Details of the Malta - Norway Income Tax Treaty (2012), signed on 30 March 2012, have become available. The treaty was concluded in the English language. Once in force, the treaty will replace the income tax treaty of 2 June 1975 between Malta-Norway. The treaty generally follows the OECD Model.
The maximum rates of withholding tax are:
|–||0% on interest (article 11(1)); and|
|–||0% on royalties (article 12(1));|
Deviations from the OECD Model include that:
|–||an enterprise performing services in the other contracting state is deemed to have a permanent establishment (PE), if services are provided:
|–||expenses incurred by a resident for the purposes of "immovable property" in the other contracting state, shall be allowed as deductions on the same conditions as are allowed for residents of that state (article 6(4));|
|–||article 7 follows the OECD Model (2008);|
|–||in respect of dividends, the provisions of article 10 do not apply if the main purpose or one of the main purposes was to take advantage of the article by means of the creation or assignment of the shares or other rights in respect of which dividend is paid (article 10(7));|
|–||the source state of a pension, payments under a social security system, and annuities may withhold a tax of 15% on such payment when it is paid to a resident of the other contracting state (article 17(1));|
|–||alimony and other maintenance payments to a resident of the other state shall be taxable in the residence state of the recipient. However, such payment shall, to the extent it is not allowable as a relief to the payer, be taxable only in the source state (article 17(3));|
|–||the treaty includes a provision regarding offshore activities (article 20); and|
|–||the treaty includes a limitation of benefits clause (article 28).|
Both states generally provide for the credit method to avoid double taxation (article 22). Norway also provides for the exemption-with-progression method (article 22(1)(b)).
Neither contracting state can terminate the treaty during a period of 5 years starting from the date of its entry into force (article 29).
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