Duty on Documents and Transfers Act (Cap. 364), article 42

42. (1) A duty of two euro for every one hundred euro or part thereof of the amount or value of the consideration or the real value, whichever is the higher, o f the marketable security shal l be charged: (a) (i) notwithstanding the provisions of article 4, on every transfer inter vivos , whether executed in Malta or outside Malta, of foreign marketable securities held in a property company as defined in article 2(1) of the Income Tax Act , made to or by any person resident in Malta: Provided that no duty shall be chargeable on such transfers where such duty has been paid outside Malta in the country where the transfer is executed or where the company is registered; (ii) notwithstanding the provisions of article 4, on every transfer inter vivos , whether executed in DUTY ON DOCUMENTS AND TRANSFERS [CAP. 364. 35 Malta or outside Malta, of foreign marketable securities held in a com pany having, directly or indirectly, more than 50% of its business interests in Malta, made to, or by any individual who is ordinarily resident and domiciled in M a l t a o r b y a n y o t h e r p e r s o n ( o t h e r t h a n a n y person referred to in article 47(3)) who is owned or controlled, directly or indirectly, or acts on behalf of, an individual who is ordinarily resident and domiciled in Malta: Provided that the provisos to article 47(3)( e) shall apply mutatis mutandis t o t h e interpretation of the term "business interests in Malta"; (iii) on every document whereby any other foreign marketable security is transferred inter vivos to, or by any person r esident in Malta: Cap. 123. Cap. 370. Provided that where the marketable securities in question are not held in a property company as defined in article 2(1) of the Income Tax Act nor in a company having, directly or indirectly, more than 50% of its business interests in Malta as set out above, no duty shall be chargeable where such transfer is effected through a local bank or through a person holding an investment services licence under the Investment Services Act . For the purpose of this proviso, the provisos to the said definition of "property company" in article 2(1) shall not apply; (b) on every document whereby a marketable security other than those mentioned in paragraph ( a) hereof is transferred to or by any person in Malta: Provided that upon any restructuring of holdings through mergers, demergers, amalgamations and re- organisations within a group of companies, no duty shall be chargeable on: (i) the transfer by an individual of any shares, held in his own name, forming part of a group of companies in exchange of shares in a company or companies forming part of the same group; (ii) the exchange of shar es from one company to another where such shares are in companies forming part of the same group of companies, or the exchange of a partnership interest for shares from one company to another where the company receiving the shares and the company whose shares are being exchanged are companies forming part of the same group of companies; (iii) the transfer of shares for consideration from one company to another, where such companies form part of the same group of companies, 36 CAP. 364.] DUTY ON DOCUMENTS AND TRANSFERS or the transfer of a partnership interest for consideration from a company or partnership to another company or partnership, where the transferor and the transferee form part of the same group of companies, or where any or both of them are partnerships, would have been considered to form part of the same group if they had been a company or companies: Provided further that where any company referred to in the immediately preceding proviso is a "property company", the immediately preceding proviso shall only apply where the individual, direct or indirect, beneficial owners of the companies referred to in the said proviso are the same and each such individual holds, directly or indirectly, substantially the same percentage interest in the nominal share capital and voting rights in each of the said companies both before and after the transfer or exchange, as the case may be. The provisions of article 32(6)(b) shall apply mutatis mutandis for the purpose of making such determination. Cap. 123. For the purpose of this proviso "property company" shall have the same meaning assigned to it in article 2(1) of the Income Tax Act but the provisos to the said definition shall not apply: Provided also that the immediately preceding proviso shall not apply, where the sa id companies are, directly or indirectly, owned as to eighty percent or more by a company whose securitie s are listed on a stock exchange recognised by the Commissioner for the purpose of this provision; For the purpose of the above p rovisos to paragraph (b): (i) "company" shall include a "partnership", and references to the transfer, acquisition or disposals of marketa ble securities shall include the tra nsfer, acquisition or disposals of an interest in a partnership; Cap. 123. (ii) "property company" shall include "property partnership" and both these terms shall have the same meaning assigned to them in article 2(1) of the Income Tax Act , but the provisos to the said definitions shall not apply; (iii) "group of companies" shall be applied in the case of partnerships mutatis mutandis as if the partnership had been a company; (iv) references to a compan y’s ordinary share capital, voting rights and rights to profits shall include a partnership ’s capital, voting rights and rights to profits; (c) on every notice of the transfer causa mortis o f DUTY ON DOCUMENTS AND TRANSFERS [CAP. 364. 