Malta-Luxembourg Double Taxation Avoidance

Malta concluded double taxation treaties with numerous countries, among which Luxembourg. The Malta-Luxembourg agreement for the avoidance of double taxation was first concluded in 1996 and was last amended in 2013, when new provisions about the income tax were introduced.

Who does the Malta-Luxembourg tax treaty apply to?

With respect to Malta, the double taxation treaty with Luxembourg covers the income tax and other similar taxes applied in both countries. With respect to Luxembourg, Maltese citizens and companies will benefit from the following reductions and exemptions applied as a consequence of the tax agreement on:

• - income tax applied to individuals,
• - corporation tax,
• - the tax on fees applied to companies’ directors,
• - the capital tax,
• - communal trade tax.

From a geographical point of view, the Malta-Luxembourg tax treaty applies to the Islands of Malta, Gozo and all the other islands in the Maltese archipelago.

Incomes covered by the Malta-Luxembourg double tax treaty

As mentioned above, the double taxation agreement between Malta and Luxembourg covers the income taxes in both countries. The incomes earned by citizens of the contracting states refer to:

• - incomes derived from immovable properties,
• - agricultural activities,
• - business profits,
• - international traffic,
• - dividends,
• - interests,
• - royalties,
• - alienation of property,
• - providing independent or dependent personal services.

Artists and sportsmen will also fall under the regulations of the double tax treaty between Malta and Luxembourg. Retired individuals gaining pensions will also abide by the tax treaty’s regulations.

The elimination of double taxation in Malta

According to the double taxation agreement, Luxembourg citizens and companies will be granted a credit against the Maltese tax based on the assessment of the tax paid in Luxembourg. For the Luxembourg companies paying dividends to a Maltese company which holds at least 10% in the Luxembourg company, the credit will be granted based on the profits derived from the dividends.

Luxembourg citizens and companies receiving interests or royalties in Malta will be levied a 10% tax on these interests and royalties.

Our agents in Malta may provide you with more information about the provisions of the double taxation agreement with Luxembourg.