Malta tax refund eligibility: who can claim, and by when

Who the Act lets claim

• Under article 48(4A), a person in receipt of a dividend from a company registered in Malta paid from the Maltese taxed account or the foreign income account, provided that person is registered for the purpose in the prescribed manner. Registration is a precondition, not a formality that follows the claim.
• Under article 48(4), a person receiving a dividend from foreign income account profits who is either not resident in Malta and not owned, controlled by or acting on behalf of a person ordinarily resident and domiciled in Malta, or a company resident in Malta wholly owned by such non-residents. Those conditions do not apply to a recipient shareholder registered for the purposes of article 48(4) or 48(4A).
• For the full refund on a participating holding, article 48(4)(b) adds anti-abuse conditions on the underlying body of persons: EU residence or incorporation, or foreign tax of at least 15%, or not more than 50% of income from passive interest or royalties. Failing all three, the holding must not be a portfolio investment and the passive income must have borne foreign tax of at least 5%.

The paperwork that has to exist first

1. Shareholder registration in the manner prescribed, before the claim.
2. An actual dividend, paid out of an account that supports a refund.
3. A dividend certificate under article 59(5) of the Income Tax Act, showing the profits distributed, the tax paid, the net dividend, and where double taxation relief has affected the tax, the net Malta rate.
4. The claim itself, made not later than four years from the date from which the amount of tax is eligible for refund, under article 48(5).

When the money arrives

Article 48(8) makes a refund a debt due by the Commissioner, payable not later than the fourteenth day following the day on which it becomes due. The same sub-article allows that period to be extended by a further twelve months where the Commissioner needs to carry out further verifications for due diligence purposes. Any cash-flow model that assumes a fortnight should be stress-tested against the twelve months.

The downside risks the Act spells out

• Claiming when not entitled: a penalty equal to the amount of the refund claimed, plus repayment of anything actually paid with additional tax of 7% per month or part of a month (article 48(10)).
• Receiving a refund not due: repayment within thirty days, with interest under article 44 if late (article 48(9)).
• Double relief blocked: once a claim is made on a parcel of distributed profits, no further refund is available on the same profits under any provision of the Income Tax Acts (article 48(7)(a)), and the tax deducted from the dividend can be set off only against the tax charged on that dividend (article 48(7)(b)).

The question this site cannot answer

None of the above tells you what happens in the country where the shareholder is resident. Controlled foreign company rules, dividend taxation, tests of where a company is effectively managed, and for large groups the EU global minimum tax, all sit outside the Maltese Acts and frequently change the overall outcome. Two jurisdictions have to be advised on, not one.

Independent guide. Every figure and rule on this page is taken from the Income Tax Act and the Income Tax Management Act as published on legislation.mt at the updated date above. Confirm the current position with the Malta Tax and Customs Administration and a licensed practitioner before acting.