Withholding Tax on Assignments of Rights acquired under a Promise of Sale Agreement
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Withholding Tax on Assignments of Rights acquired under a Promise of Sale Agreement

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Last Updated: 04/02/2021​

 

Legal Notice 461 of 2020, refers to the taxation of income derived from assignments of rights acquired under a promise of sale agreement (ċessjoni ta’ konvenju).

A final tax of 15% is to be withheld from the consideration paid for the assignment after the following deductions:

  • Brokerage fees, if any, paid by the assignor to the extent that they result from documentary evidence and are supported by a receipt.
  • Where the assignor had acquired the rights in terms of a prior valid assignment, any sum paid by him to the previous assignor to the extent that it results from that assignment and is supported by a receipt.
 
Example:
Consideration received from cession of right on promise of sale amounting to €50,000 & paid agency fees of €2,000 (deductible if the conditions stipulated in Rule 3 of Subsidiary Legislation 123.92 Tax on Property Transfers Rules are satisfied).
15% final withholding tax applies on the €50,000 - €2,000 = €7,200
 
The provisions requiring such assignments to be made in writing and authenticated by a notary or an advocate will remain unchanged.

 

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