Via the publishing of subsidiary legislation – Legal Notice 118 of 2018 – Malta and the Andorra have officially concluded a double taxation treaty. This treaty is mainly based on the pre- 2018 OECD model and the following are its main features:
Dividends – The country of source of the dividends is to exempt such income arising therein when paid to a beneficiary resident of the other contracting state with only the latter country having rights of taxation thereon.
Interest - The country of source of the interest is to exempt such income arising therein when paid to a beneficiary resident of the other contracting state with only the latter country having rights of taxation thereon.
Royalty - The country of source of the interest is to exempt such income arising therein when paid to a beneficiary resident of the other contracting state with only the latter country having rights of taxation thereon. The definition of "royalty" includes all types of rights relating to literary, artistic, scientific work including cinematography.
Pensions – An exemption from tax is provided from the source country where the person is resident in the other country in consideration for past employment. Pensions relating to the social security system relative to a specific country shall only be taxable therein.
Investment Funds and Pension Funds – The Protocol to the double taxation treaty provides for collective investment schemes and pension funds, licensed in the Malta or Andorra respectively, would fall within the definition of "resident" as per Article 4 (1) of the Treaty and hence would be able to benefit from treaty provisions accordingly.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
