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SUBSIDIARY LEGISLATION 123.35
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH THE UNITED KINGDOM OF 
GREAT BRITAIN AND NORTHERN IRELAND 
ORDER
27th March, 1995
LEGAL NOTICE 105 of 1995. 
Title.
on Income with the United Kingdom of Great Britain and Northern
Ireland Order.
Arrangements 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 United Kingdom of Great
Britain and Northern Ireland with a view to affording
relief from double taxation in relation to the following
taxes imposed by the laws of the United Kingdom of
Great Britain and Northern Ireland:
(i) the income tax;
(ii)  the corporation tax; and
(iii) the capital gains tax;
( b ) that it is expedient that those arrangements should
have effect.
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S C H E D U L E
CONVENTION 
BETWEEN MALTA
AND THE UNITED KINGDOM OF GREAT BRITAIN
AND NORTHERN IRELAND
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
AND CAPITAL GAINS
The Government of Malta and the Government of the United Kingdom of Great
Britain and Northern Ireland, desiring to conclude a new Convention for the
avoidance of double taxation and the prevention of fiscal evasion with respect to
taxes on income and capital gains, have agreed as follows:
CHAPTER I
Scope of the Convention
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
(1) The existing taxes to which this Convention shall apply are:
( a ) in the case of the United Kingdom:
(i) the income tax;
(ii) the corporation tax; and
(iii) the capital gains tax;
(hereinafter referred to as "United Kingdom tax"); 
( b ) in the case of Malta:
the income tax,
(hereinafter referred to as "Malta tax").
(2) This Convention shall apply also to any identical or substantially similar
taxes which are imposed after the date of signature of this Convention in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting States
shall notify each other of any significant 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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CHAPTER II
Definitions
ARTICLE 3
General Definitions
(1) For the purposes of this Convention, unless the context otherwise requires:
( a )  The term "United Kingdom" means Great Britain and Northern Ireland,
including any area outside the territorial sea of the United Kingdom which in
accordance with international law has been or may hereafter be designated, under the
laws of the United Kingdom concerning the Continental Shelf, as an area within
which the rights of the United Kingdom with respect to the sea bed and subsoil and
their natural resources may be exercised;
( 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 the
United Kingdom or Malta as the context requires;
( d ) the term "person" comprises an individual and -
(i) in relation to the United Kingdom, also a company or any other body of
persons but does not include a partnership;
(ii) in relation to Malta, also 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 "national" means:
(i) in relation to the United Kingdom, any British citizen, or any British
subject not possessing the citizenship of any other Commonwealth
country or territory, provided he has the right of abode in the United
Kingdom; and any legal person, partnership, association or other entity
deriving its status as such from the law in force in the United Kingdom;
(ii) in relation to Malta, any citizen of Malta and any legal person,
partnership, association or other entity deriving its status as such from
the law in force in Malta;
( 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 the case of the United Kingdom, the Commissioners of Inland
Revenue or their authorised representative;
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(ii) in the case of Malta, the Minister responsible for finance or his
authorised representative.
(2) In the application of this Convention by a Contracting State any term not
otherwise defined shall, unless the context otherwise requires, have the meaning
which it has under the laws of that State concerning the taxes to which this
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
State in respect only of income or capital gains from sources therein.
(2) Where by reason of the provisions of paragraph (1) of this Article 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 solely of the Contracting 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
solely of the Contracting State with which his personal and economic
relations are closer (centre of vital interests);
( b ) if the Contracting State in which he has his centre of vital interests
cannot be determined, or if he has no permanent home available to him
in either Contracting State, he shall be deemed to be a resident solely of
the Contracting State in which he has an habitual abode;
( c ) if he has an habitual abode in both Contracting States or in neither of
them, he shall be deemed to be a resident solely of the Contracting State
of which he is a national;
( d ) if he is a national of both Contracting 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) of this Article a person
other than an individual is a resident of both Contracting States, then it shall be
deemed to be a resident solely of the Contracting 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; 
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( d ) a factory; 
( e ) a workshop;
( f ) an installation or structure for the exploration of natural resources; 
( g ) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources;
( h ) a building site or construction or assembly project or supervisory
activities in connection therewith, where 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;
( 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 ) of this paragraph,
provided that the overall activity of the fixed place of business resulting
from this combination is of a preparatory or auxiliary character.
