One of the budget measures announced for 2020 refers to the taxation of income derived from assignments of rights acquired under a promise of sale agreement (ċessjoni ta’ konvenju).
The measure applies to assignments made as from 1 January 2020 and the relative legislation will be made retroactive to that date. In the meantime, notaries and advocates who authenticate such assignments are to withhold tax and to remit it to the Commissioner for Revenue in the same manner as the final tax withheld on transfers of immovable property. 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 (See Examples Below)