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Malta-Netherlands Double Taxation Avoidance

Malta-Netherlands Double Taxation Avoidance

Malta has an extended network of double taxation treaties, among which one with the United Kingdom and other with the NetherlandsMalta and the Netherlands have signed an agreement for the avoidance of double taxation in 1977 and it was enforced starting with 1980. The agreement was last amended in 1995, when a provision regarding the automatic exchange of tax information was enabled. In 2005, a new provision with respect to exchange of information about interest payments in respect of the Dutch Antilles was enforced.

The Malta-Netherlands agreement

The bilateral tax treaty between Malta and the Netherlands first defines the terms “resident” and “permanent establishment” with respect to the taxation of Dutch companies and natural persons in Malta and Maltese companies and individuals in the Netherlands. The treaty also establishes the types of incomes that are subject to the double taxation agreement. A particularity of the treaty refers to the taxation of Maltese SICAV companies which will not be deemed as treaty beneficiaries. The agreement also enforces a provision that no longer exists in the Organization for Economic Co-operation and Development’s Model on independent personal services. The provision refers to the taxation of individuals in both countries.

The incomes covered by the Dutch-Maltese tax agreement

The double tax agreement between Malta and the Netherlands covers a wide area of taxable incomes in both countries. With respect to the taxation of dividends paid by Dutch companies in Malta, the withholding tax was established at 5% if the Dutch company owns at least 25% of the shareholding structure. Interests will be taxed at a 10% rate. Royalties will be taxed depending on their types, as it follows:

  • – copyrights are taxed in the state of the resident only,
  • – trademarks, patents and other intellectual property are taxed with 10%.

With respect to the capital gains tax, individuals selling shares in a company will be required to pay the tax in their resident country.  In order to avoid double taxation, the credit method will be applied.

For complete information about the provisions of the Malta-Netherlands double taxation agreement and for accounting services, you may contact our agents in Malta.