The Double Taxation Relief (Taxes on Income) (Malta) Order 1995

ARTICLE 10 Dividends

(1) Dividends paid by a company which is a resident of the United Kingdom to a resident of Malta may be taxed in Malta.

(2) An individual who is a resident of Malta and who receives a dividend from a company which is a resident of the United Kingdom, shall subject to the provisions of this Article and provided that he is the beneficial owner of that dividend, be entitled:

(a) to a tax credit in respect thereof of an amount equal to the tax credit to which an individual resident in the United Kingdom would have been entitled had he received that dividend (in this Article referred to as “the resident’s tax credit”) less 15 per cent of the aggregate of the amount or value of that dividend and the amount of the resident’s tax credit, and

(b) to a payment of any amount by which the tax credit to which he is entitled by virtue of sub–paragraph (a) exceeds his liability to tax in the United Kingdom.

(3) Dividends paid by a company which is a resident of Malta to a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in Malta and according to the laws of Malta, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed that chargeable on the profits out of which the dividends are paid.

(4) The term “dividends” as used in this Article means income from shares, or other rights, not being debt–claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation laws of the State of which the company making the distribution is a resident and also includes any other item which, under the laws of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company.

(5) The provisions of paragraph (2) or, as the case may be, (3) of this Article shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal 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 case the provisions of Article 7 or Article 14 of this Convention, as the case may be, shall apply.

(6) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting 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 that other State.