The Notarial Council on Tuesday called on the government to urgently overhaul legislation that obliges notaries to serve as middlemen, and instead create a system for registration taxes on property contracts to be paid directly to the authorities.

The council was reacting after the Ombudsman earlier month slammed the government for inaction on notaries who failed to pass on the taxes they collected from property buyers.

The council said it was unfortunate that a few notaries were giving the profession a bad name.

At present, once a contract for a property sale or any other contract which involves the transfer of immovable property is signed, notaries have to register the property with the Commissioner for Revenue, which requires 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 to the tax department the only remedy available — apart from legal action — is to once again pay the taxes due on the property transfer.  

“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.

It pointed out that in the past few years, it had been working 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 said 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.