(4) Notwithstanding the provisions of paragraphs (1) and (2) of this Article
where a person - other than an agent of an independent status to whom paragraph (5)
of this Article applies - is acting on behalf of an enterprise and has, and habitually
exercises, in a Contracting State an authority to conclude contracts on behalf 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)
of this Article 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.
(5) 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.
(6) 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
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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.
CHAPTER III
Taxation of Income
ARTICLE 6
Income from Immovable Property
(1) Income derived by a resident of a Contracting State from immovable
property (including income from agriculture and 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 immovable or 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) of this Article 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) of this Article 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) of this Article, 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 enterprises which are controlled by the first-mentioned enterprise or have a
controlling interest in it or are subject to the same common control.
(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
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situated or elsewhere.
(4) 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.
(5) 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.
(6) The provisions of this Article shall not affect the application of the
provisions of the law of a Contracting State regarding the taxation of profits from the
business of insurance.
(7) Where profits include items of income or capital gains 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
Shipping and Air Transport
(1) Profits derived by a resident of a Contracting State from the operation of
ships or aircraft in international traffic shall be taxable only in that State.
(2) For the purposes of this Article, profits from the operation of ships or
aircraft in international traffic include:
( a ) income from the rental on a bareboat basis of ships or aircraft; and
( b ) profits from the use, maintenance or rental of containers (including
trailers and related equipment for the transport of containers) used for
the transport of goods or merchandise;
where such rental or such use, maintenance or rental, as the case may be, is
incidental to the operation of ships or aircraft in international traffic.
(3) Where profits within paragraphs (1) and (2) of this Article are derived by a
resident of a Contracting State from participation in a pool, a joint business or an
international operating agency, the profits attributable to that resident shall be
taxable only in the Contracting State of which he is a resident.
ARTICLE 9
Associated Enterprises
(1) 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 by a Contracting State in the profits of that
enterprise and taxed accordingly.
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(2) 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
consult each other.
ARTICLE 10
Dividends
(1) Dividends paid by a company which is a resident of the United Kingdom to a
resident of Malta may be taxed in Malta.
(2) An individual who is a resident of Malta and who receives a dividend from a
company which is a resident of the United Kingdom, shall, subject to the provisions
of this Article and provided that he is the beneficial owner of that dividend, be
entitled:
( a ) to a tax credit in respect thereof of an amount equal to the tax credit to
which an individual resident in the United Kingdom would have been
entitled had he received that dividend (in this Article referred to as "the
resident’s tax credit") less 15 per cent of the aggregate of the amount or
value of that dividend and the amount of the resident’s tax credit, and
( b ) to payment of any amount by which the tax credit to which he is entitled
by virtue of sub-paragraph ( a ) exceeds his liability to tax in the United
Kingdom.
(3) Dividends paid by a company which is a resident of Malta to a resident of
the United Kingdom may be taxed in the United Kingdom. Such dividends may also
be taxed in Malta and according to the laws of Malta, but if the recipient is the
beneficial owner of the dividends the tax so charged shall not exceed that chargeable
on the profits out of which the dividends are paid.
(4) The term "dividends" as used in this Article means income from shares, or
other rights not being debt-claims, participating in profits, as well as income from
other corporate rights assimilated to income from shares by the taxation laws of the
State of which the company making the distribution is a resident and also includes
any other item which, under the laws of the Contracting State of which the company
paying the dividend is a resident, is treated as a dividend or distribution of a
company.
(5) The provisions of paragraph (2) or, as the case may be, (3) of this Article
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 a case the provisions of Article 7 or Article 14 of this Convention, as the case
may be, shall apply.
(6) Where a company which is a resident of a Contracting State derives profits
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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 undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in that other State.
