The Maltese government has ratified the OECD’s multilateral convention (MLI) to counter base erosion and profit shifting (BEPS)
By virtue of Legal Notice 37 of 2018, the Maltese government introduced the Notional Interest Deduction (NID) Rules. Generally, companies operating in Malta that are debt financed can deduct their interest expense from their taxable income giving them an advantage over equity financed companies that do not have a corresponding deduction. The NID aims at equating the tax treatment of debt and equity by allowing the deduction of a notional interest over equity.
When a resident company (or a branch of a non-resident company) distributes profits to its shareholder (both individual and corporate), the shareholder may claim a refund for tax paid in Malta. The amount of the refund depends on the nature of the distributed profits and if these have benefited, or not, of any double taxation relief mechanisms.
Malta applies a 100% participation exemption for gains and profits derived from a Participating Holding or from the transfer thereof. Where the participating holding is in a non-resident company, the holding company may opt for full refund instead of applying…
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