Clarification by IRD – Reduced tax rate on rental income

The Commissioner for Revenue has published on its website a clarification on the application of the 15% final reduced tax rate on rental income derived from the letting of residential tenements during 2014 and subsequent years and for the scheme for the regularisation of undeclared rental income from 2005 to 2012.    The clarifications are […]

Written By ACT Team

On July 13, 2015
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The Commissioner for Revenue has published on its website a clarification on the application of the 15% final reduced tax rate on rental income derived from the letting of residential tenements during 2014 and subsequent years and for the scheme for the regularisation of undeclared rental income from 2005 to 2012.   

The clarifications are the following:

(a)    If the lease arrangement is made indirectly through a third party, i.e. the immediate tenant is not the individual/s residing in such a tenement, such an arrangement may still qualify for the 15% final tax;

(b)   One of the conditions for the applicability of the 15% final tax on rental income is that the tenement should not be licensed under the Malta Travel and Tourism Services Act (MTTSA). However it has now been clarified that this condition should be interpreted to mean that the tenement must not be a commercial tenement but must consist of either a dwelling house occupied as a home or residence by the occupier or a garage. This is irrespective of whether the tenement has an MTTSA license or otherwise.

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].