03 October 2006

Malta publishes tax treaty with Spain

Malta published the ‘Convention between Malta and The Kingdom of Spain 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 17,977 dated 3rd October 2006.

The tax treaty provides that dividends paid by a Spanish company to a Maltese shareholder shall not exceed 5% of the gross amount of dividends.  If the Maltese shareholder is a company which owns at least 25% of the capital of the Spanish company, then the dividends are exempt from tax in Spain.  Both interest and royalties are exempt from tax.

The treaty is based on the OECD model convention and includes articles on ‘Mutual Agreement Procedure’ and a ‘Limitation of Benefits’.  In a protocol published with the treaty, it is clearly mentioned that persons having a special fiscal treatment under the provisions of the Merchant Shipping Act, 1973 cannot claim treaty benefits.

To view the full version of the treaty click here.