In the 2024 Budget, the Maltese government announced the removal of a tax incentive that previously allowed property buyers in Gozo to pay a reduced 2% stamp duty, instead of the standard 5% rate applied elsewhere in the country. This change aims to slow the rapid construction activity on the island.
The 2% stamp duty incentive was introduced in the 2017 budget to stimulate economic activity in Gozo. While it initially boosted property sales, concerns arose about its impact on the island’s environment and social fabric. The Gozo Regional Development Authority (GRDA) noted that the scheme could distort the market by subsidizing excessive holiday or buy-to-rent property development, potentially harming Gozo’s delicate environment and long-term economic prospects.
In response to the government’s decision, the Malta Developers Association expressed disagreement, with prominent developer Joseph Portelli describing the removal of the 2% stamp duty as “not good news” for Gozo. Conversely, the association agreed with the government’s encouragement of renovations and purchases within Urban Conservation Areas (UCAs).
The Għal Għawdex forum clarified that it did not request the removal of the 2% stamp duty incentive for all property purchases in Gozo. Instead, it proposed removing the incentive specifically for the sale and purchase of newly constructed apartment blocks, aiming to shift property demand and supply toward more sustainable development aligned with the island’s long-term needs.
While the removal of the 2% stamp duty is a significant change, the government continues to offer other incentives to promote sustainable development in Gozo. First-time buyers of properties within UCAs or vacant properties over 20 years old in Gozo can receive grants of €40,000, up from the previous €30,000. Additionally, first-time and second-time buyers can benefit from reduced stamp duty on the first €200,000 of a property’s value, provided the property will be used as their primary residence.
These measures reflect the government’s commitment to balancing economic growth with the preservation of Gozo’s unique character and environment.
