Inheritance Tax

Upon the death of an individual any immovable property previously owned by them is subject to specific rules with respect their transfer to prospective heirs. It is important that all the appropriate steps are carried out by the Notary Public designated by the heirs and all required documentation is submitted appropriately. 

Causa Mortis relates to the succession of immovable property from a deceased person. The succession of immovable property must be made by means of a deed of Declaration Causa Mortis published by a Notary Public and duly registered in the Public Registry of Malta. 

Each heir may go to a Notary Public and make a declaration Causa Mortis for his share only. The heirs are not obliged to make the declaration Causa Mortis together. The declaration Causa Mortis shall contain a statement by the heirs stating the true value of each property or share thereof which is being transferred to them. Stamp duty to be paid on declarations Causa Mortis is regulated by the Duty on Documents and Transfers Act. To benefit from rebates on stamp duty, a deed of Causa Mortis must be concluded within six months from the date of death. Failure to conclude the Causa Mortis deed within one year from the date of death will result in the incurring of interest on the amount of tax due at the rate of 4% per annum, and the delay may also disqualify the heirs from certain exemptions. 

The basic rate of duty is 5% on the market value of the property as on date of death. A reduced rate of 3.5% on the first €175,000 of the value applies for those inheriting a property which is already being used as their sole residence. There are other exemptions such as when the surviving spouse inherits the share of the deceased spouse of their sole residence. The children are also exempt from duty when they inherit the residence of their parents. 

This is applicable to immovable property situated in Malta, irrespective of the place of residence and nationality of the heirs. 

As in transfers made by way of Inter Vivos, Causa Mortis transfers are also subject to the usual vetting by the department’s assessors and an internal departmental board to establish the correctness of the workings and the values attributed to the immovable property being transferred. The heirs have a right to object to any assessment raised, and must abide by the timeframes and deadlines established for submissions.