Malta`s tax treaty with Russia: published amendments

Earlier this year it was announced that the tax treaty between Malta and Russia will be amended. On the 10^th of November by the means of the legal notice 428 of 2020 three major changes have been introduced the  amendments to   the   convention   between   the government of Malta and the government of the Russian  Federation  for  the  avoidance  of  double taxation  and  the  prevention  of  fiscal  evasion with respect to taxes on income of 24 April 2013. The following changes will become effective as of January 1,2021:

• Article 10: Russia will be allowed to tax dividends up to a maximum of 15% (of the gross amount of the dividends) paid by a Russian company to a Maltese parent company. Previously it was 10% and in some cases 5%. However, there are exceptions to this article, whereby the reduced rate of 5% applies:
  • •  the beneficial owner of the dividends is a resident of the other Contracting State and the beneficial owner is an insurance undertaking or a pension fund; or
    • if the beneficial  owner  of  the  dividends  is  a resident of the other Contracting State and the beneficial owner is a company whose shares are listed on a registered stock exchange provided that no less than 15% of voting shares of that company are in free float and which holds directly at least fifteen per cent (15%) of the capital of the company paying the dividends throughout at three-hundred and sixty-five (365) day period that includes the day of payment of the dividends; or
    • if the beneficial owner of the dividends is a resident of the other Contracting State and the beneficial owner is the Government of that Contracting State or apolitical subdivision or a local authority thereof; or
    • if the beneficial owner of the dividends is a resident of the other Contracting State and the beneficial owner is the Central Bank of that Contracting State.

• Article 11: As in case of the previous article, the maximum rate for taxing the interest arising in Russia and paid to a resident of Malta will be on the level of 15%, except of the following cases, where the rate of 5% is applicable:
• A) When the beneficial owner is:
  1. 1. an insurance undertaking or a pension fund; or
     2. the Government of Malta or a political subdivision or a local authority thereof ;or
     3. the Central Bank of Malta; or
     4. a bank; or
     5. a company whose shares are listed on a registered stock exchange, provided that no less 15% of voting shares of that company are in free float and which holds directly at least 15% of the capital of the company paying the interest throughout a 365 day period that includes the day of payment of the interest;

• B) the interest is paid in respect of the following securities listed on a registered stock exchange:
  • government bonds;
  • corporate bonds;
  • Euro-bonds.

Article 25:  the introduced amendments have also identified criteria and conditions applicable for the exchange of information between the competent authorities of the contracting states.