Malta has no inheritance tax in the sense most people mean. There is no estate tax on a deceased person's worldwide wealth and no tax on heirs by reference to the size of what they receive. What Malta does have is duty on documents and transfers, and it reaches two assets that sit at the heart of most family businesses: Maltese immovable property and shares in companies.
For almost a decade, a special order has cut that duty sharply when a parent hands a family company or business premises to the next generation during their lifetime. The weak point was obvious. If the parent died before the deed was signed, the family fell back on the full rate that applies on death.
On 18 September 2026 the Government Gazette published Legal Notice 250 of 2026, which closes that gap. It adds a new article 8 to the order, and it is worth understanding before any succession plan goes near a notary.
What heirs normally pay
The ordinary rules sit in the Duty on Documents and Transfers Act, Chapter 364.
Immovable property. Article 32(1) charges duty of €5 for every €100 on documents transferring immovable property, and on every declaration made under article 33 when immovable property passes on death, for deaths on or after 23 November 1999. Article 33 requires every person who inherits immovable property to make that declaration by public deed.
Company shares. Article 42(1) charges €2 for every €100 on the value of marketable securities, and the list of documents it applies to includes the notice of a transfer causa mortis of company shares. Under article 42(2), where 75% or more of the company's assets (excluding current assets other than property) consist of immovable property, the duty is increased by a further €3 for every €100, taking it to 5%.
So a family whose trading company's assets consist mainly of its own premises, or whose wealth is held through a property-rich company, can face duty of 5% on the value passing on death. For a company worth several million euro, that is a real number, and it is payable whether or not anyone intends to sell.
Lifetime gifts inside the family are treated differently for income tax. Article 5(2)(e) of the Income Tax Act treats a donation as a deemed sale at market value, but provides that no tax is payable where the donation is made to the donor's spouse, descendants and ascendants in the direct line and their spouses, or, where there are no descendants, to brothers or sisters and their descendants. That list matters, because the 1.5% duty relief uses exactly the same circle of people.
The 1.5% order in brief
The Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, S.L. 364.15, has been in place since 2017. Article 2 sets a reduced rate of €1.50 for every €100 in two cases:
- marketable securities: an individual transfers shares in a company, by gratuitous title, to persons in the article 5(2)(e)(i) circle; duty is charged at 1.5% of the real value of the shares;
- business property: an individual transfers by gratuitous title a commercial tenement that has been used in a family business, as defined in the Family Business Act, for at least three years before the transfer, to persons in the same circle.
When the reduced rate is used, no other exemption or relief from duty applies to the same transfer.
The conditions are strict. Article 4 requires the transfer to be made by public deed, and the benefit is only granted where the notice required under the Act has reached the Commissioner on or before 31 December 2026. For business property, the donor must give the notary a report by a certified public accountant holding a practising certificate in auditing, confirming the three years of family business use.
The relief is also conditional after the deed. Under article 5, it is forfeited if the recipient transfers the shares or the property inter vivos within three years, and in the case of business property, if the property is not used within a business carried on by the recipient for three years. Article 6 then applies the duty that would have been due without the relief, and article 7 requires the difference to be paid within 30 days of the event that triggered the forfeiture. There is one softening: business property sold and replaced within a year by property used for a similar purpose in the family business can have the duty paid credited against the duty on the replacement.
Article 3 fixes the window: the order applies to transfers made on or after 1 April 2017 but before 1 January 2027. It has been extended repeatedly; the amendment history in the consolidated text runs through Legal Notice 283 of 2025. As things stand in the published law, a lifetime transfer has to be completed, and notified, within the current window.
What article 8 adds
The new article is headed "Benefit applicable to certain transfers of business causa mortis". It applies the same €1.50 per €100 to an acquisition on death, where five conditions are met:
- there is proof in writing that before death the deceased had a genuine intention to make a gratuitous transfer to persons in the article 5(2)(e)(i) circle;
- had the transfer been completed immediately before death, it would have met all the conditions and eligibility requirements of the order;
- the transfer was not completed solely because the death occurred before the public deed was signed;
- on death, the property is acquired causa mortis by the person named as the intended donee in that written proof; and
- that acquisition is not prevented, altered, redirected or otherwise affected by a will or other testamentary disposition, or by the operation of any law.
Articles 5 and 6 apply to these acquisitions too. In plain terms, the heir who takes at 1.5% is bound by the same three-year holding period as a donee would have been.
