Notaries should not serve as middlemen in property taxes, says Notarial Council

The Notarial Council is calling on government to urgently overhaul existing legislation that obliges notaries to serve as middlemen and pave the way for registration taxes of property contracts to be paid directly to the authorities.

The Council is urging the government to come around a table to hammer out a solution that safeguards the interests of all parties involved after the Ombudsman this month slammed the government for inaction on notaries who failed to pass on the taxes paid by property buyers to the taxman.

The Council – which represents all warranted notaries who today number close to 400 registered in Malta – said it took these matters very seriously and it was unfortunate that a couple of handful of notaries were giving the profession a bad name.

Notaries, as public officers, are entrusted by the state to ensure legal certainty for citizens and businesses requesting their services, which is why the Council is calling for the introduction of a system where notaries are no longer intermediaries.

At the moment, once a contract for a property sale or any other contract which involves the transfer of immovable property is signed, notaries have to first register the property with the Commissioner for Revenue, which enables them to pay tax on behalf of the parties to the said contract. Once the tax is paid, the contract is then registered with the Public Registry.

However, if a notary fails to pass on the taxes the only remedy available — apart from taking legal action — is to once again pay the taxes due on the property transfer. The Council clarified that in such cases, the property transfer cannot be registered, but can still go through.

“For the system to function more smoothly, several changes have to be made, which is by no means an easy task. However, it is essential to map out a way forward because the current system of self-regulation has to be replaced by a more robust framework where together with the government and possibly the banks, the payment of these taxes can be made in real time,” the Notarial Council said in a statement.

Over the past years, the Council has been working “incessantly” with the office of the Commissioner for Revenue and the Malta Information Technology Agency to implement an integrated online system allowing near real time registration of deeds and payment of taxes with immediate notification through tokenisation, linking banks, departments and notaries to strengthen legal certainty and curb any abuse as much as possible. This system is already in place in almost all EU member states.

Notwithstanding this, the Council believes the government should have an adequate system of timely redress for instances where citizens’ rights have been prejudiced; legislation which in this regard is currently lacking.

“As a Council, we have always maintained that the best way in this matter is for the parties to a property transfer deed to pay the Commissioner for Revenue directly,” the Council said.