MaltaMalta

Legal ReferenceRule 4 of the Transfer Pricing Rules

Legal ReferenceRefer to the MTCA Guidelines

A set of guidelines (hereinafter ‘the MTCA Guidelines’) have been issued in terms of Article 96(2) of the Income Tax Act. These are legally binding and are to be read in conjunction with the Transfer Pricing Rules. Within the MTCA Guidelines, with respect to certain rules, reference is made to the OECD Transfer Pricing Guidelines. Where it is not specifically stated, the OECD Transfer Pricing Guidelines are used as a reference, but they are not binding.

Legal ReferenceRule 2 of the Transfer Pricing Rules

Rule 2 of the Transfer Pricing Rules defines “associated enterprises”. These are defined as follows: (a) one (1) of the bodies of persons controls the other body of persons whether as a result of the fact that it holds, directly or indirectly, a participation of more than seventy-five per cent (75%) in the voting rights, or the ordinary capital, of the other body of persons or by virtue of any powers conferred by the articles of association or other document regulating the other body of persons; or (b) the same person or persons controls two (2) or more bodies of persons whether as a result of the fact that it holds, directly or indirectly, a participation of more than seventy-five per cent (75%) in the voting rights, or the ordinary capital, of the two (2) or more bodies of persons or by virtue of any powers conferred by the articles of association or other document regulating the two (2) or more bodies of persons: Provided that, for the purposes of paragraphs (a) and (b) of this definition, where such bodies of persons are constituent entities of a MNE group as defined in item 3 of Section I of Annex III of the Cooperation with Other Jurisdictions on Tax Matters Regulations the percentage interest in the voting rights or the ordinary capital referred to therein shall be fifty per cent (50%)

Legal ReferenceRefer to the MTCA Guidelines

In the MTCA Guidelines that were issued, the preferred methodology to be applied for the purposes of the transfer pricing rules shall be those outlined in Chapter II of the OECD Transfer Pricing Guidelines. Other methods may be accepted in accordance with Paragraph 2.9 of the OECD Transfer Pricing Guidelines.

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (provided)
• Profit Split (provided)
• Other (provided)

• Hierarchy of methods (not selected)
• Most appropriate method (selected)
• Other (if so, please explain) (not selected)

Malta’s domestic legislation does not contain specific guidance on commodity transactions. For controlled transactions involving commodities, the guidance in the OECD Transfer Pricing Guidelines is expected to be followed.

In the absence of specific transfer pricing provisions, Malta refers to the OECD TPG.

Although the domestic legislation does not specifically mention an arm’s length range, reference is made to the OECD TPG.

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

Article 14(4) - Article 14(4) of the Income Tax Act (Cap 123 of the Laws of Malta) refers to services carried out on or in relation to immovable property where such property is owned by a related person. Income derived from such services should be deemed to be separate chargeable income to the party performing the services. Deductions are allowed against such income; however, such deductions cannot exceed the total consideration received or receivable for the provision of such services. Article 26(h) - Article 26(h) of the Income Tax Act (Cap 123 of the Laws of Malta) refers to certain interest, discount or premium paid to a related person in relation to immovable property. Article 26(h)(iii) states that if the payor is a person related to the person not resident in Malta, who receives interest, discount, or premium, such deduction is disallowed for tax purposes. A related person for this paragraph is defined as follows: (a) that person and the person not resident in Malta are, directly or indirectly, controlled or beneficially owned by more than 10% by the same persons; or (b) that person owns, directly or indirectly, more than 10% of the ordinary share capital or voting rights of the person not resident in Malta

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

Legal ReferenceRule 4 of the European Union Anti-Tax Avoidance Directives Implementation Regulations relate to the interest limitation rules and Rule 9 relates to the hybrid mismatches.

With effect from 1 January 2019, an interest limitation is applicable on exceeding borrowing costs and the deduction is limited to 30% of EBITDA or EUR 3 million, whichever is the higher. With effect from 1 January 2020, if a payment under a hybrid financial instrument results in a deduction without inclusion, Malta will deny the deduction of the payment if Malta is the payer jurisdiction. Where Malta is the payee jurisdiction, the payment will be included in the income in Malta if the deduction is not denied in the payer jurisdiction.

Although Malta’s transfer pricing rules do not have specific provisions in this respect, they are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed.

