Understanding the Maltese Double Taxation System

The Maltese government greatly supports the business sector in Malta and one of its primary goals is to create a more convenient atmosphere for both local and international businesses. In order to moderate one of the barriers which deter the growth of international companies, Malta strongly leverages the double taxation system. This move has proved rewarding to both Malta and foreign investors who have taken a keen interest in doing business with Malta. Over 70 DT agreements have been signed so far with more than 60 of them already into effect.

What to expect inside the DT treaties signed by Malta
Maltese double tax agreements follow the OECD criterion and they apply to the following:

  • Taxes which are subject to DTA in both the contracting nations;
  • the validity of a personal or organizations’ residency before inclusion in the DTA;
  • the means and circumstances under which double taxation may be avoided;
  • the enactment and the conditions for the dissolution of the DT contract;


Fixed establishments according to the DT conventions
Several things have been declared as permanent establishments bonded by the DT treaties in Malta and these include infrastructure allocated for doing business and to be used as offices. Other allocations are premises for production activities like manufacturing and construction sites. According to the double taxation system in Malta, industrial places for extractive primary production such as mining and land for crop and livestock farming also falls under permanent establishments. The respective establishments should be active for a minimum period of 183 days in a given year in order to be regarded as permanent.


The tax rates employed under Malta DT Agreements and benefits
Although Malta has signed numerous double taxation agreements, the majority of the treaties cover the same tax groups and some even maintain the same tax rates. The benefits experienced by business people operating businesses in Malta and the respective countries with which it signed DT agreements include:

  • significantly reduced tax rates when repatriating profits
  • tax relief on certain income when distributed by branches or subsidiaries in Malta. 
  • The applicable tax rates with most DT treaties are usually less than 15% for dividends and interest payments. 
  • Royalties usually get 10% or less on tax charges and are subject to some tax freedoms. 

Over the years, most of the DT agreements contracted by Malta often get modified to allow interchange of tax data between the signed states.


A highlight of countries that have made treaties with Malta
The government of Malta has made DT agreements with most countries in Europe—Cyprus, France, Italy, Germany, Netherlands, Bulgaria and some nations in the Arabic states such as Saudi Arabia, UAE, Singapore just to mention a few. Other states outside EU and the Arab region that signed with Malta are China, US, Russia, and some parts of Africa.
Professional Assistance
To get more insights regarding all the states that successfully signed DT agreements with the Maltese government, you can reach out to SIGTAX.  Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Malta. They can also help with legal counsel on how to set up a company in Malta including giving a profound understanding of the nations’ tax system. Thus, you can be confident that you will get relevant info which guides you to do everything the right way and in your favor.


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