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

[Updated on 29.01.2020]
The Office of the CfR has published guidance on one of the measures announced with the budget for 2020 concerning the taxation of income derived from assignments of rights acquired under a promise of sale agreement (ċessjoni ta’ konvenju). In terms of this measure, the first €100,000 would be taxed at 15%.
The tax 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.
The tax is to be withheld at the following rates:
  • On the first €100,000, at 15%
  • On the rest, at 7% Provisional Tax (the CfR guidance provides examples).
Notaries and advocates who authenticate such assignments are required to withhold the tax and to remit it to the Commissioner for Revenue in the same manner as the final tax withheld on transfers of immovable property.
Effective Date:
This measure applies to assignments made as from 1 January 2020.