Royalties derived from literary work

By means of recent amendments to the Income Tax Act, implemented through the Budget Measures Implementation Act XII of 2023 published on the 4th April 2023, Article 31F has been amended so that the reduced tax rate applicable to royalty income derived from literary works by authors and co-authors of a qualifying literary work by […]

Written By Stephen Balzan

On June 12, 2023
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By means of recent amendments to the Income Tax Act, implemented through the Budget Measures Implementation Act XII of 2023 published on the 4th April 2023, Article 31F has been amended so that the reduced tax rate applicable to royalty income derived from literary works by authors and co-authors of a qualifying literary work by virtue of their title to the copyright on that work conferred by the Copyright Act, was reduced to 7.5% from 15%.

The reduced rate shall be calculated on the gross royalty income derived on or after the 1st January 2023.  Such a tax shall be final and no set-off or refund shall be granted in respect of the tax so charged.  Thus such income need not be reported on the recipient’s personal income tax return.  Payment of the tax due shall be effected by not later than the 30th April of the relative year of assessment.  Furthermore, the reduced rate shall only be applicable at the option of the recipient, who can opt to declare such income in his personal tax return and be charged at the standard rates of tax.

An individual may only exercise the option referred to above in respect of the full amount of those royalties received during the year and an option that refers only to a part of those royalties shall be invalid.

“Qualifying literary work” means a publication which bears an ISBN and which is a novel, story, poetical work, text book, treatise, history, biography, encyclopaedia or dictionary that is eligible for copyright in terms of the Copyright Act.

This measure comes into force on the 1st January 2023.

How can we help?  

 

For further information, please contact us on [email protected]. ACT can help you understand the changes to the income tax, accounting, corporate and VAT rules and how these can impact your business.   

 

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on +356 21378672 or send us an email on [email protected].