• Taxation of Collective Investment Schemes

Funds licensed under the Investment Services Act are exempt from tax in Malta and are excluded from benefiting from Malta's double tax treaty network.  A Collective Investment Scheme (other than a unit trust) may waive its right to an exemption from tax on its income, in which case it is liable to tax at a rate of 25%.  Taxable funds are entitled to treaty relief.  Capital gains realised by a fund are exempt from tax in Malta.

Consistent with the Maltese tax regime's objective of simplifying the collection of tax on investment income for both resident and non-resident taxpayers, largely through withholding at source, shareholders (whether resident or not) are not required to report dividends paid out of a scheme's foreign income account (generally composed of income derived from foreign sources) or a Maltese-taxed account (generally composed of the balance of taxable income).  Such unreported dividends are not subject to further tax in the hands of the shareholders.  In addition, non-resident shareholders receiving dividends from a scheme's foreign income account of a taxable scheme are entitled to a refund equivalent to two-thirds of the tax paid by the scheme on the income being distributed.  Furthermore, non-resident shareholders are not taxable on gain or profit arising from the disposal of shares of the scheme.