Double taxation treaty between Malta and the United Kingdom (and Northern Ireland)

After several meetings between the Maltese and British plenipotentiaries, the Double taxation agreement between the two countries was finally concluded and it came into effect on the 27th of March 1995. Their goal was to provide double taxation relief and make business easier between Maltese and British nationals. 
Over the years, the bilateral ties of the two countries have strengthened and both countries are active members of the Commonwealth of Nations and the European Union. It is very important for investors in Malta and the UK to know the terms of the Double taxation treaty, they can significantly benefit from the treaty’s provisions.
Malta's Tax Regime

  • The income tax

Income tax is charged on the gross income earned by an entity from its business activities within Malta
UK Tax Regime

  • The income tax

Income tax is charged on the gross income earned by an entity from its business activities within the United Kingdom

  • The corporation tax

Businesses resident in the United Kingdom will be taxed on trading profits they receive from their activities. 

  • the capital gains tax

Capital gains tax is applicable on the revenue gained from asset disposal.  
In the case that any of the two countries introduce new tax regimes, they will notify each other annually of any changes that may have transpired in their respective taxation regulations. Nonetheless, the Double taxation treaty will still continue to be relevant.
Who can benefit from the convention

  • Maltese and British citizens
  • Any company which resides in either Malta or the UK

6 facts you should know about the Malta-UK Double tax treaty

  1. Profits derived from immovable property should be taxed in the country in which the property is located.
  2. Income derived from the operation of aircraft, ships, and road transport vehicles shall only be taxed in the respective resident country.
  3. A business entity can only be considered as a Maltese resident if its business operations are conducted and managed in the Maltese territory. 
  4. A company or business shall only be considered a UK resident, provided that it’s influential management is located in the UK.
  5. If a company is conducting business activities in either Malta or the UK through an agent of independent statuses such as a broker or commission agent—it does not automatically become a permanent establishment in the state in which it is operating. The same applies to an entity which is controlled or controls a resident of either the two countries—it does not automatically become a permanent establishment in the state where it is controlling or in the state from which it is controlled.
  6. The profits of an Maltese or British business are only taxable in the respective countries unless the business conducts business operations either of the two countries through a permanent establishment situated therein. The tax charged in the country where the permanent establishment is located should only be limited to the profits acquired from the establishment.

Professional Assistance
Being a former colony of the UK, the Maltese jurisdiction is closely similar to that of the UK. Therefore it shouldn’t be hard for British businesses to operate in Malta and Maltese businesses to operate in the United Kingdom. The two countries have excellent diplomatic relations and the double tax treaty just intensifies the bilateral ties between the two. For a deeper and more detailed explanation of the double taxation treaty between Malta and the UK, feel free to get in touch with SIGTAX experts.  Our expert team of lawyers, accountants and consultants is ready to assist you in each step. Our lawyers can provide you with finer details on the legal aspects pertaining to the double taxation system in Malta so that you don’t skip any necessary steps.


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