Unilateral Relief

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Relief from double taxation is also possible on a unilateral basis where tax is suffered outside Malta on income received from a country with which Malta has not concluded a treaty, irrespective of whether or not that income is remitted to Malta. Any tax suffered outside Malta, would, limitedly to the Malta tax charge on the income, be allowed as a credit against tax chargeable in Malta.

Unilateral Tax Relief operates very much in the same way as treaty relief, except that it only applies outside a restricted tax treaty context. Unilateral Tax Relief allows relief by allowing, in defined scenarios, relief from foreign tax when such foreign tax includes tax paid in respect of a dividend indirectly.

Unilateral Tax Relief can be applied, insofar that the following conditions are satisfied:

It is availed of in respect of income which arises outside Malta;
Foreign source income relieved by Unilateral Relief must have been subject to tax, similar in nature to that imposed under the Income Tax Acts under the laws of a territory outside Malta;
The individual or body corporate claiming the credit must be resident in Malta;
The individual or body corporate claiming Unilateral Tax Relief, must be able to furnish documentary evidence that the income to by relieved by Unilateral Tax Relief suffered tax of a similar character to that imposed in Malta under the Income Tax Act.

Tax Structures can legally mitigate one’s tax liabilities. More information can be provided on request. However, it must be noted that since some of the structures may be technically complex, they are ideally discussed at a meeting with Focus Business Services’ Directors. For bespoke tax advice, please click here to contact our tax advisors or send us an email on enquiries@fbsmalta.com