UK-Malta Double Taxation Agreement

Dr Trudy Marie Attard | 10 Aug 2011

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Both Malta and the UK have wide treaty networks, typically based on the OECD Model Tax Convention. The current Double Taxation Agreement between the two states came into force in 1995. In accordance with the Agreement, tax on dividends in either state may not exceed that chargeable on the profits out of which dividends are paid. Interest and royalties are subject to a 10% maximum WHT, however Malta does not levy withholding tax on dividends, interest and royalties. Further, pensions paid by the UK to individuals who become resident in Malta are only taxable in Malta.

In 2011 Maltese Prime Minister Lawrence Gonzi visited his counterpart, British Prime Minister David Cameron, at 10, Downing Street, London. The visit reflected the strong relations between the two states and added to the long list of visits exchanged over the years. Several major British businesses have a significant presence on the island, including HSBC Malta, which is one of the largest banks in the country.

Mark Watson, chief executive of Valletta-based Mediterranean Bank, cited Malta’s advantages as: "There's a good education system here, people are well educated," he says. "Professional services are good, so you can get good accountants, lawyers and IT people. Everyone speaks English and contract law is in English. With a tax friendly environment, if you put those things together it's a good place to do business and I think a lot of people are starting to realise that."

The representatives of the both states’ Financial Services Authorities signed a Memorandum of Understanding in May, 2004. Following years of support, the Memorandum, apart from providing for a formal basis for cooperation between the two authorities, facilitates the exchange of information and collaboration in investigations. The underlying objective of the agreement is the prevention of financial crime.

In addition, a Social Security Reciprocal Agreement has long been in force between the two states. The Agreement grants access for national public healthcare services for UK nationals who otherwise would not be entitled to such services in Malta. Holders of the RHA Entitlement Card issued under the Agreement are entitled to free healthcare services in local public healthcare institutions on an in-patient and out-patient basis, as well as to other specialist services provided for Maltese nationals.

The first British High Commissioner to Malta was appointed following independence from the UK in 1964 after more than 150 years as a British colony. Since then, Malta and the UK have worked together on issues of mutual interest - bilaterally, as EU member states and neighbours in EU Council meetings, and as members of the Commonwealth.

[Full List of Malta Double Taxation Agreements]

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