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Important Information

Malta and Russia updated tax agreement


New treaty was signed on 24 April 2013
Malta and Russia inked a new tax treaty to replace the pending DTA signed between the countries in 2000.
The treaty establishes updated withholding tax rates for the dividends, interest and royalties.
Withholding tax rates for the dividends paid from Russia:

  • 0% on dividends paid to a pension fund resident in Malta provided the dividends are derived from investments that are made out of assets of the pension fund;
  • 5% on dividends paid to a company (other than a partnership) that holds directly at least 25% of the capital of the distributing company and the holding amounts to at least EUR 100,000; and
  • 10% in all other cases.

From a Maltese perspective, any withholding tax on dividends may not exceed the tax chargeable on the profits out of which the dividends are paid, i.e. effectively no withholding tax will be levied.

It should be noted that the term “dividends” is defined to include income paid in the form of interest, which is subject to the same tax treatment as income from shares by the source state, as well as any payments on units of mutual investment funds or similar collective investment vehicles or schemes.

The rate on interest will be 5% and the rate on royalties will be 5%.

In regards of capital gains the source state may tax gains derived by a resident of the other state from the alienation of shares or other rights deriving more than 50% of their value directly or indirectly from immovable property situated in the source state.