January 2012

The extensive double tax treaty network between Malta and fifty-seven (57) other countries contributes to the efficient tax environment in Malta.  Unilateral relief and a flat rate foreign tax credit allow for relief from double taxation when there is no double taxation treaty in existence.

Consequently under Maltese Legislation, relief from double taxation of foreign source income is available through four (4) types of relief:

  • Double tax treaty relief takes the form of a credit which is granted against the tax paid in a country with which Malta has concluded a treaty.
  • Unilateral relief is applicable in respect of foreign taxes by way of credit against Malta tax where there is no treaty in force between Malta and the state where the income has been sourced.
  • Commonwealth income tax relief is relief granted for taxes paid to British Commonwealth countries.
  • The flat-rate foreign tax credit (available only to companies) applies where the other forms of relief from double taxation are not available.  This credit is calculated at 25% of the amount of overseas income received by the company before deductions.

Malta is currently part of double tax treaties with the following jurisdictions :

Belgium United Kingdom Malaysia
Germany Luxembourg Estonia
Norway Sweden Slovenia
Libya Romania Lithuania
Pakistan Czech Republic Kuwait
Netherlands South Africa Spain
Finland Korea Iceland
Austria Denmark San Marino
France Croatia Morocco
Australia Lebanon Singapore
Italy Slovakia Greece
Canada Latvia Ireland
Bulgaria Albania United Arab Emirates
Hungary Egypt Montenegro
China Syria Georgia
Cyprus Portugal Qatar
Poland Tunisia Isle of Man
India United States of America Serbia
Jordan Barbados Jersey

 

Additionally the following jurisdictions have signed Double Tax Treaties with Malta which are currently awaiting ratification; Israel & Palestine, Bahrain, Hong Kong, Switzerland and Uruguay, whilst protocols to treaties with Belgium, Luxembourg and Singapore are also in the process of being ratified.  Meanwhile, Double Taxation Treaties are also being negotiated or renegotiated with Thailand, Turkey, Saudi Arabia, Oman, Ukraine and Bosnia & Herzegovina, Azerbaijan, Guernsey, India, Mexico, Norway, Russia, whilst the protocol to treaty with South Africa is also being renegotiated.