Family Business: Reduced Rate of Duty on Transfers

A reduced 1.5% rate of duty is available on transfers by gratuitous title of marketable securities as well as business property by an individual to qualifying family members.

What transfers are subject to the reduced rate?

In terms of the legal notice 131 of 2017, duty shall be chargeable at the reduced rate of 1.5% on a gratuitous transfer of marketable securities issued by a company and of immovable property being a commercial tenement that had been used in a family business for a period of at least three years preceding the transfer.

The relief granted shall be forfeited if the assets are transferred within a 3-year period and in the case of business property if this is not used within 3 years.

When can this reduced rate be used?

The reduced rate of tax shall only apply to transfers by gratuitous title that are made through a public deed on or after the 1st April 2017 but prior to 1 January 2020 (LN 412 of 2018).

How is a family member defined?

The reduced rate applies to transfers of the aforementioned assets from an individual to family members, defined as one’s spouse, his/her descendants and ascendants in the direct line and their relative spouses, or in the absence of descendants to his brothers or sisters and their descendants.

How can we help?

We can assist you in assessing whether the conditions to avail yourself of the 1.5% reduced rate are satisfied as well as with your compliance obligations, which need to be filed on or before 31 December 2019 (LN 412 of 2018).

Contact us for more information!