The Switzerland Malta Double Tax Treaty

Kristine Scerri  -  10/March/2016

Malta is an ideal jurisdiction to establish a holding company specifically for the purpose of holding shares in a Swiss trading company.   The Switzerland - Malta Double Tax Treaty allows for (i) an attractive limitation of withholding taxes on Dividends; and (ii) an elimination of withholding taxes on Royalties.

Limitation of Withholding Tax on Dividends

The treaty outlines that there are no withholding taxes upon distribution of dividends as long as the Maltese company receiving the dividends holds at least 10% of the capital of the Swiss company for at least one year and both companies are subject to tax. 

An eventual redistribution of dividends from the Maltese company to its shareholders would not be subject to any Maltese withholding taxes and moreover would entitle the said shareholder for a 100% refund of the tax paid in Malta by the Company.

Withholding Tax on Royalties

The treaty also outlines that there are no withholding taxes on royalties paid between a Swiss Company and the Maltese Company.  In Malta, royalties received by a Maltese company would generally attract an effective tax ranging between 0 and 6.25%. 

If you would like to know more please contact our tax team:

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