DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 1
SUBSIDIARY LEGISLATION 123.37
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH THE GRAND DUCHY OF 
LUXEMBOURG ORDER
14th February, 1996
LEGAL NOTICE 65 of 1996, as amended by Legal Notice 95 of 1996. 
Title.
on Income with the Grand Duchy of Luxembourg Order.
Arrangement to 
have effect.
2.   It is hereby declared: 
( a ) that the arrangements specified in the Convention set
out in the Schedule to this Order have been made with
the Government of the Grand Duchy of Luxembourg
with a view to affording relief from double taxation in
relation to the following taxes imposed by the laws of
the Grand Duchy of Luxembourg:
(i) the income tax on individuals;
(ii) the corporation tax;
(iii) the tax on fees of directors of companies;
(iv) the capital tax;
(v) the communal trade tax;
( b ) that it is expedient that those arrangements should
have effect.
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SCHEDULE
CONVENTION 
BETWEEN MALTA
AND THE GRAND DUCHY OF LUXEMBOURG 
FOR THE AVOIDANCE OF DOUBLE TAXATION 
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME 
AND ON CAPITAL
The Government of Malta and the Government of the Grand Duchy of
Luxembourg, desiring to conclude a Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and on capital,
have agreed as follows:
ARTICLE 1
Personal Scope
This Convention shall apply to persons who are residents of one or both of the
Contracting States.
ARTICLE 2
Taxes Covered
The existing taxes to which the Convention shall apply are:
( a ) in the Grand Duchy of Luxembourg:
(i) the income tax on individuals (l’impot sur le revenu des
personnes physiques);
(ii) the corporation tax (l’impot sur le revenu des collectivites);
(iii) the tax on fees of directors of companies (l’impot special sur les
tantiemes);
(iv) the capital tax (l’impot sur la fortune);
(v) the communal trade tax (l’impot commercial communal); 
(hereinafter referred to as "Luxembourg tax").
( b ) in Malta:
the income tax
(hereinafter referred to as "Malta tax")
2. The Convention shall apply also to any identical or substantially similar
taxes which are imposed after the date of signature of the Convention in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting States
shall notify each other of substantial changes which have been made in their
respective taxation laws.
3. Notwithstanding the other provisions of this Article this Convention shall
not apply to tax paid or payable in Malta in accordance with the provisions of sub-
article (13) of article 56 of the Income Tax Act concerning the chargeable income of
any person engaged in the production of petroleum produced in Malta or any
substantially similar provision which is imposed after the date of signature of this
Convention.
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ARTICLE 3
General Definitions
1. For the purposes of this Convention, unless the context otherwise requires:
( a ) the term "Luxembourg" when used in a geographical sense, means the
territory of the Grand Duchy of Luxembourg;
( b ) the term "Malta" when used in a geographical sense, means the Island of
Malta, the Island of Gozo and the other islands of the Maltese archipelago including
the territorial waters thereof, and any area outside the territorial sea of Malta which,
in accordance with international law, has been or may hereafter be designated, under
the law of Malta concerning the Continental Shelf, as an area within which the rights
of Malta with respect to the seabed and subsoil and their natural resources may be
exercised;
( c ) the terms "a Contracting State" and "the other Contracting State" mean
Luxembourg or Malta as the context requires;
( d ) the term "person" includes an individual, a company and any other body of
persons;
( e ) the term "company" means any body corporate or any entity which is treated
as a body corporate for tax purposes;
( f ) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;
( g ) the term "nationals" means:
(i) all individuals possessing the nationality of a Contracting State;
(ii) all legal persons, partnerships and associations deriving their status as
such from the laws in force in a Contracting State;
( h ) the term "international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship or aircraft is
operated solely between places in the other Contracting State;
( i ) the term "competent authority" means:
(i) in Luxembourg, the Minister of Finance or his authorized
representative, and
(ii) in Malta, the Minister responsible for finance or his authorized
representative.
2. As regards the application of the Convention by a Contracting State any
term not defined therein shall, unless the context otherwise requires, have the
meaning which it has under the law of that State concerning the taxes to which the
Convention applies.
ARTICLE 4
Resident
1. For the purposes of this Convention, the term "resident of a Contracting
State" means any person who, under the laws of that State, is liable to tax therein by
reason of his domicile, residence, place of management or any other criterion of a
similar nature. But this term does not include any person who is liable to tax in that
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State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident
of both Contracting States, then his status shall be determined as follows:
( a ) he shall be deemed to be a resident of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident of the State
with which his personal and economic relations are closer (centre of
vital interests);
( b ) if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident of the State in which he has an
habitual abode;
( c ) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident of the State of which he is a national;
( d ) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to be a
resident of the State in which its place of effective management is situated.
ARTICLE 5
Permanent Establishment
1. For the purposes of this Convention, the term "permanent establishment"
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The term "permanent establishment" includes especially:
( a ) a place of management;
( b ) a branch;
( c ) an office;
( d ) a factory;
( e ) a workshop;
( f ) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources including an offshore drilling site; and
( g ) a building site or construction, assembly or installation project or any
supervisory activities in connection therewith, when such site, project
or activity continues for more than six months.
3. Notwithstanding the preceding provisions of this Article, the term
"permanent establishment" shall be deemed not to include:
( a ) the use of facilities solely for the purpose of storage, display or delivery
of goods or merchandise belonging to the enterprise;
( b ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
( c ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
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( d ) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;
( e ) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
( f ) the maintenance of a fixed place of business solely for any combination
of activities, mentioned in sub-paragraphs ( a ) to ( e ), provided that the
overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
4. A person engaged in a Contracting State in exploration of the seabed and its
subsoil or in exploitation of natural resources situated there, as well as in activities
which are complementary or auxiliary to such activities, is deemed to exercise such
activities through a permanent establishment in that State.
5. An enterprise of a Contracting State shall be deemed to have a permanent
establishment in the other Contracting State if:
( a ) there is being used by the enterprise sufficient equipment as is
necessary to carry out its activities in that other State;
( b ) it carries on supervisory activities in that other State in connection with
the use of equipment referred to in sub-paragraph ( a ).
6. Notwithstanding the provisions of paragraphs 1, 2 and 4, where a person -
other than an agent of an independent status to whom paragraph 7 applies - is acting
on behalf of an enterprise and has, and habitually exercises, in a Contracting State an
authority to conclude contracts in the name of the enterprise, that enterprise shall be
deemed to have a permanent establishment in that State in respect of any activities
which that person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 3 which, if exercised through a fixed
place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
7. An enterprise of a Contracting State shall not be deemed to have a
permanent establishment in the other Contracting State merely because it carries on
business in that other State through a broker, general commission agent or any other
agent of an independent status, where such persons are acting in the ordinary course
of their business. However, if the activities of such an agent are carried out wholly or
almost wholly for the enterprise (or for the enterprise and other enterprises which are
controlled by it or have a controlling interest in it or are subject to the same common
control) and the conditions made or imposed between them in their commercial or
financial relations differ from those which would have been made or imposed if this
had not been the case, that agent shall not be considered to be an agent of an
independent status for the purposes of this paragraph.
8. The fact that a company which is a resident of a Contracting State controls
or is controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
ARTICLE 6
Income from Immovable Property
1. Income derived by a resident of a Contracting State from immovable
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property (including income from agriculture or forestry) situated in the other
Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions of
general law respecting landed property apply, usufruct of immovable property and
rights to variable or fixed payments as consideration for the working of, or the right
to work or to explore for, mineral deposits, sources and other natural resources;
ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct
use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from
immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.
ARTICLE 7
Business Profits
1. The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be expected to
make if it were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment or with other associated
enterprises with which it deals.
3. In the determination of the profits of a permanent establishment, there shall
be allowed as deductions expenses of the enterprise, being expenses which are
incurred for the purposes of the permanent establishment (including executive and
general administrative expenses so incurred) and which would be deductible if the
permanent establishment were an independent entity which paid those expenses,
whether incurred in the Contracting State in which the permanent establishment is
situated or elsewhere.
4. Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of a person,
including the determination of such liability by the exercise of discretion or the
making of an estimate by the competent authority of that State in cases in which,
from the information available to the competent authority of that State, it is not
possible or not practicable to ascertain the profits to be attributed to a permanent
establishment, provided that that law shall be applied, and the result shall be in
accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
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WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 7
6. For the purposes of the preceding paragraphs, the profits to be attributed to
the permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary.
7. The provisions of this Article shall not affect the provisions of the law of a
Contracting State regarding the taxation of profits from the business of insurance.
8. Where profits include items of income which are dealt with separately in
other Articles of this Convention, then the provisions of those Articles shall not be
affected by the provisions of this Article.
ARTICLE 8
International Traffic
1. Profits of an enterprise of a Contracting State from the operation of ships or
aircraft in international traffic shall be taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits derived from the
participation in a pool, a joint business or an international operating agency.
ARTICLE 9
Associated Enterprises
Where -
( a ) an enterprise of a Contracting State participates directly or indirectly in
the management, control or capital of an enterprise of the other
Contracting State, or
( b ) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State, 
and in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2. Nothing in this Article shall affect the application of any law of a
Contracting State relating to the determination of the tax liability of an enterprise
including the determination of such liability by the exercise of a discretion or the
making of an estimate by the competent authority of that State in cases which, from
the information available to the competent authority of that State, it is not possible
or not practicable to determine the income to be attributed to an enterprise, provided
that that law shall be applied, and the result shall be in accordance with the
principles contained in this Article.
3. Where a Contracting State includes in the profits of an enterprise of that
State, and taxes accordingly, profits on which an enterprise of the other Contracting
State has been charged to tax in that other State and the profits so included are
profits which would have accrued to that enterprise of the first-mentioned State if
the conditions made between the two enterprises had been those which would have
been made between independent enterprises, then that other State shall make an
appropriate adjustment to the amount of the tax charged therein on those profits. In
determining such adjustment, due regard shall be had to the other provisions of this
Convention and the competent authorities of the Contracting States shall if necessary
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consult each other.
ARTICLE 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident and according to the laws of
that State, but:
( a ) where the dividends are paid by a company which is a resident of
Luxembourg to a resident of Malta who is the beneficial owner thereof,
the Luxembourg tax so charged shall not exceed:
(i) 5 per cent of the gross amount of the dividends if the beneficial
owner is a company (other than a partnership) which holds
directly at least 25 per cent of the capital of the company paying
the dividends;
(ii) 15 per cent of the gross amount of the dividends in all other cases;
( b ) where the dividends are paid by a company which is a resident of Malta
to a resident of Luxembourg who is the beneficial owner thereof Malta
tax on the gross amount of the dividends shall not exceed that
chargeable on the profits out of which the dividends are paid.
This paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.
3. The term "dividends" as used in this Article means income from shares,
" jouissance " shares or " jouissance " rights, mining shares, founders' shares or other
rights, not being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income from
shares by the laws of the State of which the company making the distribution is a
resident.
4. The provisions of paragraphs 1 and 2 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, as
the case may be, shall apply.
5. 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 the company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in such
other State.
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ARTICLE 11
Interest
1. Interest arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in that other State, if such resident is the
beneficial owner of the interest.
2. The term "interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a right
to participate in the debtor’s profits, and in particular, income from government
securities and income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures. Penalty charges for late payment
shall not be regarded as interest for the purpose of this Article.
3. The provisions of paragraph 1 shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent establishment
situated therein, or performs in that other State independent personal services from a
fixed base situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall apply.
4. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
interest, having regard to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention.
ARTICLE 12
Royalties
1. Royalties arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which
they arise and according to the laws of that State, but if the recipient is the beneficial
owner of the royalties the tax so charged shall not exceed 10 per cent of the gross
amount of the royalties.
3. The term "royalties" as used in this Article means payments or credits,
whether periodical or not, and however described or computed, to the extent to
which they are made as consideration for:
( a ) the use of, or the right to use, any copyright, patent, design or model,
plan, secret formula or process, trademark or other like property or
right;
( b ) the supply of scientific, technical, industrial or commercial knowledge
or information;
( c ) the supply of any assistance that is ancillary and subsidiary to, and is
furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in sub-paragraph ( a ), or any such
knowledge or information as is mentioned in sub-paragraph ( b );
( d ) the use of, or the right to use:
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(i) motion picture films; or
(ii) films or video tapes for use in connection with television; or
(iii) tapes for use in connection with radio broadcasting;
( e ) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner
of the royalties, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein, and the right or property in respect of
which the royalties are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is
that State itself, a political subdivision, a local authority, or a resident of that State.
Where, however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment or
fixed base in connection with which the obligation to pay the royalties was incurred,
and such royalties are borne by such permanent establishment or fixed base, then
such royalties shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
royalties, having regard to the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention.
ARTICLE 13
Alienation of Property
1. Income or gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and situated in the other
Contracting State as well as gains derived from the alienation of shares or
participations in a company whose assets consist mainly of immovable property
situated in the other Contracting State, may be taxed in that other State.
2. Income or gains from the alienation of movable property forming part of the
business property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State or of movable property pertaining to a fixed
base available to a resident of a Contracting State in the other Contracting State for
the purpose of performing independent personal services, including such income or
gains from the alienation of such a permanent establishment (alone or together with
the whole enterprise) or of such fixed base, may be taxed in the other State.
3. Income or gains derived by an enterprise of a Contracting State from the
alienation of ships or aircraft operated in international traffic or movable property
pertaining to the operation of such ships or aircraft, shall be taxable only in that
State.
4. Income or gains from the alienation of any property other than that referred
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to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which
the alienator is a resident.
ARTICLE 14
Independent Personal Services
1. Income derived by a resident of a Contracting State in respect of
professional services or other activities of an independent character shall be taxable
only in that State. However, such income may be taxed in the other Contracting State
in the following circumstances:
( a ) if he has a fixed base regularly available to him in the other Contracting
State for the purpose of performing his activities (in which case only so
much of the income as is attributable to that fixed base may be taxed in
that other Contracting State); or
( b ) if his stay in the other Contracting State is for a period or periods
amounting to or exceeding in the aggregate 90 days in any twelve month
period commencing or ending in the calendar year concerned.
2. The term "professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the independent
activities of physicians, lawyers, engineers, architects, dentists and accountants.
ARTICLE 15
Dependent Personal Services
1. Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and
other similar remuneration derived by a resident of a Contracting State in respect of
an employment shall be taxable only in that State unless the employment is exercised
in the other Contracting State. If the employment is so exercised, such remuneration
as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:
( a ) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve month period
commencing or ending in the calendar year concerned, and
( b ) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State, and
( c ) the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by an enterprise of a Contracting State may be taxed in that
State.
ARTICLE 16
Directors’ Fees
Directors’ fees and other similar payments derived by a resident of a Contracting
State in his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other State.
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ARTICLE 17
Artistes and Sportsmen
1. Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as a sportsman, from his personal
activities as such exercised in the other Contracting State, may be taxed in that other
State.
2. Where income in respect of personal activities exercised by an entertainer or
a sportsman in his capacity as such accrues not to the entertainer or sportsman
himself but to another person, that income may, notwithstanding the provisions of
Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
ARTICLE 18
Pensions
1.  Subject to the provisions of paragraph 2 of Article 19, pensions and other
similar remuneration paid to a resident of a Contracting State in consideration of
past employment shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, pensions and other payments
made under the social security legislation of a Contracting State shall be taxable
only in that State.
ARTICLE 19
Government Service
1. ( a ) Remuneration, other than a pension, paid by a Contracting State or a
political subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable only in
that State.
( b ) However, such remuneration shall be taxable only in the other Contracting
State if the services are rendered in that State and the individual is a resident of that
State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
rendering the services.
2. ( a ) Any pension paid by, or out of funds created by, a Contracting State or
a political subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision or authority shall be taxable only in
that State.
( b ) However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration and
pensions in respect of services rendered in connection with a business carried on by
a Contracting State or a political subdivision or local authority thereof.
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 13
ARTICLE 20
Students and Apprentices
An individual who is a resident of a Contracting State immediately before making
a visit to the other Contracting State and is temporarily present in the other Sate
solely:
( a ) as a student at a recognized university, college, school or other similar
recognized educational institution in that other State; or
( b ) as a business or technical apprentice; or
( c ) as a recipient of a grant, allowance or award for the primary purpose of
study, research or training from the Government of either State or from
a scientific, educational, religious, or charitable organization or under a
technical assistance programme entered into by the Government of
either State, 
shall be exempt from tax in that other State on:
( a ) all remittances from abroad for the purposes of his maintenance,
education, study, research or training;
( b ) the amount of such grant, allowance or award; and
( c ) any remuneration for personal services rendered in that other State,
provided that the remuneration constitutes earnings necessary for his
maintenance.
ARTICLE 21
Other Income
1. Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the foregoing Articles of this Convention shall be taxable only in that
State.
2. The provisions of paragraph 1 shall not apply to income, other than income
from immovable property as defined in paragraph 2 of Article 6, if the recipient of
such income, being a resident of a Contracting State, carries on business in the other
Contracting State through a permanent establishment situated therein, or performs in
that other State independent personal services from a fixed base situated therein, and
the right or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
ARTICLE 22
Capital
1. Capital represented by immovable property referred to in Article 6, owned
by a resident of a Contracting State and situated in the other Contracting State, may
be taxed in that other State.
2. Capital represented by movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or by movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may be taxed in that other
State.
14 _g S.L.123.37
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG
3. Capital represented by ships and aircraft operated in international traffic by
an enterprise of a Contracting State and by movable property pertaining to the
operation of such ships and aircraft, shall be taxable only in that State.
4. All other elements of capital of a resident of a Contracting State shall be
taxable only in that State.
ARTICLE 23
Elimination of Double Taxation
1. In Luxembourg double taxation shall be eliminated as follows:
( a ) Where a resident of Luxembourg derives income or owns capital which,
in accordance with the provisions of this Convention, may be taxed in
Malta, Luxembourg shall, subject to the provisions of sub-paragraphs
( b ) to ( f ), exempt such income or capital from tax, but may, in order to
calculate the amount of tax on the remaining income or capital of the
resident, apply the same rates of tax as if the income or capital had not
been exempted.
( b ) Where a resident of Luxembourg derives royalties which, in accordance
with the provisions of Article 12 may be taxed in Malta, Luxembourg
shall allow as a deduction from the tax on the income of that resident an
amount equal to the tax paid in Malta. Such deduction shall not,
however, exceed that part of the tax, as computed before the deduction
is given, which is attributable to such royalties derived from Malta.
( c ) Where an enterprise of Luxembourg derives income which, in
accordance with the provisions of Article 7, may be taxed in Malta,
Luxembourg shall allow as a deduction from the tax on the income of
that resident an amount equal to the tax paid in Malta, but only if the
enterprise enjoys in Malta a special fiscal treatment by virtue of the
laws or the administrative practice of Malta. Such deduction shall not,
however, exceed that part of the tax, as computed before the deduction
is given, which is attributable to such income derived from Malta. The
Governments of the Contracting States shall agree periodically which
special fiscal treatment is meant under the provisions of this sub-
paragraph.
( d ) Notwithstanding the provisions of sub-paragraph ( b ), where a resident
of Luxembourg derives interest or royalties arising in Malta,
Luxembourg shall allow as a deduction from the tax on the income of
that resident an amount equal to the tax which would have been payable
but for the exemption or reduction of Malta tax in accordance with
special incentive measures for the promotion of development of
industry, infrastructure and tourism in Malta, provided that in the case
of interest or royalties such tax shall be deemed to have been paid at:
(i) 10 per cent of the gross amount of the interest referred to in
Article 11; and
(ii) 10 per cent of the gross amount of the royalties referred to in
Article 12.
The provisions of this sub-paragraph shall apply for a period of seven
years beginning on the 1 January in the calendar year in which the
Convention enters into force. This period may be extended by mutual
agreement between the competent authorities.
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 15
( e ) Where a company which is a resident of Luxembourg derives dividends
from Malta sources, Luxembourg shall exempt such dividends from tax,
provided that the company which is a resident of Luxembourg holds
directly at least 25 per cent of the capital of the company paying the
dividends since the beginning of the accounting year and if this
company is subject in Malta to an income tax corresponding to the
Luxembourg corporation tax. The above-mentioned shares in the Malta
company are, under the same conditions, exempt from the Luxembourg
capital tax. The exemption under this sub-paragraph shall also apply
notwithstanding that the Malta company is exempted from tax or taxed
at a reduced rate in Malta in accordance with Malta laws providing
incentives for the promotion of development of industry, infrastructure
and tourism in Malta.
