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Malta-UK Double Taxation Avoidance

Updated on Tuesday 19th April 2016

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Malta-UK-Double-Taxation-AvoidanceMalta has signed until now about 70 double taxation treaties and is still under negotiations with other countries. All types of Maltese companies benefit from the country’s double taxation agreements (DTAs), which were drafted according to the Organization for Economic Co-operation and Development Model Convention. The last double tax avoidance agreement Malta signed was with Switzerland in 2011, effective from 2012.

What does the Malta-UK double tax treaty cover?

The double tax avoidance treaty Malta signed with the United Kingdom covers several taxes. In the case of the United Kingdom, the double tax treaty covers the following taxes:

  • - the income tax,
  • - the corporate tax,
  • - the capital gains tax.

In the case of Malta, the tax treaty covers the income tax. The double tax treaty also applies to all similar withholding taxes in Malta and in the UK. Among these, there are the dividend tax and taxes applied to earnings from interests and royalties. Special provisions exist with respect to the taxation of petroleum companies in Malta, which the double tax agreement does not cover, according to the provisions of Chapter 123 in the Income Tax Act.

Tax residency according to the Malta-UK DTA

Considering the double tax treaty applies to both UK and Maltese citizens and companies, the agreement also contains provisions about how tax residency applies. In the case of the United Kingdom, the term “person” means any natural person or company, but does not include partnerships, while for Malta the same term covers both companies and natural persons. With respect to companies, any type of company paying the Maltese corporate tax is subject to the agreement. Another term employed by the DTA refers to the “enterprise of a contracting state”, meaning any enterprise carrying business activities by a resident of one of the contracting states in the other state.

Tax rates according to the Malta-UK double tax treaty

The double taxation agreement between Malta and the UK covers the following income taxes:

  • - the immovable property tax,
  • - business profits,
  • - profits derived from shipping and air transport,
  • - incomes from independent and dependent personal services,
  • - director’s fees,
  • - pensions.

The tax rates for the withholding taxes applied according to the Maltese legislation are:

  • - 0% for dividends,
  • - 10% for interests,
  • - 10% for royalties.

For complete information about the taxation system, please contact our Maltese company registration agents.

 

 

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