Back to index
V3438-15 11 November 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · exención por doble imposición

Exemption for dividends from Maltese subsidiaries may apply if Article 21 LIS requirements are met

A financial institution enquired whether dividends from subsidiaries in Malta are exempt from Corporate Tax, even if part of the income is paid by the Maltese tax administration. The DGT ruled that the exemption can be applied provided that the requirements regarding shareholding, holding period, and double taxation treaties are satisfied.

The question raised

Question posed: Whether the exemption to avoid double taxation provided for in Article 21 LIS is applicable to income linked to the distribution of a dividend by Maltese subsidiaries, the origin of which is the profits obtained by said subsidiaries, even if such income is partially paid by the Maltese tax administration.

The DGT's ruling

To apply the exemption under Article 21.1 LIS, a participation percentage of 5% or an acquisition value exceeding 20 million euros must be met, maintaining the participation uninterruptedly during the year prior to the distribution. As the subsidiaries are resident in Malta, the foreign taxation requirement is met if there is a double taxation treaty with an exchange of information clause. Income received from the Maltese tax administration is assimilated to dividends if it is linked to the distribution and is paid according to the participation. The exemption also applies to the transfer of holdings if the requirements of participation and foreign taxation are met in all fiscal years of ownership.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

Book a meeting Write to the firm
Email
Contact