Both corporate funds and unit trusts are exempt from tax in Malta, as long as they are licensed, and are specifically excluded from benefiting under Malta's double tax treaty network. However a SICAV may elect to waive its right to an exemption from tax on its income, in which case it is liable to tax on its income at the rate of 25% and is entitled to treaty relief. In all instances, capital gains realised by the fund remain exempt from tax in Malta.
Investment Services Companies
A package of fiscal incentives exists to attract to Malta the management and administrative support that is required for Maltese funds. Maltese investment services companies which are licensed enjoy a package of additional tax deductions including a 200% of deductions on building occupancy costs for the first ten years, and tax relief on excess funds invested into their own schemes. All documents relating to licensed activities under the Investment Services Act are exempt from stamp duty.
Investment Services Expatriates
An investment services expatriate is not taxed in Malta on benefits in kind including removal costs, accommodation expenses, school fees, travel costs, etc.,without time limit.
International Trading Companies
International trading or al trading or service companies, are defined as those whose profits are solely generated from transactions carried out outside of Malta. Such companies are taxed at a rate of 35%, however when these profits are distributed to non-resident shareholders, or to a Maltese company which is wholly owned by non-resident shareholders, such dividends are taxed in the shareholder's hands at a maximum effective tax rate of 4.17%, with full credit being given for the Malta tax paid by the company. Provisions exist to ensure that no cash flow disadvantages are suffered under this scheme.
Double Taxation Treaties
Malta has entered into double taxation treaties with most of the major European trading nations and is currently in the process of negotiating others. These are in the main based on the OECD model.
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