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
• Other (specify): (not selected)

The taxpayer would be required to disclose its transfer pricing documentation to the Malta Tax and Customs Administration (MTCA) only upon a specific request by the MTCA. However, the MTCA, in the interest of conducting an informed examination of the taxpayer’s transfer pricing practices, retains the right to request further information and documentation on the arrangements under review. The taxpayer would be required to make its transfer pricing documentation available, upon request by the MTCA, within a reasonable timeframe. The documentation which is required to be held by taxpayers shall be in line with Chapter V of the OECD Transfer Pricing Guidelines. In relation to Country-by-Country Report (‘CbCR’), The Cooperation with Other Jurisdictions on Tax Matters (S.L. 123.127) (The Regulations) require Maltese tax resident ultimate parent entities (UPEs) of multinational entity groups (MNEs) and certain constituent entities (CE), which has been appointed as the Surrogate Parent Entity (SPE) to file with the Commissioner for Tax and Customs (CfTC) a CbCR in respect of Reporting Fiscal Years starting from 1 January 2016. The Regulations also appear to cater for the so-called ‘secondary mechanism’, whereby a CE which is tax resident in Malta, and which is not the UPE will be required to submit the CbCR itself subject to satisfying certain conditions. This secondary mechanism will apply as from periods beginning on or after 1 January 2017, unless the CE has been appointed as the SPE. The CbCR needs to be submitted by the reporting Maltese UPE, SPE or CE within 12 months from the last day of the fiscal year of the MNE Group. The CfTC shall, at prescribed intervals, automatically exchange information gathered from the CbCRs to any other jurisdiction in which one or more CE of the MNE group is either tax resident or by virtue of a permanent establishment created therein

No specific penalties in relation to transfer pricing, but penalties are applicable in terms of general provisions. With respect to CbCR, certain penalties are contemplated when the reporting Maltese UPE, SPE or CE fail to comply with, inter alia, data collection, retention and reporting obligations in accordance with the obligations set out in the EU Administrative Cooperation Directive. Also, Article 52 of the Income Tax Management Act (Cap 372 of the Laws of Malta) includes general penalties.

The transfer pricing rules state that if one is in scope of such rules, documentation is required to be kept.

Legal ReferenceRulings and APAs requests must be made in terms of Rules 11 and 12

• Rulings (not selected)

Legal ReferenceMalta’s MAP Profile

Following the introduction of the Transfer Pricing Rules, Malta has a formal APA programme. Malta has included the MAP article in its treaties, has adopted the EU Arbitration Convention and transposed the EU Dispute Resolution Mechanism Directive into its legislation. MAP guidance has also been published on the website of the Commissioner for Tax and Customs: https://mtca.gov.mt/docs/default-source/documents/news/2025/map-guidelines.pdf?sfvrsn=3c6fd6f4_3 For further information, please refer to Malta’s MAP Profile

• Enhanced engagement or cooperative compliance programmes (not selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• International Compliance Assurance Programme (ICAP) (not selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): (not selected)

It is under consideration.

• N/A (selected)

• 20% (not selected)
• 30% (not selected)
• Other (please specify) (not selected)
• N/A (selected)

1. A person who has delivered a return of income may at any time make deductions (corrections) or additions to that return as he may consider appropriate (self-assessment) by furnishing a further return; however 2. The Commissioner for Tax & Customs may give notice in writing to any person informing him that an enquiry will be conducted into that person's tax declarations and liabilities in respect of such years of assessment as shall be indicated in the said notice

Malta’s transfer pricing rules do not have specific provisions in this respect. They are construed by reference to the OECD TPG. Therefore, it is expected that the relevant provisions are to be followed. Depending on the facts and circumstances of the case, when such secondary adjustments are proposed by the other jurisdiction, Malta is amenable to consider and discuss such adjustments in the context of a MAP.

Legal ReferenceDouble Taxation Conventions (gov.mt)

• Article 7 as it read before 2010. (selected)
• Article 7 as it reads after 2010. (selected)

The policy of Malta is to attempt to include the AOA in all (new) treaty negotiations. Malta sees the AOA as informative for cases where the tax treaty contains the pre-2010 version of Art 7. Therefore, Malta would consider the application of the AOA in practice but would respect earlier guidance on any areas where Article 7 (in its pre-2010 version included within the actual DTA) conflicts with the AOA.

Legal ReferenceTransfer Pricing Rules

Transfer Pricing Rules have been enacted with an effective date as from 1 January 2024.