Malta: Offshore Business Sectors
Licensing, Royalties and Franchising
A frequent feature of international trade and investment, particularly as between advanced and less advanced countries, is the transfer of technology or 'brand' or intellectual property in return for license, franchise or royalty payments. Due to its network of double-tax treaties and favourable taxation regime, Malta is a suitable place in which to locate an intermediary International Holding Company company to handle payment streams which might otherwise be highly-taxed in the receiving country.
Such payments would normally be deductible expenses in the originating country, and under the tax treaties will be subject to low withholding tax. The income received in Malta will be taxed after deduction of expenses at 12% or less, and where there is a 10% participation, possibly at a nil rate (see Offshore Legal and Tax Regimes and below under Financial Holding and Investment Activities for comments on the tax treatment of repatriated Maltese profits in Western countries).
On December 1, 2006, the Maltese government, deposited its instrument of accession to the Patent Cooperation Treaty (PCT) with the World Intellectual Property Organisation (WIPO).
The Treaty entered into force, with respect to the Republic of Malta, on March 1, 2007.