Exemption from royalties derived from copyright introduced

A welcome amendment has been introduced to the Income Tax Act (Cap. 123, Laws of Malta) by the Budget Measures Implementation Act (Act V of 2012), whereby royalties, advances and similar income derived from copyright, whether in the course of a trade, business, profession or vocation or otherwise, shall be exempted from income tax.

Such amendment complements the exemption on qualifying patents introduced by the Exemption on Royalties derived from Patents Rules, 2010 (Legal Notice 429 of 2010), which along with Malta’s wide network of double tax treaties, tax refund system and access to the various EU directives, provides further interesting tax planning opportunities for intellectual property companies that are tax resident in Malta.

It is understood that the requirements for the application of the income tax exemption will be delineated pursuant to a legal notice which should shortly be issued.