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The Family Business Act: What exactly am I going to benefit from?
06 November 2015
The white paper heralding a new piece of legislation that the GRTU has been working on and insisting upon for several years, has finally been published and is nearing its entering into force.
The Family Business Act will shortly provide a regulatory platform whereby incentives being introduced by the very Act itself, as well as forthcoming incentives for family businesses that fall within the definitions of the Act, will benefit. The Act includes enabling provisions to allow the competent Minister to further legislate on a number of aspects including the development of further benefits.
The new law defines family businesses and identifies the business models by which family businesses trade and operate.
The Family Business Act allows a broad spectrum of legal scenarios through which a family business may be operated: limited liability companies, registered partnerships, unregistered partnerships, and even listed or trading companies on a multilateral trading facility.
The Act also caters for family businesses that may be operated through indirect ownership structures such as those set up as holding companies, trusts or even private foundations.
The new law has created the role of a Regulator for Family Businesses who will carry out the function of being a leader and a representative of the sector. As the administrator of the Register of Family Businesses, the Regulator will collate those businesses that have been allocated the family business label after meeting the established requisites.
What we know about at present, through the publication of the white paper, are those benefits listed in the draft.
So what is in it for local family owned businesses?
The benefits that are to be introduced with the new Act are mainly twofold: those pertaining to the operation of the business per se, and those pertaining to prospective transfers between family members of immovable property or shareholdings on which Duty is payable.
The Operational Benefits:
- Micro Investment of a maximum tax credit of €50,000 over a three-year period, naturally subject to Malta Enterprise’s terms and conditions;
- Legal and Accountancy advisory services up to €2,500 over a five-year period;
- Assistance for Arbitration sittings;
- Education and training for owners and their employees of up to €1,000 annually per family business;
- The positive consideration of lease renewals occupying government premises;
- Loan guarantees of up to €500,000 per business for the purpose of acquiring the business or parts thereof;
- When a registered family business is occupying industrial government premises or land on lease or emphyteusis (cens) and subject to the business satisfying all the conditions of the tenancy agreement that has lapsed, the Regulator shall recommend to the Malta Enterprise and/or Malta Industrial Parks to renew the tenancy.
The Fiscal Benefits:
- Duty on Documents on immovable property being transferred between family members of a family busiess shall be chargeable on the first €500,000 of the value of the property transferred at the advantageous rate of 3.5% or part thereof;
- In the case of Duty on Documents payable on the transfer of shares of a family owned company between family members, or interests in a partnership, trust or foundation, no duty will be chargeable on account of the first €150,000 of the value of the shares or interests in a partnership, trust or foundation transferred.
GRTU is inviting all its members to submit any representations they may wish to make on the white paper explained above by not later than Friday 20th November 2015. Alternatively should you wish to discuss in further detail, you may schedule a private meeting with our legal advisor who will examine your own family business queries in greater detail. In either case you are kindly requested to email or call our offices directly.