ARTICLE 11
Interest
(1) Interest 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 interest may also be taxed in the Contracting State in which
it arises and according to the laws of that State, but if the recipient is the beneficial
owner of the interest and subject to tax in respect of the interest in the other
Contracting State the tax so charged shall not exceed 10 per cent of the gross amount
of the interest.
(3) 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. The term "interest" shall not
include any item which is treated as a distribution under the provisions of Article 10
of this Convention.
(4) The provisions of paragraphs (1) and (2) of this Article 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 of
this Convention, as the case may be, shall apply.
(5) Interest 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 interest, 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 indebtedness on which the interest is paid
was incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest 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
interest paid exceeds, for whatever reason, 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 of interest. 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.
(7) The provisions of this Article shall not apply if it was the main purpose or
one of the main purposes of any person concerned with the creation or assignment of
the debt-claim in respect of which the interest is paid to take advantage of this
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Article by means of that creation or assignment.
(8) Notwithstanding the provisions of paragraph (2) of this Article, interest
arising in a Contracting State shall be exempt from tax in that State if it is derived
and beneficially owned by the Government of the other Contracting State or a local
authority thereof or any agency or instrumentality of that Government or local
authority.
(9) Notwithstanding the provisions of Article 7 of this Convention and of
paragraph (2) of this Article, interest arising in a Contracting State which is paid to
and beneficially owned by a resident of the other Contracting State shall be exempt
from tax in the first-mentioned Contracting State if it is paid in respect of a loan
made, guaranteed or insured, or any other debt-claim or credit guaranteed or insured
by an institution beneficially owned by the Government of the Contracting State or
any agency or instrumentality of that Government.
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 and subject to tax in respect of the royalties in the State of
which he is a resident, the tax so charged shall not exceed 10 per cent of the gross
amount of the royalties.
(3) The term "royalties" 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 (know-how);
( c ) the supply of any assistance in the State of which the payer of the
royalties is resident 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 ) 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) of this Article 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 Contracting 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 of this Convention, 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.
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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 exceeds, for whatever reason, 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.
(7) The provisions of this Article shall not apply if it was the main purpose or
one of the main purposes of any person concerned with the creation or assignment of
the rights in respect of which the royalties are paid to take advantage of this Article
by means of that creation or assignment.
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 of this Convention and
situated in the other Contracting State may be taxed in that other State.
(2) Income or gains derived by a resident of a Contracting State from the
alienation of:
( a ) shares, other than shares quoted on an approved Stock Exchange,
deriving their value or the greater part of their value directly or
indirectly from immovable property situated in the other Contracting
State, or
( b ) an interest in a partnership or trust the assets of which consist
principally of immovable property situated in the other Contracting
State, or of shares referred to in sub-paragraph ( a ) above, 
may be taxed in that other State.
(3) 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 with the whole
enterprise) or of such fixed base, may be taxed in that other State.
(4) Income or gains derived by a resident of a Contracting State from the
alienation of ships or aircraft operated in international traffic by an enterprise of a
Contracting State or movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that Contracting State.
(5) Income or gains from the alienation of any property other than that referred
to in paragraphs (1), (2), (3) and (4) of this Article shall be taxable only in the
Contracting State of which the alienator is a resident provided that such income or
gains are subject to tax in that Contracting State.
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(6) The provisions of paragraph (5) of this Article shall not affect the right of a
Contracting State to levy according to its law a tax on income or capital gains from
the alienation of any property derived by an individual who is a resident of the other
Contracting State and has been a resident of the first-mentioned Contracting State at
any time during the five years immediately preceding the alienation of the property.
ARTICLE 14
Independent Personal Services
(1) Income derived by a resident of a Contracting State in respect of
professional services or 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 183 days during any
calendar year.
(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, and 19 of this Convention,
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) of this Article,
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 within any period of twelve
months; 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 may be taxed in the Contracting State of which the enterprise
operating the ship or aircraft is a resident.
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ARTICLE 16
Directors’ Fees
Directors’ fees and similar payments derived by a resident of one of the
Contracting States in his capacity as a member of the board of directors, or other
comparable body however described, of a company which is a resident of the other
Contracting State may be taxed in that other State.
