^{G & C}

Malta Law Firm
Griscti & Chetcuti, Advocates - Malta    
(Established 1981)

MALTA DOUBLE TAXATION AGREEMENTS

This is the list of double taxation treaties which Malta at present has negotiated with other countries.  The complete text of the treaties is available by clicking on each country.  

Albania Australia Austria Barbados Belgium Belgium (Supplement) Bulgaria Canada China Croatia Czech Republic Cyprus Denmark Egypt Estonia Finland France France (Protocol) Germany Hungary Iceland India Ireland * Italy Jordan * Korea (South) Kuwait Latvia Lebanon

Libya Libya (Protocol) Lithuania Luxembourg Malaysia Morocco * Netherlands Netherlands (Protocol) Norway Pakistan Poland Portugal Romania Russia * San Marino Singapore * Slovakia Slovenia South Africa Spain Sweden Switzerland Syria Thailand * Tunisia Turkey * Ukraine * United Arab Emirates * United Kingdom United States of America

Treaties marked with an asterisk (*) are either not yet in force or are being negotiated

 Table of Treaty Rates

Treaty Country	ROYALTIES		INTEREST		DIVIDENDS
	Treaty Rates %	Non-Treaty Rates %	Treaty Rates %	Non-Treaty Rates %	Treaty Rates %	Non-Treaty Rates %
Albania	5(h)/15	15	5	15	5	15
Australia	15	0(a)/30(a)	15	10	10	30
Austria	15	25	5	0/25(b)	0(a)/10	20
Barbados	5(i)/15	15(x)	0/5(n)	15	0(b)/5	15
Belgium	15	25	10	15(c)	0(b)/10	15(c)
Bulgaria	0	10(m)/15(m)	-(c)	15	10	15
Canada	15	25	15	25	10	25
China	10	0(d)/20	10	20	10	20(e)
Croatia	5	15	0	15	0	15
Cyprus	15	20(f)	10	20(g)/25	10	5(r)/10(r)
Czech Republic	5	25	0	25	5	25
Denmark	0(d)/15	25	0	0	0	30
Egypt	10	0	10	32	12	32
Finland	5(k)/15	28	10	0	0(b)/10	28
France	5(e)/15	25	10	0/15(n)	0(b)/10	33.33
Germany	5(e)/15	25.5	10	0(h)	0(b)/10	25
Hungary	5(d)/15	0/20(o)	10	0(i)/18	10	18
Iceland
India	10(d)/15	20	10	20	15	30
Ireland
Italy	15	12.5(t)/27	0(i)/10	12.5(j)/27(j)	0(b)/10	22.5
Jordan
Korea (South)	5(d)/15	25	10	25	0	25
Kuwait
Latvia	5(d)/10	10	10	5(u)/10(u)	10	5(v)/15(v)
Lebanon	5	10	0	0(w)/10	5	10
Libya	15	0	15	15	15	0
Lithuania
Luxemburg	5(d)/15	25	0	0	10	10(s)/12(s)
Malaysia	-(c)	0	15	15	15	10
Morocco
Netherlands	5(d)/15	25	10	0	0(a)/10	0
Norway	15	25	0(m)/10	46	0(b)/10	0
Pakistan	-(c)/15(f)	10(k)/15(k)	10	46	o(b)/10	46
Poland	5/15(g)	20	0(n)/10	20	10	20
Portugal	10(j)/15	25	10	20	10	15
Romania	5	10	5	10	5	15
Russia
Singapore
Slovakia	5	15	0	25	5	25
Slovenia
South Africa	5	0	10	0	10	12(q)
Spain
Sweden	0(e)/15	30	0	0	0	0(p)
Syria	0	15	10	15	18	15
Thailand
Tunisia	10	0	12	20	12	15
Turkey
United Arab Emirates
United Kingdom	-(c)	0	10	0(l)/20	10	23

Treaties limited to income derived from the operation of ships or aircraft in international traffic:
Switzerland, U.S.A.

NOTES: TREATY RATES
a) Nil for copyrights of literary, artistic or scientific work.
b) Nil for copyrights of literary, artistic or scientific work including film royalties.
c) In accordance with the laws of the respective countries.
d) Where recipient is a company which holds at least 25% of the capital of the paying company.
e) Where recipient is a company which holds at least 10% of the capital of the paying company.
f) Where recipient is a company which holds at least 20% of voting power of paying company.
g) Where recipient holds directly at least 20% of the capital of the paying company.
h) Where recipient is a company which holds at least 25% of the voting power of paying company.
i) Where recipient is a company which holds at least 5% of the capital of the paying company.
j) Where recipient is a company that, for an uninterrupted period of two years prior to the payment of the dividend, holds at least 25% of the capital of the company paying the dividends.
k) Where recipient is a company which holds at least 10% of voting power of paying company.
l) The 0% rate applies where interest is paid by/to Government.
m) The 0% rate applies where interest is paid to the Malta Government, Central Bank of Malta or the Malta Development Corporation.
n) The 0% rate applies where interest is paid to Government or Central Bank.

