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Tax Exemptions on Royalties

Tax Exemptions on Royalties

Maltese legislation on royalties offers various tax exemptions for individuals or companies working in the field of research and development, for patents or copyright material. Our agents in company formation can present to you the legal status on royalties when you will set up your business in Malta

Maltese Income Tax Act – Royalties Exemptions 

If you are seeking for company registration in Malta in the field of research and development, you should know that the Maltese government has recently introduced new laws to sustain, protect and encourage researchers to register their intellectual property. 

Under the Income Tax Lawroyalties represent taxable income for Maltese residents, as well for non-Maltese residents (real persons or companies) as long as the royalties are received in Malta; starting with January 2010, the law added a new provision, stating that any royalties coming from trade or business are exempted of the income tax, regardless if the registration of the patent was done in Malta or in any other country. 

A patent registered in a different place than Malta can be tax exempted if it falls in the following categories:

• fundamental research;

• industrial research;

• experimental development. 

Withholding Tax on Royalties

Malta imposes a rate of maximum 10% withholding tax on royalties, but royalties can also be tax-free, as a part of the double taxation treaties signed by Malta with several states (associated companies that belong to the European Union’s space are exempted from the payment of the withholding tax); if you want to set up a company in Malta and you need advice on this subject, our agents in company formation can offer you relevant information. 

Tax Exemption on Copyright Royalties 

An entrepreneur interested in company registration in Malta should also know that, from May 2012, Maltese Law has extended the tax exemptions on royalties to copyright material, under the Article 12 of Income Tax Act

 The copyright contains a larger area of intellectual property, such as: 

• artistic works; 

• audiovisual works; 

• literary works;

• musical works. 

The Copyright Act specifies that intellectual property refers also to art – sculptures, architecture, lithographs, maps, scientific works, photography, buildings and craftsmanship. 

If you plan on opening a company in Malta in the field or research and development and you need further advice, please contact our consultants in company formation.