Russia, Malta Update Double Tax Treaty

Russia and Malta have signed amendments to their Double Tax Agreement, to come into effect from January 1st 2021. The amendments increase interest and dividend tax to 15%, while also defining a list of exceptions.

“Exceptions are provided for institutional investments, as well as for public companies, which have at least 15% of their shares in free float, and those who own at least 15% of the company’s capital and pay these incomes during the year. For such income, the tax rate is set at 5 %.” according to a statement issued by the Russian Ministry of Finance.

The changes will not affect interest income paid on Eurobonds, bonded loans of Russian companies, as well as loans provided by foreign banks. The protocol was signed by Russia’s Deputy Finance Minister Alexei Sazanov and Malta’s ambassador to Russia Pierre Clive Agius.

The Russian Finance Ministry has been updating several DTA, closing loopholes that has seen overly generous terms for Russian nationals investing overseas, and wish to increase the tax on dividends that are withdrawn abroad, from 2% to 15%. This measure requires adjustment of agreements on avoidance of double taxation with some countries.

Russia recently renegotiated the Russia-Cyprus Double Tax Treaty and is negotiating with Luxembourg and the Netherlands concerning similar cases.

Malta is a popular business centre for Russian investors with one of the lowest income tax rates in the European Union. It is also a hub for IT professionals in gaming and other online applications, and has a Russian Cultural Centre situated in the Maltese capital, Valletta.

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