USA – Malta Tax Treaty: In Force – 1st January 2011

• Cross-Border Dividend Payments: dividends paid by a resident of the United States which are beneficially owned by a resident of Malta are subject to source country taxation at a maximum rate of 15%. However, where the beneficial owner of the dividend directly owns 10% or more of the voting power of the payor, such rate is reduced to 5%. With respect to dividends paid by a resident of Malta which are beneficially owned by a resident of the United States, the tax charged by Malta on the gross amount of the dividends shall not exceed that Malta tax chargeable on the profits out of which the dividends are paid (there is generally no withholding tax on Malta-source dividends as a matter of Maltese domestic law). Furthermore, dividends paid by a resident of one Contracting State which are beneficially owned by a pension fund that is a resident of the other Contracting State are exempt from source country taxation, so long as such dividends are not derived from a trade or business carried on by the pension fund or through an associated enterprise.
• Cross-Border Interest Payments: under the USA – Malta Tax Treaty, interest paid by a resident of one Contracting State which is beneficially owned by a resident of the other cntracting State is generally subject to source country taxation at a maximum rate of 10%. However, interest arising in the United States that is contingent interest which does not qualify as “portfolio interest” for U.S. federal income tax purposes may be subject to U.S. tax at a rate of 15%. In addition, interest that is an excess inclusion with respect to a residual interest in a Real Estate Mortgage Investment Conduit (REMIC) may be taxed by each Contracting State in accordance with its domestic law.
• Cross-Border Royalty payments: the USA – Malta Tax Treaty limits the source country taxation of royalties arising in one Contracting State which are beneficially owned by a resident of the other Contracting State to 10%. The royalty concept extends to gains on alienation of qualifying intangible property to the extent that “such gain is contingent on the productivity, use or disposition of the property”.