ARTICLE 17
Artistes and Sportsmen
(1) Notwithstanding the provisions of Articles 14 and 15 of this Convention,
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 of this Convention, 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 of this Convention,
pensions and other similar remuneration paid in consideration of past employment,
or any annuity paid, to an individual who is a resident of a Contracting State shall be
taxable only in that State.
(2) The term "annuity" means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an obligation
to make the payments in return for adequate and full consideration in money or
money’s worth.
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
14 g S.L.123.35
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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 of this Convention shall apply to
remuneration and pensions in respect of services rendered in connection with any
business carried on by a Contracting State or a political subdivision or a local
authority thereof.
ARTICLE 20
Students and Trainees
An individual who is or was a resident of a Contracting State immediately before
making a visit to the other Contracting State and is present in the other State solely:
( a ) as a student at a recognised university, college, school or other similar
recognised 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 organisation or under a
technical assistance programme entered into by the Government of
either State;
shall be exempt from tax in that other State on:
(i) all remittances from abroad for the purposes of his maintenance,
education, study, research or training; and
(ii) the amount of such grant, allowance or award.
ARTICLE 21
Other Income
(1) Items of income of a resident of a Contracting State, wherever arising,
which are not dealt with in the foregoing Articles of this Convention, other than
income paid out of trusts or the estates of deceased persons in the course of
administration, and which are subject to tax in that State shall be taxable only in that
State.
(2) The provisions of paragraph (1) of this Article shall not apply to income,
other than income from immovable property as defined in paragraph (2) of Article 6
of this Convention, 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 of this
Convention, as the case may be, shall apply.
(3) The provisions of this Article shall not apply if it was the main purpose or
one of the main purposes of any person considered with the creation or assignment
of the rights in respect of which the income is paid to take advantage of this Article
by means of that creation or assignment.
CHAPTER IV
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Elimination of Double Taxation
ARTICLE 22
Elimination of Double Taxation
(1) Subject to the provisions of the law of the United Kingdom regarding the
allowance as a credit against United Kingdom tax of tax payable in a territory
outside the United Kingdom (which shall not affect the general principle hereof):
( a ) Malta tax payable under the laws of Malta and in accordance with this
Convention, whether directly or by deduction, on profits, income or
chargeable gains from sources within Malta (excluding in the case of a
dividend, tax payable in respect of the profits out of which the dividend
is paid) shall be allowed as a credit against any United Kingdom tax
computed by reference to the same profits, income, or chargeable gains
by reference to which the Malta tax is computed;
( b ) in the case of a dividend paid by a company which is a resident of Malta
to a company which is resident of the United Kingdom and which
controls directly or indirectly at least 10 per cent of the voting power in
the company paying the dividend, the credit shall take into account (in
addition to any Malta tax for which credit may be allowed under the
provisions of sub-paragraph ( a ) of this paragraph) the Malta tax payable
by the company in respect of the profits out of which such dividend is
paid.
(2) Subject to the provisions of the law of Malta regarding the allowance as a
credit against Malta tax of tax payable in a territory outside Malta, where, in
accordance with the provisions of this Convention, there is included in a Malta
assessment profits, income or chargeable gains from sources within the United
Kingdom, the United Kingdom tax payable, whether directly or by deduction, in
respect of those sources (excluding in the case of a dividend, tax payable in respect
of the profits out of which the dividend is paid) shall be allowed as a credit against
any Malta tax payable in respect of those profits, income or chargeable gains.
(3) For the purposes of paragraphs (1) and (2) of this Article, profits, income
and capital gains owned by a resident of a Contracting State which may be taxed in
the other Contracting State in accordance with this Convention shall be deemed to
arise in that other Contracting State.
