Expansion of the Tax Exemption on Royalty Income
In the last few years Malta has become an attractive jurisdiction for individuals and also multi-national organisations to set up their Holding Company. The full imputation system and the participation exemption regime are amongst some of the fiscal incentives applicable to such companies.
The new rules relating to the expanded exemption of royalty income was introduced retrospectively last year and has since further enhanced the jurisdiction's attractiveness. The amendment broadened the exemption to include royalties derived from qualifying copyrights and trademarks. Prior to such amendment, the exemption was only applicable to income from patents in respect of inventions; this exemption has now been broadened to include income from copyrights and trademarks. Such income which is exempt in terms of the above provisions, will also be exempt in the hands of the shareholders upon receipt of a dividend
Income from other intangibles which do not fall within the above mentioned exemption will be taxable in Malta, generally at an effective rate of 5% or 10%, depending whether the income is of a passive nature.
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.
