Amended at 4.25pm

People who inherit agricultural land that is rented to farmers will no longer have to pay inheritance tax, the agriculture minister announced on Tuesday.

Heirs of agricultural plots will also be exempt from inheritance taxes if they work the land themselves and are considered “professional farmers”.

The new measure aims to promote the use of Malta's scarce agricultural land and improve the country’s food security, minister Anton Refalo said.

“Agricultural land in Malta is scarce, and it’s important that what little land remains is preserved and used,” he said.

Inheritance tax for agricultural land stood at 5 per cent of property value, meaning that one would have to pay €5,000 on inheriting a field worth €100,000.

Landowners had often complained that their rights to enjoy their property were being breached because of rural lease laws. They were also barred from raising rents. 

Since 2022, the government has changed those rules. Now, landowners who want to raise the rent need to suggest a price to the Rural Leases Control Board, which mediates with the farmers. In order to facilitate the board’s computation, the government then published a legal notice in March 2023 with guidelines on how to value agricultural land for agricultural use.

In the measure announced on Tuesday, people who inherit agricultural land will also be exempt from the tax if they are “professional farmers,” Refalo said.

New regulations, introduced this summer put farmers into five categories, depending on the amount of yield produced.

Categories four and five are considered professional farmers. 

Crop farmers who harvest more than  €47,000 worth of produce a year are in category four. Category 5 farmers need to produce €84,000 or more. 

Herdsmen need to have an output equating to €53,000 or more to be classified in category four. They need to produce €64,000 worth of products to be put in category five.