(4) Subject to paragraphs (5) and (6) of this Article, for the purposes of
paragraph (1) of this Article the term "Malta tax payable" shall be deemed to include
any amount which would have been payable as Malta tax for any year but for a
deduction allowed in computing taxable income, or an exemption or reduction of tax
granted for that year or any part thereof, under any of the following provisions of
Malta law:
( a ) the provisions of:
(i) article 3 and, where a deduction is allowed in computing taxable
income by way of investment allowance, article 4 of the Aids to
Industries Ordinance;
(ii) articles 7, 8 and 9 (so far as it provides for exemption from tax on
dividends paid out of the gains or profits, or part thereof, of a
company which are relieved from income tax under the provisions
of article 7), 19, 20, 23 and 36 (5) of the Industrial Development
Act;
16 g S.L.123.35
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so far as the provisions in question were in force on, and have not been
modified since, the date of signature of this Convention, or have been
modified only in minor respects so as not to affect their general
character and provided always that the competent authority of Malta has
certified that any such exemption from or reduction of Malta tax given
under these articles has been granted in order to promote industrial,
commercial, scientific, educational or other development in Malta and
that the gains or profits of the company, or any part thereof, were not
exempt from Malta tax for the year in question, or part thereof, under
the provisions of Articles 4 or 5 of the Industrial Development Act, and
the competent authority of the United Kingdom has accepted that such
exemption or reduction has been granted for such purpose; or
( b ) any other provision which may subsequently be enacted allowing a
deduction in computing taxable income, or granting an exemption or
reduction of tax, which is agreed by the competent authorities of the
Contracting States to be of a substantially similar character to any of the
provisions referred to in sub-paragraph ( a )(i) or (ii) of this paragraph,
so far as it has not been modified thereafter or has been modified only in
minor respects so as not to affect its general character, and subject
always to certification and acceptance having taken place as provided
for under sub-paragraph ( a ) of this paragraph.
(5) Relief from United Kingdom tax by virtue of paragraph (4) of this Article
shall be given for a period of ten years only, beginning with the date on which this
Convention entered into force.
(6) The period referred to in paragraph (5) of this Article may be extended by
agreement between the Contracting States.
ARTICLE 23
Limitation of Relief
(1) Where under any provision of this Convention any income is relieved from
tax in a Contracting State and, under the law in force in the other Contracting State a
person, in respect at that income, is subject to tax by reference to the amount thereof
which is remitted to or received in that other Contracting State and not by reference
to the full amount thereof, then the relief to be allowed under this Convention in the
first-mentioned Contracting State shall apply only to so much of the income as is
taxed in the other Contracting State.
(2) The provisions of this Convention shall not apply to persons entitled to any
special tax benefit under:
( a ) a law of either one of the Contracting Sates which has been identified in
an Exchange of Notes between the Contracting States; or
( b ) any substantially similar law subsequently enacted.
ARTICLE 24
Partnerships
(1) Where, under any provision of this Convention, a partnership is entitled, as a
resident of Malta, to exemption from tax in the United Kingdom on any income or
capital gains, that provision shall not be construed as restricting the right of the
United Kingdom to tax any partner who is a resident of the United Kingdom on his
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UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND g S.L.123.35 17
share of such income or capital gains; but any such income or gains shall be treated
for the purposes of Article 22 of this Convention as income or gains from sources in
Malta.
(2) Nothing in Article 10 of this Convention shall entitle a partnership which is
a resident of Malta to a tax credit in respect of dividends paid to the partnership by a
company which is a resident of the United Kingdom; but any partner who is a
resident of Malta shall be treated for the purposes of the said Article 10 and of this
paragraph as having been paid a dividend of an amount corresponding to his share of
those dividends by the company which is a resident of the United Kingdom.
CHAPTER V
Special Provisions
ARTICLE 25
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.
(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 (6) of
Article 11, or paragraph (6) of Article 12 of this Convention 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.
(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 that 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 residents 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 apply to the taxes which are the subject
of this Convention.
ARTICLE 26
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
18 g S.L.123.35
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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 25
of this Convention to that of the Contracting State of which he is a national.
(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.
(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.
(4) The competent authorities of the Contracting States may communicate with
each other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs.
ARTICLE 27
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. 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 he
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) of this Article 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.