37 company shares made in accordance with article 45; (d) on a transfer of real value in marketable securities as provided for in article 42B. In this sub-article, "a group of companies" means: (i) a holding company and its subsidiaries; a company shall be deemed to be a subsidiary if more than fifty per cent of its voting shares are beneficially owned by it s holding company; and (ii) companies which are c ontrolled and beneficially owned directly or indirectly to the extent of more than fifty per cent by the same shareholders: Provided that the Minister ma y by rules prescribe another definition of "group of companies" and that definition shall ap ply to transfers made after such date a s may be prescribed by those ru les. (2) ( a) Where it results that seven ty-five percent or more of the assets, excluding all current assets other than immovable property, of the company referred to in article 42B or of the company whose marketable securities are transferred inter vivos or are transmitted causa mortis in respect of persons from whom the transfer causa mortis originates who died on or after the 1st January 2000, consists of any immovable property or any right over an immovable, the duty chargeable in virtue of sub-article (1) shall be increased by three euro for every one hundred euro or part thereof of the amount or value of the consideration or the real value of the marketable security, whichever is the higher. (b) Where the company referred to in article 42B, or whose marketable securities are transferred holds, directly or indirectly, sh ares in a company having seventy-five percent or more of its assets, excluding all current assets other than immovable property, consisting of any immovable property or any right over an immovable, hereinafter referred to as the "property company", the duty chargeable in virtue of sub-article (1) shall be i ncreased by three euro for every one hundred euro or part thereof of the amount or value of the consideratio n or the r eal value of the marketable security, whichever is the higher: Provided that paragraph ( b) shall only apply where the aggregate value of: (i) immovable property or any right over an immovable owned by a property company or companies (as represented by the percentage interest held in such company or companies), and (ii) immovable property or any right over an immovable owned by the company referred to in 38 CAP. 364.] DUTY ON DOCUMENTS AND TRANSFERS article 42B or whose marketable securities are transferred, is equal to or exceeds seventy-five percent of the total non-current assets of the property company or companies (as represented by the percentage interest held in such company or companies) and of the c o m p a n y r e f e r r e d t o i n a r t i c l e 4 2 B o r w h o s e marketable securities are transferred, disregarding the book value of shares held, directly or indirectly, in the property company or companies and taking into account total current assets consisting of immovable property: Provided further that paragraph ( b) shall not apply where the duty chargeable in virtue of sub-article (1) has been increased by three euro for every one hundred euro or part th ereof in accordance with paragraph ( a). (c) For the determining of the amount or value of the consideration or the real value of the marketable security or of the real value of the company referred to in article 42B, there shall not be deducted any liability in excess of the value of all assets excluding the value of any such immovable property or any real right thereon other than - (i) a bank loan relating to the cost of acquisition and improvements of the immovable property or real right thereon; or (ii) a debt registered at the Public Registry relating to the acquisition cost of the aforesaid immovable, where such debt is registered within three months from the date of acquisition of the said immovable, proved in each case by the production of such documents to the satisfac tion of the Commissioner, as the Commissioner may require: Provided that where the aforesaid immovable has been acquired from a group company and such transfer qualified for duty relief under article 32(6), the date of acquisition taken into account in determining whether the debt is registered within three months as aforesaid shall be the date when the immovable was acquired by the said group company: Provided also that for the purpose of this paragraph, where the company has in issue any marketable securities consisting of shares which do not participate in any way in the profits of the company other than by way of a fixed rate of return, which resulted from a conversion of debt, other than a debt referred to in sub- paragraph (ii), such marketable securities shall be treated as a liability. DUTY ON DOCUMENTS AND TRANSFERS [CAP. 364. 39 (3) ( Deleted by Act XIII. 2015.100 ). Cap. 123. (4) The Minister responsible for finance may make rules under this Act or the Income Tax Act for the implementation of the provisions of this article and article 42B and, without prejudi ce to the generality of the foregoing , such rules may provide for: (a) the manner in which the real value of a company is to be determined; (b) the manner in which the real value of marketable securities is to be determined; (c) the manner in which a transfer of real value in marketable securities as provided for in article 42B is to be determined; and (d) any matter that may be prescribed under this article. Special rules applicable to trusts. Added by: XIII. 2004.76.