Malta has signed its double taxation treaty with Canada in 1986 and enforced in 1988. The agreement covers the taxes imposed on income and capital in Malta and in Canada. The taxes levied on income also refer to elements composing the income, among which:
- – alienation of immovable and movable property,
- – salaries.
In the case of Canada, the agreement covers the taxes on incomes, while in the case of Malta, the convention covers:
- – the income tax,
- – prepayments of the income tax.
The Malta-Canada double tax treaty also affects any similar taxes imposed by both countries’ tax authorities who also have the obligation of notifying each other about any changes in the legislation. Additionally, the agreement contains a provision on the mutual exchange of tax information.
Fiscal domicile in the Malta-Canada double tax agreement
The agreement for avoidance of double taxation between Malta and Canada applies based on fiscal domicile. According to this provision, a resident of one of the contracting states will be subject to taxation in the country they reside in. In the case of companies, the fiscal domicile is the country the legal entity was registered in or has a management place in. For information about how fiscal domicile is determined, you can refer to our agents in company formation in Malta.
Taxation under the Malta-Canada treaty
The Malta-double taxation treaty provides for the following:
- – income derived from selling or renting immovable property situated in a country can be taxed in the other country,
- – business profits of enterprises will be taxed only in the country the company conducts commercial activities,
- – income derived from international traffic will be taxed only in the country the company operating the vessel or aircraft is registered.
The Malta-Canada double tax treaty also covers permanent establishments which must be operating in a country for at least 183 days in a calendar year. Our Maltese agents can provide you with information about the sites considered permanent establishments under the treaty with Canada.
Reduced tax rates under the Malta-Canada agreement
The following reduced tax rates apply under the Malta-Canada double taxation agreement:
- – maximum rate of 15% in the case of dividend payments,
- – a maximum rate of 15% in the case of interest payments,
- – a maximum rate of 10% in the case of royalties payments.
For information about the avoidance of double taxation under the agreement with Austria, please contact our agents in Malta.