Malta introduced branch profit and expanded royalty exemptions

These new rules apply retroactively to tax periods commencing on or after 1 January 2012

On the 17th of May 2013 Malta parliament approved tax amendments that were previously announced during the Budget speech in November 2012.

Tax amendments include the introduction of two new tax exemptions, namely:

– Branch Profits. Malta operates a full participation exemption with respect to dividends and gains derived from qualifying shareholdings. The participation exemption regime is broadened to include profits and gains derived by a Maltese company that are attributable to a permanent establishment (PE) situated outside Malta, or to the transfer of such PE. The intent of this is the ensuring of compliance with EU law. Profits and gains are to be calculated as if the permanent establishment is an independent enterprise operating in similar conditions and at arm’s length.

– Trademark Royalties. Malta operates a full tax exemption with respect to royalties derived from registered patents and copyrights. The amendments extend the exemption to royalties derived from qualifying trademarks.