Any fixed place of business where companies and individuals carry out economic activities.
Any fixed place of business where companies and individuals carry out economic activities.
(a) taxable person is established in a country if he has established his economic activity or has a fixed place of establishment from which he carries on that economic activity in that country or, being a physical person who has not fixed his economic activity or who does not have a fixed place of establishment in any country, has a permanent address or usually resides inthat country; (b) a non-taxable legal person is established in a country ifit is constituted under the law of that country or if ithas a fixed place in that country from which it carrieson its activities; (c) a non-taxable physical person is established in the country where he has a permanent address or usually resides.(3) Where, in terms of subarticle (2), a taxable person falls to be treated as established in Malta and in another country withrespect to the same transaction, and where it is necessary for theproper application of any provision of this Act that he should betreated as established only in one of those two countries, he shall,to the extent that it is so necessary, be treated as established only inthe country with which that transaction is more closely connected.
Legal stipulation
Although Maltese tax legislation contains a number of references to the term ‘permanent establishment’, the term is not defined by Maltese legislation. Indeed, in terms of Maltese domestic tax law, a non-resident is, in principle, subject to Maltese tax on income arising in Malta, irrespective of the existence or otherwise of a PE in Malta (subject to any double tax treaty [DTT] provisions that would apply if in conflict with Maltese tax law).
In the event that the Maltese Inland Revenue is required to interpret such a term, reference would typically be made to the definition contained in the OECD Model Convention.
Main examples
In particular, management headquarters, branches, offices, factories, workshops, warehouses, shops or other establishments, mines, oil or gas wells, quarries, agricultural, forestry or livestock farms or any other site for the exploration or extraction of natural resources, and construction, installation or assembly work lasting more than six months shall be deemed to constitute a permanent establishment.
Formal requirements
– Identification VAT Number (begins with an “MT”)
– No need of a tax representative with residence in Malta
– Identification Tax Number (begins with an “99”)
– Obligation of a tax representative who is registered in Malta
Legal personality
Yes
Yes
Cost
Less costly than normal companies established in Malta, as less formal requirements are needed
Main requirements
VAT
CIT
Existence of place of business
Yes
Yes
Fixation of the place of business
Yes
Yes
Carrying of an economic activity
Yes
Yes
Further requirements per country
No
No
Short analysis of the main examples
VAT
CIT
Dependent agent
Agencies or representatives authorised to contract in the name and on behalf of the taxable person
Agents or representatives authorised to contract or negotiate in the name and on behalf of the taxable person
Real estate operated under lease or under any other title
The mere ownership of a property, consitutes a permanent establishment
The mere ownership of a property, does not constitute a permanent establishment
Construction, installation or assembly works
6 months
6 months
Warehouse
The ownership or rental of a warehouse constitiutes a permanent establishment (not logistic services)
The ownership or rental of a warehouse does not constitute a permanent establishment (not logistic services)
Consequences
VAT
CIT
Tax returns
– Quarterly Tax return
– Annual summary of VAT returns
– Regular declarations regarding intra-Community operations
– Other informative declarations
