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



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 ( and Kirsten Cassar (

Camilleri Preziosi

Tel: +356 2123 8989


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