International Activities in Various Jurisdictions
We offer to assist national and global clients alike while carefully building our international reach on an extensive network of leading law firms throughout Europe and in the international community with whom we interact closely to provide our clients integrated solutions to multi-jurisdictional matters.
We accompany our clients alike, whether you are an individual, a non-profit organization or company, where the economies blossom and boom and in particular in Eastern Europe, Middle and Far East. We also suggest focused trainings, language lessons, longer and deepened cultural immersions and any other types of accompaniment if we find it useful for the development of your expansion.
Belgium is not an Island… But Malta is !
May Tax and Social Security Optimizations inside the EU create new Wealths, Consciouness of New Worlds and Added Values that enhance our Well-being, Empathy and Life Balance ?
1. The Maltese Tax System For Dummies
A company incorporated in Malta is considered to be ordinarily resident and domiciled in Malta for Malta tax purposes and is therefore subject to Malta tax on its worldwide income at the standard rate of 35%.
Malta operates a full imputation system of taxation with respect to dividends whereby dividends paid by a company resident in Malta carry a tax credit equivalent to the tax paid by the company on its profits out of which the dividends are distributed.
Since the 35% tax rate applicable to companies is equivalent to the maximum progressive rate of tax
applicable to individuals, a dividend distribution would typically result in no further tax payable at the level of the shareholder. Non-resident shareholders are not taxed in Malta.
A shareholder in receipt of a dividend distributed by a Malta company is entitled to claim a refund of the Malta tax on those profits. In most cases, the tax refund entitlement of a shareholder would be of 6/7th of the Malta tax suffered by the Malta company on the profits out of which the dividend is distributed.
The application of this tax refund provides for an overall Malta effective tax (COMET) between 0% – 10%.
2. Malta Tax Exemption on Patent Royalties
Recent amendments to Maltese income tax legislation provide for a tax exemption on royalty income derived from eligible patents, in respect of qualifying inventions.
The tax exemption applies regardless of the place where the patent is registered and of where any relevant research and development resulting in the qualifying patent may have been carried out. Furthermore, the exemption applies both in cases where there is an active trade of licensing of several patents and in the case of passive receipt of royalties from patents.
Any individual or enterprise which grants the exploitation of knowledge protected under a qualifying patent through a licensing or similar agreement and is consequently in receipt of royalty payments or similar income, may opt to have such income exempt from tax.
The tax exemption on royalty income derived from patents acts complimentary to the Maltese fiscal regime by providing for tax efficient options to persons involved in intellectual property holding and licensing activities.
Malta imposes no withholding taxes upon the paying out of outbound dividends, interest or royalties.
Moreover, the Interest & Royalties Directive acts in conjunction with the exemption in question present under Maltese law.
Among other considerations, via the domestic implementation of this directive, Malta grants a unilateral exemption on outbound royalties payable to a non-resident, irrespective of whether the recipient of the royalties is resident in an EU Member State or otherwise. Maltese companies also have access to an extensive double tax treaty network with over 60 countries whereby the maximum withholding tax rate is typically 10%.
3. Why all Tax and Social Security Solutions need to be 100% compliant ?
New EU rules that improve Member States’ ability to assess and collect the taxes have entered into force since 1 January 2013.
The Directive on Administrative Cooperation in the field of Taxation lays the basis for stronger cooperation and greater information exchange between tax authorities in the EU and brings an end to bank secrecy.
The Maltese INCOME TAX ACT and INCOME TAX MANAGEMENT ACT have therefore be amended so that Malta fully cooperates with Other Jurisdictions on Tax Matters.
As from 1 January 2014, the Maltese Competent Authority will provide automatic exchange of information on a yearly basis on:
- Income from employment;
- director’s fees;
- life insurance products not covered by other EU legal instruments on exchange of information and other similar measures;
- ownership of and income from immovable property.
Commissioner šemeta also presented end of 2012 a EU plan to fight tax evasion and avoidance.
The Convention on Mutual Administrative Assistance in Tax Matters was developed jointly by the Council of Europe and the OECD and opened for signature by the member states of both organisations on 25 January 1988.
In April 2009, the G20 called for action “to make it easier for developing countries to secure the benefits of the new co-operative tax environment, including a multilateral approach for the exchange of information.”
In response the OECD and the Council of Europe developed a Protocol amending the multilateral Convention on Mutual Administrative Assistance in Tax Matters to bring it in line with the international standard on exchange of information for tax purposes and to open it up to all countries.
Article 26 of the OECD Model Tax Convention also relates to exchange of information with an updated commentary dated 17 July 2012.