Malta-registered collective investment schemes are generally not subject to Malta tax. Given that CIS are properly structured, such schemes generally can take advantage of the following:
- no income or company tax is imposed on schemes having more than 85% of their underlying assets situated outside Malta
- no tax on the Net Asset Value of the scheme
- no withholding tax on dividends paid to non-residents
- no taxation on capital gains on the sale of units by non-residents
- no stamp duty on issues or transfers of units
- no taxation on capital gains on the sale of shares or units by residents provided such shares or units are listed on the Malta Stock Exchange.
Taxation at the level of the investors
In order to analyse the taxation of investors, the below need to be established:
- is the shareholding in a prescribed or non-prescribed fund?
- what type of income is being received?
- is the shareholder a Maltese or non-Maltese resident?
- is the shareholder an individual or a body-corporate?
In the case of Maltese residents, any capital gains arising on the redemption, liquidation, or cancellation of units in a non-prescribed fund by Maltese shareholders may attract 15% final withholding tax as per the investment income provisions. Such income is not to be declared in the individual's tax return as the 15% withholding tax incurred is a final tax. Should the investor wish to declare such income, then such Maltese resident may opt to receive the income in gross and thus would declare the capital gain made in the tax return.
Non-Malta resident unit holders are exempt from tax on gains or profits arising on the disposal of units in both prescribed and non-prescribed funds. Such exemption applies on the basis that the unit older is not resident in Malta for tax purposes and subject that such non-resident is not owned and controlled by, directly or indirectly, nor acts on behalf of an individual/s ordinarily resident and domiciled in Malta. A number of exemptions apply.
Contact us for further information about how Grant Thornton can help you with your collective investment scheme and taxation enquiry.