Malta has signed various agreements for the avoidance of double taxation. Most of them are with European countries, such as Austria, Belgium, Italy, the UK and Bulgaria. The double tax treaty between Malta and Bulgaria was signed in 1988 and included in Malta’s Income Tax Law in the same year. The agreement covers the following taxes:
- – the income tax in Malta;
- – the total income, the personal income and the profit taxes in Bulgaria.
The agreement also provides for similar taxes levied in Bulgaria and Malta, as well as for notifications if any changes which would influence the agreement occur. Our law firm in Malta can offer information on the taxes applied in this country.
Provisions in the Malta – Bulgaria double tax treaty
The double tax treaty between Malta and Bulgaria applies to companies and individuals with a fiscal domicile in one or both countries. In the case of Malta, residents of the islands in the Maltese archipelago will fall under the scope of the double taxation treaty with Bulgaria.
In the case of Maltese and Bulgarian companies, the profits these make will be taxed in the country of residence of the businesses, with the exception of permanent establishments and associated enterprises which will be taxed in the country where they operate. Branch offices are deemed permanent establishments provided that they are established in the other state for at least six months within a period of a calendar year.
Avoidance of double taxation in Malta and Bulgaria
In order to eliminate double taxation, Malta and Bulgaria have agreed upon the taxes which will be levied in one or the other countries, however they have also enabled other mechanisms such tax exemptions and tax credits through which income is not imposed twice on a taxpayer. The method depends on the type of income subject to taxation. Our Maltese lawyers can offer more information on how double taxation can be avoided in this country.
The Malta – Bulgaria double tax agreement also provides for reduced rates related to certain elements of the income. These are:
- – a 0% tax rate applied to dividend payments;
- – a 0% tax rate applied to interest payments;
- – a 10% tax rate applied to royalties payments.
For full information on the treaty for the avoidance of double taxation with Bulgaria, please contact our lawyers in Malta.