Company in Malta

Malta is an EU Member State with
an Exceptionally Advantageous Tax Regime

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Malta Double Tax Treaties

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Malta Double Tax Treaties – Summary Tables and Full Text

Commercial dealings would be severely undermined if taxable gains generated in one jurisdiction were to be taxed again in another. The imposition of double taxation on the same income poses a serious threat to an investor, and thorough tax planning is rendered necessary to circumvent and/or mitigate the effects of double taxation.

Constructive use of Malta’s Treaties’ Network has rendered considerable advantages to businesses and individuals who have chosen to establish legal entities in Malta. Tax treaties, in Malta and most countries, legally supersede local tax legislation and for this reason they are a useful tax-planning tool to protect businesses and individuals against double taxation of income earned in other countries.

Notes:

  • The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the tax payer resides for taxes levied in the other treaty country, and as a result the tax payer pays no more than the higher of the two rates (a number of the treaties also contain very beneficial “tax-sparing credits”).
  • The EU Parent Subsidiary and the Interest & Royalties Directives can be used to eliminate withholding taxes on payments of dividends, interest and royalties from or to EU Group Companies and the EU Merger Directive to eliminate the tax effects of EU Group reorganisations

Treaty relief is generally provided in the form of an ordinary credit, limited to the amount agreed between Malta and the relevant foreign territory. The tax suffered in a relevant foreign territory applies on the basis of the ordinary credit method (based on a source-by-source and country-by-country basis).

Double taxation relief can be applied, insofar that the following conditions are satisfied:

(i) A double taxation arrangement must be in force between Malta and the relevant foreign territory;

(ii) The person entitled to the income must be resident in Malta for the year immediately preceding the year of assessment;

(iii) The taxpayer must be able to furnish documentary evidence of the tax paid abroad;

(iv) The tax paid abroad is income tax or any tax of a similar character imposed by the laws of the relevant foreign territory.

Malta has a vast network of double tax treaties, having signed and ratified double tax treaties with over fifty jurisdictions. Most of the treaties which Malta has entered into are based on the OECD Model Convention and would typically cover income tax, inheritance taxes, real estate taxes and similar taxes. In a number of treaties concluded by Malta, certain foreign income remitted to Malta would qualify for a reduced withholding rate of foreign tax (typically to dividends, income and royalties) or is exempt from foreign tax (e.g. private pensions and capital gains).

The full text of Malta Double Tax Treaties can be downloaded here:

COUNTRY
DIVIDENDS
INTEREST
ROYALTIES
TREATY TEXT
TREATY PROTOCOL
Rate for Minor
Rate for Major
Percentage
Rates
Rates
Download PDF
Download PDF
shareholder
shareholder
required to
qualify for Major
shareholder
%
%
%
%
%
Albania
15
5
25
5
5
Australia
15
15
N/A
15
10
Austria
15
15
N/A
5
10
Barbados
15
5
5
5
5
Bahrain
N/A
0
N/A
N/A
0
Belgium
15
15
N/A
10
10
Bulgaria
0
0
N/A
N/A
10
Canada
15
15
N/A
15
10
China
10
10
N/A
10
10
Croatia
5
5
N/A
0
0
Cyprus
15
15
N/A
10
10
Czech Republic
5
5
N/A
0
5
Denmark
15
0
25
0
0
Egypt
10
10
N/A
10
12
Estonia
15
5
25
10
10
Finland
15
5
10
0
0
France
15
5
10
10
10
Georgia (i)
-
-
-
0
0
Germany
15
5
10
0
0
Greece
10
5
25
8
8
Guernsey
Hungary
15
5
25
10
10
Hong Kong 0 0 N/A 0 3 DTT Malta-Hong Kong
Iceland
15
5
10
0
5
India
15
10
25
10
15
Ireland
15
5
10
0
5
Isle of Man (ii)
0
-
0
0
0
Israel 15 0 10 5 0 DTT Malta-Israel
Italy
15
15
N/A
10
10
Jersey (iii)
0
-
0
0
0
Jordan
10
10
N/A
10
10
Korea
15
5
25
10
0
Kuwait
0
0
N/A
0
10
Latvia
10
5
25
10
10
Lebanon
5
5
N/A
0
5
Libya
15
15
N/A
15
15
Lithuania
15
5
25
10
10
Luxembourg
15
5
25
0
10
Malaysia
-
-
N/A
15
15
Montenegro
10
5
25
10
5 or 10
Morocco
10
6.5
25
10
10
Netherlands
15
5
25
10
10
Norway
15
15
N/A
10
10
Pakistan
-
15
20
10
10
Poland
15
5
20
10
10
Protocol 1
Portugal
15
10
25
10
10
Qatar
-
-
N/A
0
5
Romania
5
5
N/A
5
5
San Marino
10
5
25
0
0
Serbia
10
5
25
10
5 or 10
Singapore
0
-
0
7 or 10
10
Slovakia
5
5
N/A
0
5
Slovenia
15
5
25
5
5
South Africa
5
5
N/A
10
10
Spain
5
0
25
0
0
Sweden
15
0
10
0
0
Switzerland (v)
N/A
N/A
N/A
N/A
N/A
Syria
0
0
N/A
10
18
Tunisia
10
10
N/A
12
12
Turkey (vi)
15 10 25 10 10
U.K.
-
-
N/A
10
10
U.A.E (iv)
0
-
0
0
0
U.S. A
5
15
10
10
10

Note: This schedule is only intended to give a general outline of the maximum rates of tax applicable to dividend, interest and royalty payments under Malta’s tax treaties. It is advisable to consult the relevant tax treaty for more detailed information.

(i) Only residence state of the recipient is allowed to tax repatriation of dividend, income and royalties
(ii) As above
(iii) As above
(iv) As above
(v) Limited to tax relief on ship and aircraft (new treaty signed March 2011 and awaiting ratification)
(vi) Signed on July 2011 and awaiting ratification

If you have difficulty in downloading the Tax Treaties, please contact us. We will send them to you.

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 or by calling at +356 2338 1500

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