Malta has signed double tax treaties with 70 countries and jurisdictions, in order to avoid the double taxation of income and provide lower withholding taxes on dividends, incomes and royalties for foreign companies that are non-residents but develop business activities in the country.
The double tax treaties
encourage foreign investments
and they are signed with all types of countries, including emerging ones. Many treaties are currently in force and other are signed but have not yet entered into force. Examples of the latter include those with Curacao or Ukraine. Several treaties are being renegotiated, like those with Azerbaijan, Bosnia and Herzegovina or Oman. Malta has also signed tax information exchange agreements with other countries.
Taxation under the double tax treaties in Malta
Here are some examples regarding the modality of application of the regulations of the double tax treaties
: if a non-resident entity holds at least 25% of a Maltese company’s capital and it has as residency country Albania, China, Finland, Germany, Hungary, Korea, Kuwait, Latvia, Luxembourg or the Netherlands
, then the withholding tax on dividends is 5%, while in the rest of cases is 15%. A company which has at least 25% of the capital held by a Denmark resident won’t pay any withholding tax on dividends and 15% in the rest of the cases.
A Maltese company with at least 10% of the capital held by a resident of France, Poland, Sweden or Switzerland
will have an exemption on the dividends’ tax. The withholding taxes on interests and royalties don’t exceed 15% and in many cases are not charged at all.
The agreement for the avoidance of double taxation applies to those taxes levied on income and capital, imposed both by Malta or the other country with which the treaty is signed. In the case of Malta, these taxes are the income tax and surtax.
As defined in a double tax treaty
, a Maltese “resident” is a citizen of Malta or a legal entity
, partnership or association incorporated in the country, under the applicable laws. In regards to companies, a permanent establishment, as defined in the double tax treaty, can be a place of management, a branch in Malta
, an office, factory or workshop as well as other establishments like mines, oil or gas wells or quarries.
Besides these provisions, the double tax treaties signed with Malta specifies what are the conditions for making an exchange of taxpayers’ lists.
Double tax treaties in force
The countries and jurisdictions which have signed double tax treaties with Malta
are the following: Albania, Australia, Austria
, Bahrain, Barbados, Belgium, Bulgaria, Canada
, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Jordan, Korea, Kuwait, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg
, Malaysia, Mauritius, Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Tunisia, Turkey, United Arab Emirates
, United Kingdom, United States of America