Article 8(2) adds four further limits. The deceased must have died after 31 December 2025. The planned transfer must have been bona fide and not made to avoid any legal provision. It must not have been abandoned, revoked, withdrawn or materially altered before death. And it must be a transfer that, but for the death, would have been completed in the ordinary course of events.
What counts as proof
Article 8(3) lists the kinds of evidence that can establish intention and the other conditions:
- any documentation, declaration, notice, certification or confirmation required or contemplated under the order;
- any document signed by the deceased that amounts to a written promise of donation, an agreement, a declaration, a succession plan, a shareholders' agreement, a board resolution or another written instrument evidencing the transfer;
- proof that substantial and demonstrable steps had been taken towards completing it;
- a declaration on oath by a warranted advocate, certified public accountant, notary public or other professional acceptable to the Commissioner, confirming the facts.
Two provisos tighten this. Where the proof relied on is not a document signed by the deceased, it must be endorsed by one of those professionals within 365 days of the death. And where the evidence consists of documents under the order or proof of steps taken, it must be accompanied by the sworn professional declaration, which has to refer to those documents.
The Commissioner may, on objective evidence, refuse to accept a document as appropriate. Under article 8(4), the burden of proof rests on the intended donee. If the Commissioner is satisfied, he issues a certificate confirming entitlement, and that certificate is attached to the declaration of the transfer causa mortis drawn up under article 33 of the Act. Article 8(6) allows him to refuse the claim where he is not satisfied that the intended transfer would have qualified for the reduced rate had it been completed before death. Article 8(5) confirms that the benefit applies only where the property actually devolves on the person named in the evidence.
Why the wording matters for succession planning
Read carefully, article 8 is not a general reduction of duty on death. It rescues a lifetime transfer that was genuinely under way. Three practical consequences follow.
Paper the plan before you need it. A board resolution, a signed succession plan or a shareholders' agreement that names the intended recipients and the shares or property is exactly the kind of document the order lists. Without something in writing, there is nothing for the heir to rely on.
The will has to point the same way. Condition five is easy to miss. If the will leaves the shares to someone other than the person named in the succession plan, or leaves them in different proportions, the acquisition is "altered, redirected or otherwise affected" by the will, and the reduced rate falls away. Wills and succession documents need to be read together.
Every normal condition still applies. The transfer must have qualified as if completed just before death. For business property, that means three years of family business use, which in practice needs the same accountant's report. It also means the recipient must fall within the article 5(2)(e)(i) family circle. A plan to transfer shares to a long-standing manager who is not family was never within the order and is not rescued by article 8.
The heir takes on the holding period. Article 8 applies articles 5 and 6 to the heir, so an heir who takes at 1.5% and transfers the shares or the property inter vivos within three years, or stops using business property in a business, loses the relief and owes the duty that would otherwise have been due. Article 8 does not mention article 7, which sets the 30-day payment deadline for donees, so it is not certain that the same deadline applies to heirs.
Where it fits in a wider structure
Many international families hold Maltese companies through a holding structure, sometimes several layers deep, and the participation exemption is often the reason the structure exists. The duty order speaks of an individual transferring marketable securities or business property. Where shares are owned by a company, a trust or a Maltese foundation rather than by the individual directly, the analysis is different and needs to be done on the actual ownership chain. The same goes for trust-held assets, which also face the new disclosure rules described in the trust register update.
It also helps to keep the order in proportion. The broader case for Malta's lack of wealth and estate taxes is set out in the piece on why Malta has no wealth tax. What L.N. 250 of 2026 does is narrower and more technical: it stops a sudden death from turning a planned 1.5% transfer into a 5% one.
Checklist for owners of Maltese family businesses
Identify the assets. List the Maltese company shares and business premises you intend to pass on, and whether any company is property-rich enough to attract the extra €3 per €100 on death.
Identify the recipients. Check that each one falls within the spouse, descendants and ascendants circle, or siblings and their descendants where there are no descendants.
Put the plan in writing now. A signed succession plan, board resolution or shareholders' agreement is the evidence article 8 is built around.
Align the will. Make sure the will leaves the same assets to the same people.
Mind the window. The published order covers lifetime transfers made before 1 January 2027, with notice to the Commissioner by 31 December 2026. A transfer that can be completed by deed within that window does not need article 8 at all.
Plan for three years of holding. Whether the recipient takes by deed or on death, the relief depends on keeping the asset, and for business property on keeping it in business use.
Malta's duty rules reward families who plan early and document what they plan. Article 8 is a safety net for the families who did both and ran out of time.
Work with Sebastian
If you own a Maltese family company or business property and want its transfer to the next generation planned and documented while the reduced rate is available, book a consultation.
