Malta and Moldova sign Double Tax Treaty

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On 10 April 2014, Malta and the Republic of Moldova signed an Agreement on the Avoidance of Double Taxation.

The Agreement on the Avoidance of Double Taxation, the first ever between the two jurisdictions, seeks to enhance bilateral trade and to increase investment.

The main features of the Agreement on the Avoidance of Double Taxation are the following:

Capital Gains: The source state may tax gains derived by a resident of the other state from the alienation of shares deriving more than 50% of their value, directly or indirectly, from immovable property situated in the source state.

Elimination of Double Taxation: Ordinary Credit Method.

Limitation of benefits: The Treaty does not contain such provisions.

Withholding Taxes: The Treaty provides for withholding at source at the following rates:

– Dividends: paid from Moldova- 5% provided that the dividends are paid to a resident of Malta who is the beneficial owner thereof (In Malta effectively no withholding tax will be levied).

– Interest: 5%

– Royalties: 5% (the term “royalties” does not include payments for the use of, or the right to use, industrial, commercial or scientific equipment).

The Agreement on the Avoidance of Double Taxation will enter into force on the date when the second country gives notice that its internal ratification procedures have been completed.

A copy of the signed double taxation agreement may be accessed here.