The Malta Tax Refund System
Upon the distribution of dividends by a Malta company, non-resident
shareholders are typically entitled to apply for tax refunds
of the Malta tax paid by the Malta company.
The claiming of Malta tax refunds is subject to certain administrative procedures to be followed.
The amount of refunds depends on the nature of the income derived by the distributing company :
• 6/7 Malta Tax Refund
Following the distribution of dividends by a Malta Company distributed out of profits allocated to its Foreign Income Account and/or its Maltese Taxed Account not consisting in passive interest or royalties, the recipient shareholders would be entitled to a refund of 6/7 of the tax paid by the company in Malta on the said profits.
• 5/7 Malta Tax Refund
Where however the dividends distributed out of profits allocated to the Foreign Income Account relate to profits consisting of passive interest or royalties or of dividends derived from a non-qualifying participating holding, the refunds to which the shareholders are entitled are reduced to 5/7 of the tax paid by the company in Malta on the said profits.
Passive interest or royalties shall means ‘interest or royalty income which is not derived, directly or indirectly, from a trade or business, where such interest or royalties have not suffered or suffered any foreign tax, directly, by way of withholding, or otherwise, at a rate of tax which is less than five per cent (5%);
• 2/3 Malta Tax Refund
Should the company have claimed relief from double taxation in respect of profits allocated to its Foreign Income Account, following the distribution of dividends its shareholders would only be entitled to a refund of 2/3 of the Malta tax paid by the company in Malta on the said profits.