contact:

Nicky Gouder
Luana Farrugia

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