Passive Interest & Royalties

Where a Malta company makes a distribution of dividend to its shareholder from passive interest and/or royalties, the shareholder is entitled to claim a refund of 5/7ths of the tax suffered in Malta on such passive interests and/or royalties (or otherwise a 2/3rds refund in the case where the Malta company has claimed relief from double taxation of its income).

Passive interest or royalty income is interest or royalty income that is not derived, directly or indirectly, from a trade or business, where such interest or royalties have not suffered or suffered any foreign tax, directly, by the way of withholding, or otherwise, at a rate of tax that is less than 5%.

Where the interest or royalty income is not passive as described above, the applicable refund available to the shareholder is 6/7ths of the Malta tax paid (or otherwise 2/3rds in the case where double taxation relief has been claimed by the Malta company).