Malta: Malta clarifies taxation of fees paid to non-resident investment committee members

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Malta: Malta clarifies taxation of fees paid to non-resident investment committee members

vella.jpg

cassar.jpg

Donald Vella


Kirsten Cassar

In a recent release, Malta's Institute of Financial Services Practitioners (IFSP) sets out its understanding of the tax treatment of remuneration derived by non-Maltese resident members of an investment committee of a Maltese licensed collective investment scheme. The release is based on discussions with Malta's Inland Revenue Department (IRD). The clarification is particularly welcome in light of the growth in the Maltese fund industry in recent years. Maltese law provides for various types of retail and non-retail funds, all of which must be licensed by the Malta Financial Services Authority (MFSA) and must comply with ongoing regulation and supervision requirements based on the category of investors the fund is targeting. In terms of the relevant rules issued by the MFSA, a self-managed fund must establish an in-house investment committee in lieu of an investment fund manager. Furthermore, the majority of the investment committee's meetings must be physically held in Malta.

In this context, the IFSP together with the IRD have clarified that non-resident investment committee members of Maltese funds are subject to tax on the portion of remuneration they receive that is attributable to management services that are physically performed in Malta.

Non-residents are generally taxable in Malta on Malta-source income and gains. In principle, director's fees are considered to be Malta-source income if the company is resident in Malta. Other fees for services rendered are typically considered to have a Malta source if the services are physically performed in Malta.

IFSP and the Maltese tax authorities have therefore clarified that remuneration for the provision of advice as an investment committee member should be regarded as consideration (payment) for services rendered. Consequently, non-resident investment committee members should be taxable in Malta on the portion of the remuneration they receive that is attributable to the services that are physically performed in Malta.

Because of the complexity of making that determination, the tax authorities have determined that the portion of the remuneration that should be attributable to the portion of the services that are physically performed in Malta is to be computed on an annual basis as the higher of:

  • a pro-rata amount of the total remuneration received, determined on a per diem basis based on the actual number of days of physical presence in Malta; and

  • one-twelfth of the investment committee member's compensation.

However, this treatment may be limited by the provisions of an applicable tax treaty. If a treaty is in force between Malta and the country of residence of the non-resident investment committee member, the treaty may allocate taxing rights to the country of residence, in which case Malta would have no jurisdiction to tax the remuneration received. Malta has about 70 tax treaties in force.

Donald Vella (donald.vella@camilleripreziosi.com) and Kirsten Cassar (kirsten.cassar@camilleripreziosi.com)

Camilleri Preziosi

Tel: +356 2123 8989

Website: www.camilleripreziosi.com

more across site & shared bottom lb ros

More from across our site

In his newly created role, current SSA commissioner Bisignano will oversee all day-to-day IRS operations; in other news, Ryan has made its second acquisition in two weeks
In the age of borderless commerce, money flows faster than regulation. While digital platforms cross oceans in milliseconds, tax authorities often lag. Indonesia has decided it can wait no longer
The tariffs are disrupting global supply chains and creating a lot of uncertainty, tax expert Miguel Medeiros told ITR’s European Transfer Pricing Forum
Corporate counsel should combine deep technical knowledge with strategic dynamism, says Agarwal, winner of ITR’s EMEA In-house Indirect Tax Leader of the Year award
Luxembourg’s reform agenda continues at pace in 2025, with targeted measures for start-ups and alternative investment funds
Veteran Elizabeth Arrendale will lead the new advisory practice, which will support clients with M&A tax structuring, post-deal integration, and more
MAP cases keep increasing, and cases closed aren’t keeping pace with the number started, the OECD’s Sriram Govind also told an ITR summit
Nobody likes paperwork or paying money, but the assertion that legal accreditation doesn’t offer value to firms and clients alike is false
Ryan hopes the buyout will help it expand into Asia and the Middle East; in other news, three German finance ministers have called for a suspension of pillar two
SKAT, which was represented by Pinsent Masons, had accused Sanjay Shah and other defendants of fraudulent dividend tax refund claims
Gift this article