31 October 2006

Malta publishes tax treaty with Iceland

On 31st October 2006 Malta published the ‘Convention between Iceland and Malta for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income’.  The tax treaty was published in the Government Gazette number 17,990’

The tax treaty provides that dividends paid by a company which is a resident of Iceland to a Maltese shareholder shall not exceed 15% of the gross amount of dividends.  If the Maltese shareholder is a company which owns at least 10% of the capital of the Icelandic company, then the withholding tax is reduced to 5%.  Interest is exempt from tax in the country of source and the tax on royalties may not exceed 5%.

The treaty is based on the OECD model convention and includes an article on ‘Mutual Agreement Procedure’.  It was initialed in November 2001, signed in September 2004 and becomes operative from basis year 2007.

To view the full version of the treaty click here.