The Budget Implementation Act, 2015 was recently enacted by the Maltese Parliament and transposes into legislation various measures announced by the Minister of Finance during the last Budget speech for 2015.
The main amendments which are relevant for international business are the following:
- Amendment to the applicability of the participation exemption to bring it in line with recent amendments to the Parent-Subsidiary Directive.
The participation exemption applicable to dividends derived from a participating holding will continue to apply. However, where such profits benefit from the exemption from withholding tax set out in article 5 of EU Directive 2011/96/EU, the participation exemption would only apply to the extent that such profits are not deductible by the relevant subsidiary distributing the dividend in that other EU Member State. The same applies to a permanent establishment situated in Malta of a parent that is established in another EU Member State.
- Option for partnerships and EEIG to elect to be treated as a company for the purposes of the Income Tax Acts.
Partnerships and European Economic Interest Grouping may elect to be treated as a company for all purposes of the Income Tax Acts with effect from year of assessment 2016. Such election may be made irrespective of whether the income derived by the partnership consists of income d during the course of a trading activity or from a passive activity. The election is to be made within 60 days from the setting up of the partnership, but transitory arrangements have been agreed to with the Inland Revenue in respect of foreign partnerships which were already in existence prior to the enactment of the changes in law.
- Amendments to the definition of marketable security for stamp duty purposes.
The definition of “marketable security” for stamp duty purposes has been restricted to an exhaustive list unlike the previous non-exhaustive list in the Duty on Documents and Transfers Act. A “marketable security” is now only treated as being the holding of share capital in a company and any document representing the same. Thus, the transfer of debentures, bonds, notes, and any other interest in a company will no longer be subject to stamp duty.