ARTICLE 28
Diplomatic and Consular Officials
Nothing in this Convention shall affect the fiscal privileges of diplomatic agents
or consular officials under the general rules of international law or under the
provisions of special agreements.
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ARTICLE 29
Entry into Force
(1) Each of the Contracting States shall notify to the other through the
diplomatic channel the completion of the procedures required by its law for the
bringing into force of this Convention. This Convention shall enter into force on the
date of the later of these notifications and shall thereupon have effect:
( a ) in the United Kingdom:
(i) in respect of income tax and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year next
following that in which the Convention enters into force;
(ii) in respect of corporation tax, for any financial year beginning on
or after 1 April in the calendar year next following that in which
the Convention enters into force;
( b ) in Malta:
in respect of income tax, for any year of assessment beginning on or
after the first day of January in the calendar year next following that in
which the Convention enters into force.
(2) The Arrangement between Her Majesty’s Government and the Government
of Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income as amended by the Agreement signed at Valletta on
29th November 1974 (hereinafter referred to as "the 1961 Arrangement") shall
terminate and cease to be effective from the date upon which this Convention has
effect in respect of the taxes to which this Convention applies in accordance with the
provisions of paragraph (1) of this Article.
(3) Where any provision of the 1961 Arrangement would have afforded any
greater relief from tax than is due under this Convention, any such provision as
aforesaid shall continue to have effect:
( a ) in the United Kingdom, for any year of assessment, financial year, or
chargeable period; and
( b ) in Malta, for any year of assessment 
beginning in either case, before the entry into force of this Convention.
ARTICLE 30
Termination
This Convention shall remain in force until terminated by one of the Contracting
States. Either Contracting State may terminate the Convention, through the
diplomatic channel, by giving notice of termination at least six months before the
end of any calendar year. In such event, the Convention shall cease to have effect:
( a ) in the United Kingdom:
(i)  in respect of income tax and capital gains tax, for any year of
assessment beginning on or after 6 April in the calendar year next
following that in which the notice is given;
(ii) in respect of corporation tax, for any financial year beginning on
or after 1 April in the calendar year next following that in which
the notice is given;
( b ) in Malta:
20 g S.L.123.35
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in respect of income tax, for any year of assessment beginning on or
after the first day of January in the calendar year next following that in
which the notice is given.
In witness whereof the undersigned, being duly authorised thereto by their
respective Governments, have signed this Convention.
DONE at London, this 12 day of May, 1994, in the English language.
JOSEF BONNICI
FOR THE GOVERNMENT OF MALTA
STEPHEN DORELL
FOR THE GOVERNMENT OF THE
UNITED KINGDOM OF GREAT 
BRITAIN AND NORTHERN IRELAND
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UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND g S.L.123.35 21
EXCHANGE OF NOTES
London
12th May, 1994
Your Excellency
I have the honour to refer to the Convention between the Government of the
United Kingdom of Great Britain and Northern Ireland and the Government of Malta
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains which has been signed today and to
propose on behalf of the Government of the United Kingdom of Great Britain and
Northern Ireland that:
( a ) with reference to Articles 7 and 9 , it is understood that nothing
contained therein 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 practicable to
ascertain the profits to be attributed to a permanent establishment,
provided that that law shall be applied, so far as the information
available to the competent authority permits, consistently with the
principles of the said two Articles;
( b ) with reference to paragraph (9) of Article 11 , it is understood that the
relevant institution, agency or instrumentality shall in the case of the
United Kingdom be the Export Credits Guarantee Department and shall
in the case of Malta be the Export Credit Guarantee Company Ltd;
( c ) with reference to paragraph (6) of Article 22 , it is understood that at the
request of one competent authority both Contracting States shall enter
into discussions about extending the period referred to in paragraph (5)
at any time so that, in the event of an agreement to extend that period
being reached, there should be no discontinuity in the application of the
Article;
( d ) with reference to paragraph (2) of Article 23 , the provisions of this
Convention shall not apply:
(i) to persons who are entitled to a special tax benefit under the
Malta Financial Services Centre Act except for those persons who
opt under article 41 of the said Act to be subject to the normal
provisions of the Income Tax Act; or
(ii) to persons who and to the extent to which under the provisions of
the Merchant Shipping Act are not subject to tax on the profits
derived from the operation of ships in international traffic; or
(iii) to persons entitled to any special tax benefit in respect of
distributions by a trust subject to the provisions of the Trusts Act
given that a trust as laid down in that Act is not vested with legal
personality and therefore cannot benefit under the Convention in
its own right; or
(iv) to persons entitled to any special tax benefit under any
substantially similar law subsequently enacted and which is
agreed by the competent authorities of the Contracting States as
included within the terms of paragraph (2) of Article 23 of this
22 g S.L.123.35
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Convention.
