Pursuant to the implementation of the Malta national budget measures, the exemption on royalties and similar income has been extended to advances and income from copyrights.
As of 2012, the tax exemption on royalties and similar income under Article 12 (1) (v) of the Malta Income Tax Act has been extended to royalties, advances and similar income derived from copyrighted intellectual property.
Such intellectual property includes artistic, audiovisual, literary and musical works. According to the Copyright Act, this includes art, including sculpture, architecture and lithographs, maps and scientific works, photography, buildings and other works of artistic craftsmanship.
This extension of the tax exemption already in force for royalties derived from qualifying patents came into force as part of the implementation of the 2012 budget measures.
The broad exemption is beneficial to artistic individuals and Malta Intellectual Property companies as it has wide application to royalty income, whether in the course of a trade or business or otherwise. Where the exemption does not apply, the Malta effective tax rate may still, at times, be significantly reduced. Apart from local incentives and the application of Malta's extensive double tax treaty network, Malta has transposed applicable EU law such as the Interests and Royalties Directive.
