Maltese law envisages four different mechanisms for the relief of double taxation of foreign-source income:

1. Treaty relief;
2. Commonwealth relief;
3. Unilateral relief; and
4. Flat Rate Foreign Tax Credit.

Treaty Relief

Malta has an extensive network of Double Taxation Agreements, having entered into double taxation agreements with over 65 countries, which include all EU countries and with further agreements which have been initialed or negotiated that are currently awaiting ratification. These agreements are generally based on the Organisation for Economic Cooperation and Development (OECD) Model.

As of the 1st of January, 2015, Malta has entered into Double Taxation Agreements with the following countries:

  • Albania
  • Australia
  • Austria
  • Bahrain Barbados
  • Belgium
  • Bulgaria
  • Canada
  • China (P.R.C.)
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Egypt
  • Estonia
  • Finland
  • France
  • Georgia
  • Germany
  • Greece
  • Guernsey
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Ireland
  • Isle of Man
  • Israel
  • Italy
  • Jersey
  • Jordan
  • Korea (R.O.K.)
  • Kuwait
  • Latvia
  • Lebanon
  • Libya
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Malaysia
  • Mauritius*
  • Mexico
  • Moldova
  • Montenegro
  • Morocco
  • Netherlands
  • Norway
  • Pakistan
  • Poland
  • Portugal
  • Qatar
  • Romania
  • Russia
  • San Marino
  • Saudi Arabia
  • Serbia
  • Singapore
  • Slovakia
  • Slovenia
  • South Africa
  • Spain
  • Sweden
  • Switzerland
  • Syria
  • Tunisia
  • Turkey
  • Ukraine*
  • United Arab Emirates
  • United Kingdom
  • United States
  • Uruguay

*not yet in force

Commonwealth Relief

Where there is no double taxation treaty, Commonwealth Relief is applicable on a reciprocal basis to relieve taxes paid in Commonwealth countries other than the United Kingdom.

Unilateral Relief

Relief from double taxation is also possible on a unilateral basis where tax is suffered overseas by individuals or companies resident in Malta and Maltese branches of overseas companies on income received from a foreign country.

The overseas tax suffered, limited to the Malta tax charge on the income, is allowed as a credit against tax chargeable in Malta.

This relief also grants an indirect tax credit for foreign tax and/or Malta tax suffered at the level of the foreign distributing company or any of its subsidiaries.

Flat Rate Foreign Tax Credit

The flat rate foreign tax credit (FRFTC) is another form of unilateral relief that is available only to companies, which are specifically empowered to receive foreign source income or gains in accordance with their constitutive documents, which fall to be allocated to their foreign income account. The FRFTC constitutes a credit for notional tax paid at 25% of the overseas income or gain received in Malta and is to be added to such amount.