Malta exempts retirement benefits from tax

Dr. Trudy Marie Attard | Published on 08 Aug 2012

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Taxation of the Retirement Fund or Scheme

Article 12(1) (d) of the Income Tax Act exempts from tax income of any retirement fund or scheme authorized under the Special Funds (Regulation) Act except where such income is derived from immovable property situated in Malta.

Taxation of Benefits derived from a Retirement Fund or Scheme

Since under the Special Funds (Regulation) Act, the principal purpose of any such funds or schemes is to provide retirement benefits, the income received is to be characterized as a pension. Whereas the commutation of a pension remains exempt according to Article 12(1)(h) of the Income Tax Act, the receipt of benefits is considered to be taxable, taking into consideration any relevant double tax treaty.

Registration of Beneficiaries

Pursuant to the above, beneficiaries receiving retirement benefits considered to be a pension arising in Malta are required to register for Maltese tax purposes and to submit an income tax return annually. 

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