Portugal-Malta Double Taxation Agreement

Dr. Trudy Marie Attard | 15 Jan 2012

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The Double Taxation Relief Agreement between Portugal and Malta was signed on 26th January 2001 and came into effect on the 6th March 2002 through LN 105 of 2002.

The Agreement envisages a maximum tax rate of 15% on dividends paid by a Portuguese company to a Maltese beneficial owner. Where the Maltese beneficial owner is a company that owns directly at least 25% of the capital stock of the Portuguese company for an uninterrupted period of two years prior to the payment of the dividend, the maximum rate is 10%. In the opposite scenario, where dividends are paid by a Maltese company to a Portuguese beneficial owner, Malta tax on the dividends may not exceed that chargeable on the profits out of which the dividends are paid. Further, tax at source on interest and royalty income is capped at 10%. The Agreement includes an exchange of information clause based on the OECD Model Tax Convention.

Portuguese Banif Bank opened its first branch in Malta in January 2008. Since the commencement of operations it has grown significantly and has at present nine branches and over 150 employees. In September 2011 the Malta Chamber of Commerce, Enterprise and Industry signed a Gold Partnership with Banif Bank in the first Support Agreement between the two organisations.  By virtue of this Agreement, the Maltese Chamber will provide new additional benefits to the local business community whilst extending support to the Portuguese economy and business. The Agreement is the basis for the creation of a Malta-Portugal Business Council within the Malta Chamber to explore and develop business opportunities for Malta in Portugal and vice versa. Through this Support Agreement, Banif will be able to continue tangibly contributing towards the Maltese economy.

In 2008, a Maltese business delegation organised by the Ministry of Foreign Affairs together with Malta Enterprise visited Portugal accompanied by the then Maltese President Dr. Eddie Fenech Adami. Banif was part of the Maltese business delegation. The visit was instrumental in creating leads during around 100 one-to-one meetings at the Chambers of Porto and Lisbon to the mutual benefit of both Maltese and Portuguese companies. Various areas of business cooperation were discussed including cooperation in renewable energy, education and training, tourism, financial services, steel structures, automobile components, software development and logistics.

During the visit, Malta Enterprise signed two memoranda of understanding with the Commercial Associations in Porto and Lisbon that represent the main industries and commercial sectors in Portugal. The main aim of these agreements is to foster further cooperation in trade information, business opportunities and joint business events. Maltese companies would be open to wider market access through Portugal`s historical links with countries such as Angola, Mozambique, Cape Verde and Brazil. On the other hand, Portuguese companies are interested in the North African market and Maltese companies can play an important role in this regard. Furthermore, the Chairman of the Malta Arbitration Centre, Dr George Hyzler signed a memorandum of understanding with the Lisbon Commercial Arbitration Centre that forms part of the Commercial Association of Lisbon.

In September 2011, Malta’s Ambassador to Portugal, Mr Simon Pullicino, met the Executive President and Secretary General of AICEP, the Investment and External Trade Agency in Portugal. Ambassador Pullicino also held meetings with the President and Secretary General of the Portuguese Chamber of Commerce in October with a view to intensifying trade exchanges and business opportunities between both countries. In November, a working lunch was organised with the four Honorary Consuls in Portugal to discuss the strengthening of economic relations between both countries.

Malta has an embassy in Lisbon and four honorary consulates, in the Algarve, Azores, Lisbon, and Porto. Portugal has an embassy and an honorary consulate in Valletta.

[Full List of Malta Double Taxation Agreements]

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