Funds | Taxation of a CIS

The tax treatment of the Collective Investment Scheme depends entitely on how that fund is classified. Maltese law distinguishes between two types of funds, being prescribed funds and non-prescribed funds.

Prescribed Funds

A prescribed fund is one which is incorporated in Malta and which has at least 85% of its assets situated in Malta.

Taxation of such funds is as follows :

  1. A final witholding tax of 10% is levied on interest, premiums and discounts earned on Maltese Government stocks or bonds, bonds issued by listed companies and income paid by corporate entities.
  2. A final witholding tax of 15% is levied on bank interest.
  3. Any income derived by the fund from immovable property situated in Malta is taxed at the normal rate of 35%.

Non-Prescribed Funds

A non-prescribed fund is one which is not incorporated in Malta or which has less than 85% of its assets situated in Malta.

Taxation of such funds is as follows :

  1. Any income and gains derived by the fund are exempt from income tax, except from income dervied from immovable property in Malta.
  2. Any income derived by the fund from immovable property situated in Malta is taxed at the normal rate of 35%.

Capital Gains

Any Capital Gains derived through the disposal of a fund, be it either a prescribed or a non-prescribed fund, by a non-resident shareholder, are exempt from tax in Malta.

Dividends

Distributions of dividend by a CIS to a non-resident shareholder are exempt from tax in Malta.

Stamp Duty

Any acquisitons or disposals of securities by a licensed CIS are exempt from any stamp duty in Malta.

VAT

A fund established in Malta is not required to register for VAT, but is not entitled to claim a refund for any VAT.