Malta – Israel Tax Treaty – In Force
Malta – Israel Tax Treaty – Ratified: the double tax treaty between Malta and the State of Israel signed in Jerusalem on the 29th of July 2011 has been ratified by the Republic of Malta via Legal Notice 343 of 2013.
The ratification of this treaty is expected to improve and facilitate the bilateral relations between these two States, allowing for:
- Israeli investors to have a more tax efficient access to their investments in the European Union
- Israeli inbound investors can access and utilize the Malta – Israeli double tax treaty to extract profits out of Israel in a tax efficient manner.
Based upon the OECD Model Convention and is applicable to residents who are residents of one or both of these two Contracting States and applied to:
- Malta income and corporate tax, taxes imposed on gains from immovable property (in accordance with the Real Estate Taxation Law)
- Israeli profit tax on financial institutions.
- Restricts Israel to levy any withholding tax on dividends when such dividends are paid to a Malta resident company holding at least 10% of the share-capital of an Israeli resident company – applicable to withholding taxes applied to an Israeli Real Estate Investment Company, subject to the Maltese company holding at least 10% of the share-capital of the Israeli Real Estate Investment Company
- Israel is also bound to withholding tax of no more than 5% on interest paid to a Maltese company
- Royalty payments – no withholding by the State of Israel on royalty payments made by an Israeli company to a Maltese company
Malta’s Tax Law do not withhold any tax on outbound interest, dividends or royalties and when combined with Malta’s 100% tax exemption on certain intellectual property, the treaty can realise true tax efficiencies for Israeli companies, the use of a Malta trading or holding company could lead to significant tax advantages.