NOTES: NON-TREATY RATES
a) 0% for franked dividends; 30% for unfranked dividends.
b) The 25% withholding tax is imposed on interest income from bank deposits and securities. However interest payable to non-residents is generally not subject to withholding tax.
c) The 15% rate applies to securities or loans contracted on or after 1 March 1990. The previous rate applicable was 25%. Various exemptions may be applicable.
d) Dividends remitted abroad by foreign investment enterprises and foreign enterprises are exempt from withholding tax.
e) Reduced rates (5% - 15%) may apply for certain royalties.
f) The tax is refunded if the shareholder is a non-resident foreign corporation.
g) 20% on interest income up to £100,000
h) A 30% (35% for over-the-counter business) withholding tax applies if a bank is the paying entity. Non-residents are only subject to 35% withholding for over-the-counter business. A 25% withholding applies on interest payments on convertible and profit sharing bonds and loans.
i) No withholding on bank interest and on Hungarian treasury notes.
j) 12.5% for public bonds.
  For private bonds:
   - 12.5% for a maturity term of at least 18 months.
   - 27% in other cases.
   - 27% on interest on deposits and current accounts. All other interest (e.g. on loans) is subject to 12.5% final withholding tax. k) 15% for corporations; 10% for individuals.
l) Not applicable to bank interest paid to non-residents.
m) 10% to Bulgarian companies with foreign participation, 15% when dividend is paid to foreign companies or individuals.
n) The 15% rate applies in the case of loans to shareholders; in general no withholding tax on interest is imposed.
o) Dividends are not subject to withholding tax if they are reinvested in establishing a new company in Hungary or used to increase the share capital of an existing resident company.
p) Royalties are not subject to withholding tax but are taxed at the normal corporate rate of 28%.
q) The actual rate of tax due is 10.5% but the recipient must file a tax return to obtain a refund of the 1.5% excess.
r) The rate is 5% on film royalties and 10% on any other royalties.
s) Withholding tax is 12% on patent royalties and 10% on artistic royalties.
t) For dividends on savings shares the rate of withholding tax is 12.5%.
u) Interest withholding tax applies only to interest paid to associated companies or persons. The 5% rate applies to interest paid by Latvian-registered banks; the 10% rate applies to other interest payments.
v) The 15% rate applies to copyright royalties; the 5% rate applies to royalties on other types of intellectual property.
w) Bank interest is not subject to withholding tax.
x) Dividends paid by a Barbados-resident company out of tax-exempt profits are subject to withholding tax of 45%.

 

OTHER FORMS OF DOUBLE TAXATION RELIEF

Apart from Double Taxation Relief under the treaties mentioned above, Malta offers three other forms of relief from double taxation; these are Commonwealth Income Tax Relief, Unilateral Relief and a Flat Rate Foreign Tax Credit.  These reliefs are not cumulative and can only be availed of in this order.  

Commonwealth income tax

Where there is no double taxation treaty, relief from Commonwealth income tax comes into operation. Relief from Maltese tax is granted in respect of any tax charged under a law of a Commonwealth country (other than Malta and the United Kingdom) if that country's law also provides for a similar relief in respect of tax charged on income both in that country and in Malta. Where the Commonwealth country's rate of tax does not exceed the Maltese rate, a non-resident will receive a credit in Malta equivalent to one-half of the Commonwealth country's rate of tax, and if the Commonwealth country's rate of tax exceeds the Maltese rate, a non-resident will receive a credit equivalent to the amount by which the Maltese rate of tax exceeds one-half of the Commonwealth rate of tax.

Unilateral relief

Relief from double taxation is also given on a unilateral basis where overseas tax is suffered on income received from a country with which Malta does not have a treaty and relief from Commonwealth income tax is not available. The overseas tax may be allowed as a credit against the tax chargeable in Malta on the gross amount received, and such a credit cannot exceed the total tax liability in Malta on the receipt. Unilateral relief for underlying tax is also available where the taxpayer is a Maltese company that holds more than 10% of the voting power of the overseas company paying the dividend. In order to claim unilateral relief, the recipient of the income must prove that the income arose from overseas, that the income suffered overseas tax and the amount of that tax.

Flat rate foreign tax credit

This is available to a Maltese company which receives income from overseas where none of the other three regimes for relief are available.   A certificate from an auditor stating that the income arose from overseas will be sufficient for this purpose. The flat rate foreign tax credit is calculated at 25% of the amount of the overseas income or gain received by the company, before allowable expenses. The income plus the credit less the allowable expenses will be subject to Maltese income tax with relief for the deemed credit up to a maximum of 85% of the Malta tax payable.

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