The income tax treaty between Armenia and Malta entered into force on 25 November 2021. The treaty, signed 24 September 2019, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Armenian profit tax and income tax and Malta income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel and the activities continue for a period or periods aggregating more than 6 months within any 12-month period.

Withholding Tax Rates

• Dividends -
  • for dividends paid by a resident of Armenia to a resident of Malta, the tax may not exceed 5% if the beneficial owner is a company that directly holds at least 10% of the paying company's capital and has invested at least 1.5 million euro (or equivalent) in the share capital of the paying company at the date of dividend payment; otherwise, 10%
  • for dividends paid by a resident of Malta to a resident of Armenia, the tax is limited to the amount of Malta tax on the profits out of which the dividends are paid
• Interest - 5%
• Royalties - 5%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
• Gains from the alienation of shares or comparable interests if, at any time during the 365 days preceding the alienation, the shares or comparable interests derived more than 50% of their value directly or indirectly from immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entitlement to Benefits

Article 27 (Entitlement to Benefits) provides that a benefit under the treaty will not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty.

Effective Date

The treaty applies from 1 January 2022.