Family Businesses and the Incentives under the Malta Family Business Act

A number of incentives are available to entities registered as a family business in terms of the Family Business Act, Chapter 565 of the Laws of Malta (“the Act”).

Such incentives are available up to the end of 2020 and include reduced stamp duty of 1.5% on the transfer of the business from the parents to their children, duty on documents at the reduced rate of 3.5% on the transfer of immovable property for the first €500,000 and no tax on the first €150,000 in value on the transfer of shares or interest in a family business. Further incentives include a subsidy of €2500 p/annum on legal, notarial and accountancy fees for 5 years for services provided in relation to the transferof a family business and a €1,000 p/annum subsidy on education and training fees for family business owners and their employees. Family businesses are also eligible for loan debt financing by Bank of Valletta and Malta Development Bank, a maximum tax credit of €70,000 over a three-year period, a micro-loan guarantee and investment aid.

For a private limited liability company to qualify as a family business, at least 95% of its issued share capital must be owned, directly or indirectly, by at least two family members where family members are defined as the business owner and his/her spouse, ascendants, descendants and their spouses, brothers or sisters and their descendants.

Other entities including public companies, trusts, partnerships and other registered forms such as foundations and associations may register as a family business if they are owned by family members as defined in Article 3 of the Act. Eligible family businesses must apply with the Family Business Office (“the Regulator”) to register as such. Upon registration the family business will receive a certificate which is required for the purposes of applying for the above-listed incentives.

Should you wish to register your business or require assistance with applying for any of these incentives please contact us on info@emd.com.mt.