Until the 1st April 2018, an exceptional incentive is available providing that stamp duty at the rate of 1.5% shall be payable by family members transferring gratuitously shares and immovable property used in a family business to other eligible family members.
Upon the lapse of this period, the following terms would apply with respect to duty payable on transfers to other eligible family members:
- The rate of duty payable on the transfer of immoveable property shall be 3.5% of the value on the first €500,000;
- No account shall be taken of the first €150,000 upon the transfer of shares, interests in a partnership, trust or foundation when assessing the duty payable.
The following incentives have been made available by Malta Enterprise to entities registered as Family Businesses:
- A loan guarantee of up to €500,000 per business for the purpose of acquiring the business or parts thereof;
- Micro Investment of a maximum tax credit of €50,000 over a three year period;
- A refund system on the costs of legal, notarial and accountancy advisory services up to €2,500 over a 5 year period to assist in succession and business transfer;
- Education and training for owners and their employees of up to €1,000 annually per family business;
- Arbitration of up to five sittings with a value of €2,500 with the objective of establishing the fair value of the business;
- Lease renewal – The positive consideration of lease renewals occupying government premises; When a registered family business is occupying industrial government premises or land on lease or emphyteusis respectively as prescribed under Chapter 325 the Business Promotion Act and subject to the business satisfying all the conditions of the tenancy agreement, the Regulator shall recommend to the Malta Enterprise Corporation and, or Malta Industrial Parks to renew the tenancy, which renewal shall not be unreasonably withheld when the objectives of the renewal are to ensure the continuity of the family business between family members.
- Investment Aid – The Incentive Guidelines for Investment Aid 2014 – 2020 launched by Malta Enterprise in 2014 specify that in the case of acquisition of the assets of an establishment only the costs of buying the assets from third parties unrelated to the buyer shall be taken into consideration. The transaction shall take place under market conditions. If aid has already been granted for the acquisition of assets prior to their purchase, the costs of those assets shall be deducted from the eligible costs related to the acquisition of an establishment. The Incentive Guidelines shall allow that where a member of the family of the original owner, or an employee, takes over an enterprise, the condition that the assets be bought from third parties unrelated to the buyer shall be waived. The acquisition of shares does not constitute initial investment.
Procedure to register as a Family Business
In order to benefit from the above-mentioned incentives, an entity would need to register as a Family Business. The process in order to be registered is simple and straightforward. The Regulator will initially review whether the family business is eligible to register. If it is eligible the required documents would be requested by the Regulator, following which the entity will be given a certificate. This certificate will allow the family business to immediately make use of the fiscal and governance incentives available.