New duty relief for family business transfers interrupted by the demise of the transferor

The publication of L.N. 250 of 2026 introduces an important enhancement to Malta's duty framework for family business succession planning. By means of an amendment to the Duty on Donations of Marketable Securities and Immovable Property Used for Business (Exemption) Order, a new Article 8 has been introduced to address circumstances where an intended lifetime transfer of qualifying marketable securities and business assets cannot be completed due to the demise of the transferor.

The amendment reflects a practical reality frequently encountered in succession planning. Business transfers often involve extensive preparation, discussions with family members, legal documentation and professional advice before the final public deed is executed. Where demise intervenes during this process, the intended transfer could previously fail to benefit from the preferential duty treatment, notwithstanding clear evidence that the transfer would otherwise have qualified. The new provisions seek to remedy this outcome.

The New relief

Article 8 provides that where an individual had a genuine intention to transfer qualifying marketable securities and business assets by gratuitous title to eligible family members, but passes away before the transfer is formally completed, the intended beneficiary may still benefit from the reduced duty rate of €1.50 for every €100, or part thereof, of the value transferred, equivalent to a duty rate of 1.5%, provided the prescribed conditions are satisfied.

The relief effectively preserves the tax treatment that would have applied had the transfer been completed immediately prior to the transferor's demise. In doing so, the legislation places greater emphasis on the substance of the succession plan rather than the unfortunate timing of the transferor's demise.

Conditions for eligibility

The relief is subject to a number of safeguards intended to ensure that it applies only to genuine succession planning arrangements. In particular, the legislation requires that:

• The deceased had a genuine intention to make the transfer before demise.
• Had the transfer been completed immediately before demise, it would have satisfied all the conditions required under the Order.
• The transfer remained uncompleted solely because the transferor passed away before the execution of the relevant public deed.
• Following the demise of the transferor, the property is acquired causa mortis by the person identified as the intended donee.
• The acquisition is not altered, redirected or otherwise affected by a will, testamentary disposition or operation of law.

The provisions apply only where the deceased dies after 31 December 2025 and where the intended transfer was bona fide, had not been abandoned, revoked or materially altered before demise, and would have been completed in the ordinary course of events had demise not intervened.

Documentary evidence becomes critical

One of the most noteworthy aspects of the amendment is the recognition of a broad range of documentary evidence that may be used to establish the deceased's intention.

The legislation specifically refers to:

• Written promises of donation.
• Succession plans.
• Shareholders' agreements.
• Board resolutions.
• Declarations and confirmations.
• Other written instruments evidencing the proposed transfer.
• Evidence demonstrating that substantial steps had already been taken towards completing the transfer.

In addition, the legislation allows for a declaration made under oath by a warranted advocate, certified public accountant, notary public or another professional acceptable to the Commissioner, confirming the facts and circumstances supporting the claim.

This emphasis on documentary evidence highlights the importance of ensuring that succession planning initiatives are appropriately documented and formalised. Whilst informal discussions may indicate a transferor's wishes, properly drafted documentation will be critical in demonstrating entitlement to the relief.

The commissioner's role

The burden of proving entitlement rests with the intended beneficiary seeking to rely on the relief. Where the Commissioner is satisfied that all statutory requirements have been met, a certificate confirming entitlement to the reduced duty rate will be issued and attached to the declaration relating to the relevant transfer causa mortis.

Conversely, the Commissioner retains the power to refuse a claim where objective evidence does not sufficiently demonstrate that the proposed transfer would have qualified for the relief had it been completed during the transferor's lifetime.

Implications for family-owned businesses

The introduction of Article 8 represents a welcome development for family-owned businesses and individuals engaged in succession planning. It acknowledges that business succession is often a process rather than a single transaction and that unforeseen events can disrupt even the most carefully planned arrangements.

By preserving access to the reduced duty rate where clear evidence exists that a qualifying transfer was intended, the amendment helps ensure that family businesses are not unfairly deprived of valuable relief solely because the transferor passes away before the necessary formalities can be completed.

The changes also provide greater certainty for intergenerational business transfers and reinforce Malta's broader policy objective of facilitating the continuation of family-owned enterprises across generations.

Forvis Mazars’ view

The introduction of this new article  represents a practical and forward-looking enhancement to Malta's duty framework and further strengthens the legislative support available for family business succession planning. By recognising documented intentions and substantive steps taken towards the implementation of a qualifying business transfer, the amendment acknowledges the realities of succession planning and ensures that an unforeseen demise does not, in itself, frustrate the availability of valuable duty relief.

In our view, the measure strikes an appropriate balance between facilitating genuine intergenerational business transfers and maintaining the necessary safeguards to preserve the integrity of the regime. The introduction of clear evidential requirements provides taxpayers and advisers with a degree of certainty whilst ensuring that the relief remains available only in circumstances where a bona fide transfer was intended and would ordinarily have been completed.

The new provisions also serve as a timely reminder of the importance of proactive succession planning. Family businesses should ensure that intended transfers are supported by appropriate documentation, whether through succession plans, shareholders' agreements, board resolutions or other formal records capable of demonstrating the transferor's intention.

This amendment helps align the tax consequences of a transfer with its underlying commercial and family succession objectives. Where the statutory conditions are satisfied, the preferential duty treatment can now survive the unexpected demise of the transferor, providing greater certainty, preserving continuity within family-owned businesses and supporting the successful transition of enterprises across generations