Malta - Dividend

Article 10. Dividends

1.  Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State. 

2.  Dividends paid by a company which is a resident of the Netherlands to a resident of Malta may also be taxed in the Netherlands, and according to Netherlands law, but, if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed: 

a.  5 per cent of the gross amount of the dividends if the recipient is a company which holds directly at least 25 per cent of the capital of the company paying the dividends; 

b.  15 per cent of the gross amount of the dividends, in all other cases. 

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 

3.  Dividends paid by a company which is a resident of Malta to a resident of the Netherlands who is the beneficial owner thereof shall be exempt from any tax in Malta which is chargeable on dividends in addition to the tax chargeable in respect of the profits of the company. Furthermore, Malta tax chargeable with respect to distributed profits of the company shall not exceed 15 per cent of the gross amount thereof, if the distributed profits consist of gains or profits earned in any year in respect of which that company is in receipt of any benefit under the provisions regulating aids to industries in Malta, and the profits are distributed to a company which is a resident of the Netherlands and which is not charged to Netherlands company tax with respect to such profits: provided that the receiving company submits returns and accounts to the taxation authorities of Malta in respect of its income liable to Malta tax for the relative year of assessment. 
This paragraph shall not affect the taxation of the company in respect of the profits out of which distributions are made, but the recipient of any distributed profits shall be entitled to any refund which may be available under the law of Malta on account of the tax paid by the company, if the tax so paid is in excess of that chargeable on the distributed profits in accordance with the provisions of this paragraph or of the law of Malta. 

4.  The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders' shares or other rights participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident. 

5.  The provisions of paragraphs 1, 2 and 3 shall not apply if the recipient of the dividends, being a resident of one of the States, carries on business in the other State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State professional services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 

6.  Where a company which is a resident of one of the States derives profits or income from the other State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. 

Protocol:

IV. Ad Article 10

1.  The provisions of sub-paragraph a) of paragraph 2 of Article 10 shall not apply if the relation between the two companies has been arranged or is maintained primarily with the intention of securing this reduction.

2.  It is understood that the reference in the second sentence of paragraph 3 of Article 10 to the provisions of the Netherlands law to the effect that the receiving company is not charged to Netherlands company tax in respect of the profits distributed by a Malta company, is to the application of the so called “ holding privilege” in the Netherlands Company Tax Act. Subject to the provisions of the said Act and to future amendments thereto, this “holding privilege” leads to the result that a company which is a resident of the Netherlands can leave out of account, in the computation of its taxable profits, dividends it receives from a company which is a resident of Malta, if it owns at least 5 per cent of the paid-up capital of the latter company. 

V. Ad Articles 10, 11 and 12 

Applications for the repayment of tax levied contrary to the provisions of Articles 10, 11 and 12 have to be lodged with the competent authority of the State, which has levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied.