COLLECTIVE INVESTMENT SCHEMES 
(INVESTMENT INCOME) g S.L.123.51 1
SUBSIDIARY LEGISLATION 123.51
COLLECTIVE INVESTMENT SCHEMES 
(INVESTMENT INCOME) REGULATIONS
1st March, 2001
LEGAL NOTICE 55 of 2001, as amended by Legal Notices 111 of 2002
and 188 of 2003. 
Title.
Schemes (Investment Income) Regulations.
Definitions.
Cap. 123.
"fund" means a collective investment scheme or, in the case of a
collective investment scheme divided into sub-funds, a sub-fund of
that scheme;
"Malta based scheme" means a collective investment scheme
formed in accordance with the laws of Malta;
"overseas based scheme" means a collective investment scheme
that is not a Malta based scheme;
and other terms shall have the meaning assigned to them in articles
33 to 42, both inclusive, of the Act or, when not defined in the said
articles, the meaning assigned to them under the other provisions of
the Act.
Meaning of 
prescribed fund.
3. For the purpose of the definition of "prescribed fund" in
paragraph ( b ) of article 41A of the Act, and subject to the
provisions of that paragraph and to the other provisions of these
regulations, a fund shall be treated as a prescribed fund if it has
been so classified by the Commissioner by means of a notice in
writing.
Classification of a 
prescribed fund.
4. The Commissioner shall classify a fund as a prescribed
fund if it is a fund of a Malta based scheme that has declared in the
manner provided for in these regulations that -
( a ) the value of the assets situated in Malta allocated to
that fund is on the 1st March 2001 at least eighty-five
per cent of the value of the total assets so allocated; or
( b ) in the case of a fund that has been granted a collective
investment scheme licence on or after the 1st March
2001 the value of the assets situated in Malta that will
be allocated to that fund for the purpose of its
operations is expected to be at least eighty-five per
cent of the value of the total assets that will be so
allocated.
Non-prescribed 
fund.
5. (1) A fund in an overseas-based scheme shall be treated as
a non-prescribed fund.
(2) When a Malta based scheme declares in the manner
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provided for in these regulations that a fund does not satisfy the
conditions set out in regulation 4( a ) or ( b ), as the case may be, the
Commissioner shall classify that fund as a non-prescribed fund.
Value of assets.
Cap. 370.
6. For the purposes of these regulations the value of assets
allocated to a fund on any given day shall be the value determined
on the close of business of the last preceding working day and the
basis of valuation of such assets shall comply in all relevant
respects with that adopted in any reports or statements submitted by
or with respect to that fund for any of the purposes of the
Investment Services Act.
Change of status of 
fund.
7. (1) When a collective investment scheme declares in the
manner provided for in these regulations that the average daily
value of the assets situated in Malta allocated to a prescribed fund
has been, throughout any period of thirty consecutive days, less
than eighty-five per cent of the average daily value of the total
assets so allocated the Commissioner may, in his discretion,
classify that fund as a non-prescribed fund and that fund shall as
from the date of such new classification be treated as a non-
prescribed fund.
(2) When a Malta based scheme declares in the manner
provided for in these regulations that the average daily value of the
assets situated in Malta allocated to a non-prescribed fund has
been, throughout any period of thirty consecutive days, at least
eighty-five per cent of the average daily value of the total assets so
allocated the Commissioner may, in his discretion, classify that
fund as a prescribed fund and that fund shall, subject to the
provisions of regulation 8, be treated as a prescribed fund with
effect from the date specified in the said classification.
(3) For the purpose of these regulations the average daily
value of assets allocated to a fund on any day (hereinafter in this
paragraph referred to as "the particular day") shall be determined
by reference to the value of assets situated in Malta and the value of
the total assets allocated to that fund on each day over a period of
ninety days ending on the particular day: 
Provided that if that fund had been classified as a
prescribed or a non-prescribed fund less than ninety days before the
particular day the said period shall be a period commencing on the
date of the last classification and ending on the particular day. 
(4) The Commissioner may, as a condition for a classification
in terms of subregulation (1) or (2), impose such conditions as he
may deem appropriate in the circumstances to ensure the proper
application of the investment income provisions and of these
regulations.
Securities in a non-
prescribed fund 
that is 
subsequently 
classified as a 
prescribed fund.
Cap. 345.
8. (1) When a fund is classified as a prescribed fund in terms
of regulation 7(2) any securities held in that fund on the date of that
classification shall continue to be treated as securities in a non-
prescribed fund: provided that when such securities are disposed of
they shall, if they are listed on a stock exchange recognised under
the Financial Markets Act, be deemed to be disposed of for the
price last quoted on the recognised stock exchange before the date
of the said classification.
COLLECTIVE INVESTMENT SCHEMES 
(INVESTMENT INCOME) g S.L.123.51 3
(2) When a person holds securities that are treated as securities
in a non-prescribed fund in terms of subregulation (1) and other
securities in the same fund that are not so treated, any disposals of
securities in that fund by that person shall be treated as disposals of
securities in a non-prescribed fund until all the securities which
that person held on the date on which that fund was classified as a
prescribed fund have been disposed of. 
Calculation of cost 
of acquisition of 
listed securities.
Amended by:
L.N. 111 of 2002.
9. For the purpose of determining the capital gains derived by
a person from the disposal of securities that are listed on the
recognised stock exchange and held in a non-prescribed fund the
cost of acquisition of each unit or share of the same class as those
disposed of shall be deemed to be the average cost obtained by
dividing the total cost of acquisition of all such units or shares held
by that person on the date of the disposal by the total number of the
said units or shares:
Provided that -
( a ) if  the disposal is the first disposal of such units or shares
by that person after the 28th February, 2001, the cost of
acquisition of such units or shares held by him, if any, on
the 1st March, 2001 shall be the price at which such units
or shares were quoted on a recognised  stock exchange  on
the date when they were acquired or the price at which
they were last quoted on a recognised  stock exchange
before the 1st March, 2001, whichever price is the higher;
and ;
( b ) when the average cost of units or shares has been
determined on the occasion of a disposal, the units or
shares of the same class that are not disposed of on
that occasion shall be deemed to have been acquired at
the average cost determined on that occasion.
Calculation of 
capital gains on the 
surrender or 
maturity of unit 
linked investments.
Amended by:
L.N. 111 of 2002.
10. For the purpose of determining the capital gains arising on
the surrender or maturity of units and such like instruments relating
to linked long term business of insurance where the relative
contract of insurance was concluded before the 1st March 2001 and
where the benefits are wholly determined by reference to the value
of units or shares held in a collective investment scheme, the cost
of acquisition of the said linked units or such like instruments shall,
to the extent that they correspond to units or shares in a non-
prescribed fund that were listed on  a recognised  stock exchange on
the said date, be deemed to be equal to the price of the said units or
shares as last quoted on  a recognised  stock exchange  before that date,
or to the price of the said units or shares as quoted on a recognised  stock
exchange  on the date the said contract of insurance was concluded,
whichever price is the higher .
Rate of 
withholding tax.
Amended by:
L.N. 111 of 2002.
11. A payor shall withhold tax on investment income paid to a
collective investment scheme at the following rates:
( a ) when the investment income in question is income to
which article 41( a )(i) of the Act refers, at the rate of
fifteen cents on every lira of such payment;
( b ) in every other case, at the rate of ten cents on every
lira of such payment.
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Declarations to the 
Commissioner.
Amended by:
L.N. 111 of 2002.
12 . (1) Every Malta based scheme that holds a collective
investment scheme licence issued before the 1st March 2001 shall
make a declaration to the Commissioner stating if the value of the
assets situated in Malta allocated to each of its funds on that date is
at least eighty five per cent of the value of the total assets so
allocated. 
(2) When a collective investment scheme licence is issued on
or after the 1st March 2001 to a fund in a Malta based scheme that
scheme shall make a declaration to the Commissioner stating if the
value of the assets situated in Malta that will be allocated to that
fund for the purpose of its operations is expected to be at least
equal to eighty-five per cent of the value of the total assets that will
be so allocated. 
(3) When the average daily value of the assets situated in
Malta allocated to a prescribed fund of a collective investment
scheme has been, throughout any period of thirty consecutive days,
less than eighty-five per cent of the average daily value of the total
assets so allocated that collective investment scheme shall make a
declaration to that effect to the Commissioner. 
(4) When the average daily value of the assets situated in
Malta allocated to a non-prescribed fund of a Malta based scheme
has been, throughout any period of thirty consecutive days, at least
eighty-five per cent of the average daily value of the total assets so
allocated that collective investment scheme shall make a
declaration to that effect to the Commissioner.
(5) Any declaration required in accordance with the foregoing
provisions of this regulation shall be given without delay and
without the need of any request being made therefor by the
Commissioner.
(6) Every collective investment scheme shall make such other
declarations and give such other details as the Commissioner may
reasonably require for any of the purposes of these regulations
within such time as the Commissioner may specify.
Notification to 
payor.
Amended by:
L.N. 111 of 2002.
13. (1) When the Commissioner classifies a fund in a Malta
based scheme as a prescribed or a non-prescribed fund, that scheme
shall as soon as may be notify that status to any person who is
liable to pay any income referred to in article 41( a ) of the Act that
falls to be allocated to that fund.
(2) When any person who makes a payment of income referred
in subregulation (1) to a Malta based scheme has not been notified,
before that payment is made, that that income falls to be allocated
to a non-prescribed fund that payment shall be deemed for all the
purposes of the Act to be a payment of investment income that falls
to be allocated to a prescribed fund and that person shall
accordingly withhold tax and comply with the provisions of the Act
relating to payors.
Authorised 
financial 
intermediary.
Amended by:
L.N. 111 of 2002;
L.N. 188 of 2003.
14. (1) An authorised financial intermediary is a person
resident in Malta who has been registered as such by the
Commissioner.
(2) A person shall not be eligible for registration as an
COLLECTIVE INVESTMENT SCHEMES 
(INVESTMENT INCOME) g S.L.123.51 5
authorised financial intermediary unless he applies for registration
to the Commissioner for the purposes of these regulations and is, at
the time of such application - 
Cap. 370.
( a ) a person who holds a Category 2 or Category 3
investment services licence issued in terms of the
Investment Services Act, or
( b ) a person who holds a Category 1 investment services
licence issued in terms of the Investment Services Act
provided he declares to the Commissioner that he has
given a commitment to the Malta Financial Services
Authority that he will apply for a licence referred to in
paragraph ( a ) and provided moreover that such person
shall not remain an authorised financial intermediary
after the 28th February 2002 unless he holds, on that
date, a licence referred to in the said paragraph.
(3) ( a ) Where a recipient utilises the services of an authorised
financial intermediary in connection with the payment
of investment income, the said authorised financial
intermediary shall, unless an election in terms of
article 35 of the Act has been made, collect tax, by
deduction or otherwise, amounting to fifteen percent of
such income and shall be bound by all the obligations
imposed on payors under the investment  income
provisions:
Provided that notwithstanding the provisions of
article 33(3) of the Act -
(i) where the investment income is income referred
to in article 41( a )(v) of the Act, the tax so
collected shall be payable not later than the
ninetieth day following the day of the contract
note in relation to the disposal of the relevant
units or shares; and
(ii) where the investment income is income referred
to in article 41( a )(vi) of the Act, the tax so
collected shall be payable not later than the
thirtieth day of April following the year in which
the payment was made.
( b ) For the purposes of this regulation, a recipient utilises
the services of an authorised financial intermediary in
connection with the payment of investment income
where:
(i) the payment of investment income is made to the
authorised financial intermediary  who is the
registered holder of the relevant units or shares
and who holds such units or shares for the
benefit of the said recipient; 
(ii) the said recipient is the registered holder of the
relevant units or shares, who receives the
investment income directly in his own name and
who requires that an authorised financial
intermediary collects an amount of tax equal to
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fifteen percent of such investment income for
onward payment to the Commissioner;
(iii) the payment of investment income is effected
through an arrangement approved by the
Commissioner, which arrangement enables the
collection of tax on such investment income through
an authorised financial intermediary.
(4) Where a recipient has utilised the services of an authorised
financial intermediary in connection with the payment of investment
income, the said authorised financial intermediary shall furnish  the
recipient with a certificate in accordance with article 33(3) of the
Act, which certificate shall bear a sequential number in a series
applied to all certificates issued by that intermediary for payments
of investment income and shall contain the information specified in
Part One of the Schedule to these regulations.
(5) An authorised financial intermediary shall every month
render an account to the Commissioner in accordance with article
33(2) of the Act which shall include the information specified in
Part Two of the schedule to these regulations: provided that for any
month in which he does not make any payment of investment
income he shall furnish a nil return.
Tax treatment on 
switches.
Added by:
L.N. 188 of 2003.
15. (1) For the purposes of this regulation:
''chain of consecutive switches'' means a series of consecutive
switches (which for the purposes of this regulation may constitute a
single switch) commencing by a switch, immediately prior to which
there was not a switch, and terminating with a switch following
which there was a transfer of securities which was not a switch;
''final securities'' means those securities in a sub-fund last
acquired in a chain of consecutive switches;
''initial securities'' means those securities in a sub-fund the
switch of which was the first switch in a chain of consecutive
switches;
''prescribed switch'' means a switch of securities from a
prescribed fund;
''sub-fund'' includes a class, part or other similar section of the
same collective investment scheme;
''switch'' means a transaction, whereby securities in a sub-fund of
a collective investment scheme are switched to, or transferred to, or
re-invested in, or exchanged for or otherwise transformed into
securities of another sub-fund of the same collective investment
scheme provided that the holder of the last mentioned securities is
the same person as the holder of the first mentioned securities and
that the holding in the last mentioned sub-fund follows
immediately the holding in the first mentioned sub-fund.
(2) A switch constitutes a transfer of securities for the purposes
of article 5 of the Act:
Provided that it shall be deemed that no loss or gain arises
upon a switch.
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(INVESTMENT INCOME) g S.L.123.51 7
(3) ( a ) Capital gains arising at the time of disposal of final
securities shall be computed by aggregating those
chargeable capital gains and allowable capital losses
which would have arisen during the chain of
consecutive switches and transfer of final securities
had the provisions of the proviso to subregulation (2)
not been enacted:
Provided that in the case of a disposal of final
securities held in a non-prescribed fund and where the
relevant chain of consecutive switches does not include
a prescribed switch, such capital gains may be
calculated by deducting from the proceeds of the
disposal of the relevant final securities, the cost of
acquisition of the relevant initial securities.
( b ) In calculating the capital gains as provided for in
paragraph ( a ) -
(i) the conversion of foreign currencies, where
required, are to be made at the rates of exchange
used in the acquisition or transfer of the
securities relevant to the calculation of the
capital gains. Where proof is not available as to
the rates of exchange used in the acquisition or
transfer of the relevant securities, conversion of
currencies is to be made at the rate of exchange
(middle rate of the Central Bank) prevailing at
the end of the calendar year in which the
acquisition or transfer, as the case may be, was
made:
Provided that if the acquisition and transfer
are made in the same calendar year, the
conversion rate to be used is the rate of
exchange (middle rate of the Central Bank)
prevailing on the date of the acquisition and the
rate of exchange (middle rate of the Central
Bank) prevailing on the date of the transfer;
(ii) where the aggregation of capital gains and
capital losses as provided for in paragraph ( a )
involves different currencies, such gains or
losses may be converted into Maltese liri at the
rates of exchange (middle rate of the Central
Bank) prevailing on the dates of the relevant
switches or disposal of final securities;
(iii) the cost of acquisition is to be calculated in the
same manner provided for in regulation 9, or in
such other manner which may be approved by
the Commissioner.
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COLLECTIVE INVESTMENT SCHEMES 
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PART ONE
Information to be supplied by authorised financial intermediaries on every payment 
certificate
1) Sequential number of certificate 
2) Name and address of the authorised financial intermediary 
3) Description of the fund
4) Name and identity card number of the investor 
5) In the case of a disposal of units or shares:
a) The date of the disposal
b) The number of units or shares disposed of
c) The price for which the units or shares were disposed of 
d) The amount subject to tax 
e) The net amount paid or reinvested 
6) In the case of a distribution of profits
a) The profits distributed before withholding tax
b) The tax withheld
c) The net payment
7) Date of the certificate
8) Signature of the authorised financial intermediary
PART TWO
Monthly account to be rendered to the Commissioner by financial intermediaries 
1) Name and address of the authorised financial intermediary
2) Period covered
3) Total tax withheld 
4) First and last sequential numbers of the corresponding payment certificates 
5) A breakdown giving
a) The description of each fund
b) The tax withheld on the payments from each fund 
c) The total number of payment certificates corresponding to payments
from each fund
6) The date of the return
7) Signature of the authorised financial intermediary
For a period during which no tax was withheld a nil return must be
submitted.
Amended by:
L.N. 111 of 2002. SCHEDULE(Regulation 14(4))
