Corporate Taxation in Malta

Maltese companies are subject to tax at the rate of 35% on their world wide income and capital gains.   Malta grants various fiscal incentives to both companies and their shareholders upon distribution of a dividend.  Malta is a member of the EU and therefore has access to EU directives such as the EU Parent Subsidiary Directive, the Merger Directive, the Savings Directive and the Interest and Royalties Directive.

Malta also has a comprehensive tax treaty network and has to date concluded more than 65 double taxation agreements for the avoidance of double taxation.  Malta’s treaties are largely based on the OECD Model Convention and grants relief from double taxation using the credit method.

Malta operates the full imputation system whereby the tax paid by the company is imputed towards the shareholders’ tax liability upon receipt of a dividend, meaning that no further tax is due by the shareholder upon receipt of a dividend. 

No tax is withheld upon the distribution of interest and royalties to non-resident beneficial owners of such income.  No tax is withheld upon the distribution of dividends irrespective of the residence and nationality of the shareholders.

Malta does not have rules such as CFC legislation, Thin Capitalisation Rules and Transfer Pricing.

For further information please contact the firm’s tax partners Stephen Balzan (sbalzan@act.com.mt) or Elaine Camilleri (ecamilleri@act.com.mt).

A company registered in Malta may qualify for an exemption in respect of income derived from its holding, known as the Participation Exemption. The exemption may also be claimed in respect of the gains derived from the transfer of such holding. For further information about the Taxation of Maltese Holding Companies download the pdf below. 

Download PDF:  Taxation of Maltese Companies     

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