The Maltese Government has published the tax treaty with the Principality of Monaco by means of Legal notice 70 of 2019.
The tax treaty is modelled on the OECD model tax convention. The treaty provides that the source country shall not withhold any tax on outbound payments of dividends, interest and royalties given that both countries do not levy any withholding taxes in terms of their own domestic legislation. Thus the residence state of the beneficiary shall have an exclusive jurisdiction to tax such income. The treaty also provides that the source state will have taxing rights with respect to capital gains on immovable property and capital gains on shares whose value is derived as to more than 50% from immovable property.
The tax treaty also contains OECD ‘standard articles’ with respect to the elimination of double taxation (under the credit method), mutual agreement procedure (MAP) and exchange of information.
