Tax treaties

Malta has double tax treaties with the following countries:

Country	Country
Albania	Latvia
Australia	Lebanon
Austria	Libya
Barbados	Lithuania
Belgium	Luxembourg
Bulgaria	Malaysia
Canada	Montenegro
China, P.R.	Morocco
Croatia	Netherlands
Cyprus	Norway
Czech Republic	Pakistan
Denmark	Poland
Egypt	Portugal
Estonia	Qatar
Finland	Romania
France	San Marino
Georgia	Serbia
Germany	Singapore
Greece	Slovakia
Hungary	Slovenia
Iceland	South Africa
Isle of Man	Spain
India	Sweden
Ireland	Syrian Arab Rep.
Italy	Tunisia
Jordan	UAE
Korea, Rep. of	United Kingdom
Kuwait

Tax treaties initialed/signed but not yet in force include the following:

Country	Country
Bosnia & Herzegovina	Thailand
Oman	Turkey
Russia	Ukraine
Saudi Arabia	United States of America
Switzerland

Most of Malta’s treaties are based on the OECD model.

Once concluded, a tax treaty becomes law by Ministerial order and overrides any provisions to the contrary under Maltese domestic tax legislation.

Double taxation relief is available in the terms of the relative tax treaty.

Taxpayers satisfying the relevant conditions are entitled to double tax relief on income arising outside of Malta that is included in their taxable income.

Relief is granted in the form of a credit. In the absence of the tax treaty double taxation relief is still available under the unilateral relief provisions for foreign tax incurred on income arising outside of Malta.

Companies may, subject to certain conditions, claim double taxation relief under the flat rate foreign tax credit instead of other forms of double tax relief. This may be especially beneficial in those cases where the foreign income has been exempt from tax or taxed at a reduced rate.

Withholding taxes

The normal treaty rate on dividends paid by Maltese companies is the company rate of tax of 35%. Malta operates a full imputation system on the dividends paid which means that the shareholder is eligible to a credit in respect of the tax paid by the company. As a result company profits are taxed only once and no further tax is payable by the shareholder on distributions.

Under Maltese law dividends paid to non-residents are not subject to withholding tax. Interest and royalties paid to non-residents are exempt from tax in Malta if they are not effectively connected with a permanent establishment in Malta through which the non-residents engage in a trade or business. As a result of these rules, the withholding tax on dividends, interest and royalties paid to residents of treaty and non treaty countries is 0%.

No tax is payable by non-residents on capital gains tax arising on transfers of company shares or securities except where such gains result from the transfer of shares and securities of companies whose assets consist primarily of immovable property situated in Malta.