Switzerland-Malta Double Tax Treaty

Switzerland-Malta double taxation agreement

The first taxation agreement between Switzerland and Malta was signed in 1988 and was designed to avoid the double taxation of Maltese and Swiss shipping and aviation companies. The Switzerland-Malta double taxation agreement referred to the exemption on the income tax on business profits obtained by shipping and aviation companies from international traffic. The exemption also applied to joint ventures and international agencies in the shipping and aviation industries.

New Switzerland-Malta double tax treaty

In 2011 Switzerland and Malta have renewed their double taxation agreement. The treaty was enforced in 2012 and applicable beginning with 2013 in both Malta and Switzerland. The main purpose of the new double taxation agreement was to extend the list of incomes that would benefit from tax deductions, reductions or exemptions. The agreement contains the following:

• -          a limitation of the taxation of dividends and interests in Switzerland and Malta,
• -          the avoidance of double taxation of royalties,
• -          a protocol for the exchange of tax information.

For complete information about Swiss double taxation treaties you can refer to our lawyers.

New provisions in the Switzerland-Malta double taxation treaty

The new Switzerland-Malta double taxation agreement incorporated the EU Parent-Subsidiary Directive under which Swiss companies was exempt from paying withholding taxes on dividends. The Directive established that a Maltese holding company would own at least 25% of the capital contribution in the Swiss company in order to be valid. Under the new Switzerland-Malta double tax treaty, the Maltese company must own only 10% of the share capital in the Swiss company for at least a year in order to be exempt from the dividend tax.

Under the new Switzerland-Malta double taxation agreement, companies are exempt from the taxation of interests if the parent company holds at least 10% of the shares in a Maltese or Swiss subsidiary for a minimum period of one year. The agreement also provides an exemption from the withholding tax on royalties.

For complete information about the double taxation treaty with Malta, please contact our law firm in Switzerland.