If the foregoing proposals are acceptable to the Government of Malta, I have the
honour to suggest that the present Note and Your Excellency’s reply to that effect
shall be regarded as constituting an agreement between the two Governments in this
matter which shall enter into force at the same time as the entry into force of this
Convention.
I avail myself of this opportunity to extend to Your Excellency the assurance of
my highest consideration.
J.S. BUCK
for the Secretary of State
for Foreign and Commonwealth Affairs
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Floriana
12th May, 1994
Your Excellency
I have the honour to acknowledge receipt of Your Excellency’s Note of today
which reads as follows:
"I have the honour to refer to the Convention between the Government of the
United Kingdom of Great Britain and Northern Ireland and the Government of Malta
for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
respect to Taxes on Income and Capital Gains which has been signed today and to
propose on behalf of the Government of the United Kingdom of Great Britain and
Northern Ireland that:
( a ) with reference to Articles 7 and 9 , it is understood that nothing
contained therein 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 practicable to
ascertain the profits to be attributed to a permanent establishment,
provided that that law shall be applied, so far as the information
available to the competent authority permits, consistently with the
principles of the said two Articles;
( b ) with reference to paragraph (9) of Article 11 , it is understood that the
relevant institution, agency or instrumentality shall in the case of the
United Kingdom be the Export Credits Guarantee Department and shall
in the case of Malta be the Export Credit Guarantee Company Ltd;
( c ) with reference to paragraph (6) of Article 22 , it is understood that at the
request of one competent authority both Contracting States shall enter
into discussions about extending the period referred to in paragraph (5)
at any time so that, in the event of an agreement to extend that period
being reached, there should be no discontinuity in the application of the
Article;
( d ) with reference to paragraph (2) of Article 23 , the provisions of this
Convention shall not apply:
(i) to persons who are entitled to a special tax benefit under the
Malta Financial Services Centre Act except for those persons who
opt under article 41 of the said Act to be subject to the normal
provisions of the Income Tax Act; or
(ii) to persons who and to the extent to which under the provisions of
the Merchant Shipping Act are not subject to tax on the profits
derived from the operation of ships in international traffic; or
(iii) to persons entitled to any special tax benefit in respect of
distributions by a trust subject to the provisions of the Trusts Act
given that a trust as laid down in that Act is not vested with legal
personality and therefore cannot benefit under the Convention in
its own right; or
(iv) to persons entitled to any special tax benefit under any
substantially similar law subsequently enacted and which is
agreed by the competent authorities of the Contracting States as
included within the terms of paragraph (2) of Article 23 of this
24 g S.L.123.35
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Convention.
If the foregoing proposals are acceptable to the Government of Malta, I have the
honour to suggest that the present Note and Your Excellency’s reply to that effect
shall be regarded as constituting an agreement between the two Governments in this
matter, which shall enter into force at the same time as the entry into force of this
Convention".
The foregoing proposals being acceptable to the Government of Malta, I have the
honour to confirm that Your Excellency’s Note and this Reply shall be regarded as
constituting an agreement between the two Governments in the matter which shall
enter into force at the same time as the entry into force of this Convention.
I avail myself of this opportunity to extend to Your Excellency the assurance of
my highest consideration.
VINCENT GALEA
Commissioner of Inland Revenue
For the Government of Malta
