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Taxation

International and EU Tax

DOUBLE TAX TREATY NETWORK

Throughout the past 40 years, Malta has endeavoured to expand its tax treaty network. Malta’s economic development, particularly the growth in its financial services sector, increased the importance and scope for the conclusion of tax treaties. Malta’s tax treaty network, consisting of tax treaties with 81 different jurisdictions, has seen a considerable leap forward over the past months – with new tax treaties with Andorra, Armenia, Botswana, Kosovo, Monaco, and the Ukraine having come into force in recent years.
The majority of Malta’s treaties are based on the OECD model. Nevertheless, several treaties, particularly the earlier ones, contain significant differences from those based on the OECD model, enshrining provisions that cater for special tax incentives for foreign enterprises setting up manufacturing establishments in Malta. Such conditions included low tax rates on dividends arising in Malta and tax sparing articles. Tax sparing is usually granted to Malta by the other Contracting state (often about dividends, and/or interest, and/or royalties), binding the other contracting state to give relief for taxes suffered in Malta (or at a specified rate of tax), even when these taxes would have not been so suffered (waiver), or would have been suffered at a lower rate than the relevant rate (reduced), via the application of legislation that gives tax incentives to attract investment. The idea is to allow the taxpayer to benefit from the tax foregone in Malta, rather than the other contracting state (adopting the credit method).
Maltese domestic law also provides for a Malta tax exemption afforded to non-residents on interest and royalties arising in Malta, subject to the fulfillment of specific conditions, which rule overrides the treaty provision on withholding taxes on these categories of income. Likewise, no tax is payable by non-residents on capital gains arising on transfers of company shares or securities except where such gains are derived from the transfer of shares or securities in companies whose assets consist wholly or principally of immovable property situated in Malta.

Double Tax Treaties in Force

Albania
Australia
Austria
Andorra
Armenia
Azerbaijan
Bahrain
Barbados
Belgium
Bulgaria
Botswana
Canada
China
Croatia
Cyprus
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Georgia
Germany
Greece
Guernsey
Hong Kong
Hungary
Iceland
India
Israel
Latvia
Lebanon
Libya
Liechtenstein
Lithuania
Luxembourg
Malaysia
Mauritius
Montenegro
Morocco
Monaco
Moldova
Mexico
Netherlands
Norway
Pakistan
Poland
Portugal
Qatar
Romania
Russia
San Marino
Saudi Arabia
Serbia
Singapore
Slovakia
Slovenia
South Africa
Spain
Sweden
Switzerland
Ireland
Isle of Man
Italy
Jersey
Jordan
Korea
Kuwait
Syria
Tunisia
Turkey
United Arab Emirates
United Kingdom
United States of America
Uruguay
Ukraine
Vietnam

Tax Information Exchange Agreements – in Force

Bahamas
Bermuda
Gibraltar
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