Malta and Russia sign new double taxation agreement

The governments of Russian Federation and Malta have signed the Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. The Agreement and the related Protocol were signed on April 24, 2013 at the Ministry of Finance by the Ambassador of Malta to the RF, Raymond Sarsero and the Deputy Minister of Finance, Sergey Shatalov.

The Minister of Foreign Affairs, Dr. George W. Vella, highlighted that the signing of this Agreement was to promote economic diplomacy, to invite foreign direct investments to Malta and to broaden further trade and investment on the basis of mutually equal benefit.

According to the articles of the Agreement, taxes on dividends, interest and royalties, where if owners are residents of the other contracting state, the tax charged should not exceed 5% of the gross amounts.

Income derived by a resident of a contracting state from immovable property situated in the other contracting state, may be taxed in the other state. Where dividends are paid by a company resident in Russia to a Maltese resident as a beneficial owner of the dividends, the tax charged in Russia should not exceed 5% of the gross amount of the dividends, if the Malta company directly holds at least 25% of the capital of the company paying the dividends and this holding amounts to at least €100,000, 10% of the gross amount of the dividends in all other cases.

Malta does not withhold tax on dividends paid from Russia to Malta. Withholding tax on interest paid from Russia to Malta is limited to 5%. Malta does not withhold tax on interest paid to Russia. Withholding tax on royalties paid from Russia to Malta is limited to 5%. Malta does not withhold tax on the payment of royalties to Russia.

For capital gains provisions include, among others, that gains derived by a resident of a contracting state from the sale of immovable property situated in the other contracting state may be taxed in the other state. Gains from the sale of shares in a company or rights deriving more than 50% of their value directly or indirectly from immovable property situated in the other contracting state may be taxed in the other state.

There is an also an exchange of information clause based on the OECD Model Agreement.