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0% Royalties Tax Exemption – Malta Holding Companies – Efficient Tax Structuring

The 0% tax exemption in respect of patents and artistic royalties makes Malta a jurisdiction of choice for entertainers, artists, musicians, sports persons and companies who operate internationally. With many companies creating or deriving substantial benefits from the use of intellectual property, whether by way of trademark, industrial design or patents, the creation, protection, maintenance and use of IP is critical to many businesses’ success.

Add to this an efficient tax planning and routing of income flowing from IP can substantially increase the bottom line of any company.

Malta’s IP royalty tax exemption regime applies to:

  • Royalties flowing from exempted IP are 0% income tax rated, no matter where the IP was created
  • Distribution of dividends from exempt profits of company are also 0% rated
  • Subsequent dividends distributed to higher tier shareholders are also 0% rated
  • 0% withholding tax on dividends suffer if the income is distributed to another Malta company or any company within the EU due to the Interest & Royalties Directive and the Parent & Subsidiary Directive
  • Royalty payments to go to outside of the EU? Malta’s extensive double taxation treaty network– currently over 60 worldwide – ensures no more than 10% taxation, which can be further reduced by the flat rate foreign tax credit (‘FRFTC’) to 6.25%

International Operations – Transfer Pricing

Malta does not have transfer pricing or thin capitalisation rules.

With our background arising from multi – national operations, Acumum can advise your business in respect of OECD’s transfer pricing policies – as part of our overall review of your IP re-structuring and favourable IP royalties routing – as it relates to your associated companies in other jurisdictions.