Malta’s Double Taxation Treaty with Russia which was signed on the 24 April 2013 is now in force. The treaty is expected to encourage cross border trade and investment between Malta and Russia.
The salient provisions of the treaty are the following:
Paid from Russia – 5% on dividends distributed by a Russian resident company to a Maltese resident company, where the Maltese company holds at least 25% of the capital of the Russian company and such holding amounts to at least € 100,000. In all other circumstances, the maximum Russian tax is 10%. 0% on dividends paid to a pension fund resident in Malta provided the dividends are derived from the investments that are made out of the assets of the pension fund.
Paid from Malta – In line with Maltese tax legislation, generally no tax will be due on dividends distributed by a Maltese entity to Russia entity.
Interests and Royalties
Russian tax on interest and royalties paid by a Russian resident to a resident of Malta who is the beneficial owner thereof are capped at 5% of the gross amount of interest/royalty.
No Maltese tax is generally imposed on interest and royalties paid to non-residents as long as certain conditions are satisfied, particularly that the income derived is not connected to a permanent establishment situated in Malta.
The treaty is primarily based on the OECD Model and includes an exchange of information clause.