( f ) Where a resident of Luxembourg derives dividends from Malta sources
not dealt with in sub-paragraph ( e ), such dividends shall be subject to
Luxembourg tax on the amount after the deduction of Malta tax charged
on such dividends, but, there shall be allowed as a credit against
Luxembourg tax an amount of 15 per cent on such dividends after the
deduction of the Malta tax (if any) charged thereon. Such credit shall
not, however, exceed that part of the tax, as computed before the credit
is given, which is attributable to such dividends derived from Malta.
2. In Malta double taxation shall be eliminated as follows:
( a ) Subject to the provisions of the law of Malta regarding the allowance of
a credit against Malta tax in respect of foreign tax, where, in accordance
with the provisions of this Convention, there is included in a Malta
assessment income from sources within Luxembourg, the Luxembourg
tax on such income shall be allowed as a credit against the relative
Malta tax payable thereon.
( b ) Where a company which is a resident of Luxembourg pays a dividend to
a company resident in Malta which controls directly or indirectly at
least 10 per cent of the voting power in the first-mentioned company,
the credit shall take into account (in addition to any Luxembourg tax for
which credit may be allowed under sub-paragraph ( a ) of this paragraph)
the Luxembourg tax payable by that first-mentioned company in respect
of the profits out of which such dividend is paid.
3. Where the Convention provides that income arising in a Contracting State
shall be relieved from tax in that State, either in full or in part, and, under the law in
force in the other Contracting State, such income is subject to tax by reference to the
amount thereof which is remitted to or received in that other State and not by
reference to the full amount thereof, then the relief to be allowed in the first-
mentioned State shall apply only to so much of the income as is remitted to or
received in the other State.
ARTICLE 24
Non-Discrimination
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith, which is
other or more burdensome than the taxation and connected requirements to which
nationals of that other State in the same circumstances are or may be subjected. This
provision shall, notwithstanding the provisions of Article 1, also apply to persons
who are not residents of one or both of the Contracting States.
16 _g S.L.123.37
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG
2. The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other State
carrying on the same activities.
3. Except where the provisions of paragraph 1 of Article 9, paragraph 4 of
Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a
resident of the first-mentioned State.
Similarly, any debts of an enterprise of a Contracting State to a resident of the
other Contracting State shall, for the purpose of determining the taxable capital of
such enterprise, be deductible under the same conditions as if they had been
contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any taxation
or any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the first-
mentioned State are or may be subjected.
5. Nothing in this Article shall be construed as obliging a Contracting State to
grant to individuals who are resident of the other Contracting State any personal
allowances, reliefs and reductions for tax purposes on account of civil status, family
responsibilities or any other personal circumstances which it grants to its own
residents.
6. The provisions of this Article shall, notwithstanding the provisions of
Article 2, apply to taxes of every kind and description.
ARTICLE 25
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions
of this Convention, he may, irrespective of the remedies provided by the domestic
law of those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of Article 24,
to that of the Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in taxation not in
accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in accordance with the
Convention. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of the Convention. They may also consult together for
the elimination of double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 17
each other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs. When it seems advisable in order to reach agreement to have
an oral exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting States.
ARTICLE 26
Exchange of Information
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Convention or of
the domestic laws of the Contracting States concerning taxes covered by the
Convention insofar as the taxation thereunder is not contrary to the Convention. The
exchange of information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed only to persons
or authorities (including courts and administrative bodies) involved in the
assessment or collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes covered by the Convention. Such
persons or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose
on a Contracting State the obligation:
( a ) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
( b ) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
( c ) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy
( ordre public ).
ARTICLE 27
Diplomatic Agents and Consular Officers
Nothing in this Convention shall affect the fiscal privileges of diplomatic agents
or consular officers under the general rules of international law or under the
provisions of special agreements.
ARTICLE 28
Exclusion of Certain Companies
1. The provisions of this Convention shall not apply to companies enjoying a
special fiscal treatment by virtue of the laws or the administrative practice of either
one of the Contracting States. Neither shall they apply to income derived from such
companies by a resident of the other Contracting State, nor to shares or other rights
in such companies owned by such person.
