The Irish and the Maltese have a lot in common. They are both Islands set on the periphery of Europe, military neutral and their economic growth is at par. Furthermore, they are expected to be one of most thriving economies in the European Union in the near future. To strengthen their bilateral ties, the two nations signed a Double taxation treaty.
The treaty was signed by the plenipotentiaries of the two countries, Ambassadors Walter Balzan and Sean O’Huiginn on the 14th of November 2008 in Rome.
What are the provisions of the Ireland-Malta DTA?
It is important to note that the provisions offered by the double taxation treaty between Ireland and Malta are generally built on the 2008 OECD Model Tax Convention. Nonetheless, there are a few differences you would find compared to the Model Convention.
Below are a few significant provisions of the convention:
- Zero rates of withholding tax on interest payments
- Reduced rates of withholding tax on royalty and dividends payments.
- Nationals of the two countries are protected from discriminatory tax and tax evasion
Irish Tax Regime
- The income tax
Income tax is charged on the gross income earned by an entity from its business activities within Ireland
- The corporation tax
Businesses resident in Ireland will be taxed on trading profits they receive from their activities.
- the capital tax
Capital gains tax is applicable on the revenue gained from asset disposal.
Malta Tax Regime
- The income tax
Income tax is charged on the gross income earned by an entity from its business activities within Malta
The provisions of the double taxation treaty between Ireland and Malta will still continue to be relevant even if the two countries introduce new tax regimes. As a general rule, Irish and Maltese authorities will notify each other each year about any changes that may have transpired in their respective taxation regulations during the year.
7 facts you should know about the Ireland-Malta Double tax treaty
- Profits derived from immovable property should be taxed in the country in which the property is located.
- Income derived from the operation of aircraft, ships, and road transport vehicles shall only be taxed in the respective resident country.
- A business entity can only be considered as an Irish resident if its business operations are conducted and managed in the Irish territory.
- A company or business shall only be considered a Maltese resident, provided that it’s influential management is located in Malta.
- If a company is conducting business activities in either Ireland or Malta through an agent of independent statuses such as a broker or commission agent—it does not automatically become a permanent establishment in the state in which it is operating. The same applies to an entity which is controlled or controls a resident of either the two countries—it does not automatically become a permanent establishment in the state where it is controlling or in the state from which it is controlled.
- The profits of an Irish or Malta business are only taxable in the respective countries unless the business conducts business operations either of the two countries through a permanent establishment situated therein. The tax charged in the country where the permanent establishment is located should only be limited to the profits acquired from the establishment.
- It is also important to note that Ireland extended the domestic dividend withholding exemption for qualifying shareholders i.e. tax residents of the countries which signed DTAs with Ireland or tax residents of the European Union Member State
The signing of the Double taxation treaty between Ireland and Malta has seen a large influx of Irish-registered companies to Malta and vice versa. The two countries are continuously strengthening their bi-lateral ties through cooperation in different fields, from business and commerce to sport, and security and defense. To learn more about the Irish-Maltese Double taxation agreement, you can reach out to our consultants at SIGTAX.