2. The Governments of the Contracting States shall agree periodically which
special fiscal treatment is meant under the provisions of paragraph 1 of this Article.
18 _g S.L.123.37
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG
ARTICLE 29
Entry into Force
1. The Governments of the Contracting States shall notify each other that the
constitutional requirements for the entry into force of this Convention have been
complied with.
2.  The Convention shall enter into force thirty days after the date of the later of
the notifications referred to in paragraph 1 and its provisions shall have effect:
( a ) in Luxembourg:
(i) in respect of taxes withheld at source, to income derived on or
after 1 January in the calendar year in which the Convention
enters into force;
(ii) in respect of other taxes on income and taxes on capital, to taxes
chargeable for any taxable year beginning on or after 1 January in
the calendar year in which the Convention enters into force;
( b ) in Malta:
in respect of taxes which are levied for any year of assessment
beginning on or after 1 January in the calendar year immediately
following the year in which the Convention enters into force.
ARTICLE 30
Termination
This Convention shall remain in force until terminated by a Contracting State.
Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of any
calendar year following after the period of five years from the date on which the
Convention enters into force. In such event, the Convention shall cease to have
effect:
1. in Luxembourg:
( a ) in respect of taxes withheld at source, to income derived on or after l
January in the calendar year immediately following the year in which
the notice is given;
( b ) in respect of other taxes on income and taxes on capital, to taxes
chargeable for any taxable year beginning on or after 1 January in the
calendar year immediately following the year in which the notice is
given;
2.  in Malta:
in respect of taxes which are levied for the year of assessment beginning on
or after 1 January of the second calendar year next following the year in
which the notice is given.
In witness whereof the undersigned, duly authorized thereto, have signed this
Convention.
Done in duplicate at Luxembourg this 29th day of April, 1994, in the French and
English languages, both texts being equally authentic.
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE GRAND DUCHY OF LUXEMBOURG _g S.L.123.37 19
AGREED MINUTES
The representatives of the Government of Malta and the Government of the Grand
Duchy of Luxembourg hereby record the following understanding which has been
reached between the two Governments during the course of the negotiations for the
conclusion of the Convention between Malta and the Grand Duchy of Luxembourg
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital, signed at Luxembourg today (hereinafter
referred to as "the Convention"):
1. With reference to sub-paragraph ( c ) of paragraph 1 of Article 23 of the
Convention the term "if the enterprise enjoys in Malta a special fiscal treatment by
virtue of the laws or the administrative practice of Malta" means a Luxembourg
enterprise with a branch in Malta under the provisions of sub-article (3) of article 22
of the Malta Financial Services Centre Act.
2. With reference to Article 28 of the Convention, the term "companies
enjoying a special fiscal treatment by virtue of the laws or the administrative
practice of either one of the Contracting States" means:
( a ) in the case of Luxembourg holding companies within the meaning of the
Act (lot) of 31 July, 1929 and the Decree (arrete grand-ducal) of 17
December, 1938;
( b ) in the case of Malta companies which are subject to a special tax regime
under the Malta Financial Services Centre Act, except for companies
which opt in terms of article 41 of the said Act to be subject to the
normal provisions of the Income Tax Act.
Luxembourg, 29th April, 1994
FOR THE GOVERNMENT OF MALTA
GUIDO DE MARCO 
DEPUTY PRIME MINISTER,
MINISTER FOR FOREIGN AFFAIRS
FOR THE GOVERNMENT OF THE
GRAND DUCHY OF LUXEMBOURG
JACQUES F. POOS 
DEPUTY PRIME MINISTER,
MINISTER FOR FOREIGN AFFAIRS, 
FOREIGN TRADE AND 
COOPERATION
FOR THE GOVERNMENT OF MALTA
GUIDO DE MARCO 
DEPUTY PRIME MINISTER,
MINISTER FOR FOREIGN AFFAIRS
FOR THE GOVERNMENT OF THE
GRAND DUCHY OF LUXEMBOURG
JACQUES F. POOS 
DEPUTY PRIME MINISTER,
MINISTER FOR FOREIGN AFFAIRS, 
FOREIGN TRADE AND 
COOPERATION
