The structure is possible on the basis of Article 4 (resident) of the 2008 tax treaty, which also includes that a company considered resident of the two contracting states is considered resident only in the state where its actual place of administration is located. In order to prevent the use of the structure, the competent authority`s agreement stipulates that the treatment of companies established in a single state does not apply to it: on 27 November 2018, it was announced that an agreement had been reached between Malta and Ireland to end the structures of unit malt. These were used by transferring to Malta the management and control of companies established in Ireland. As part of a competent authority agreement, Malta and Ireland agreed that the Double Taxation Convention is intended to eliminate double taxation and not to the possibility of double non-taxation. Therefore, the acceptance of a company headquartered in Ireland, which was based in Malta only in Malta, does not serve the purpose of the Double Taxation Convention, since the income was not made available either in Malta or Ireland when the income was not transferred to Malta. As a result, such a company based in Ireland will be tax resident in Ireland and the corresponding payments will be paid to it under Irish corporation tax. The agreement enters into force from the date the multilateral instrument enters into force in Ireland and Malta from the date the Multilateral Instrument (IML) enters into force from the date the Multilateral Instrument (IML) enters into force in Ireland and Malta. Malta approved its agreement with reservations with respect to the MLI by subsidiary law 123.183 and ratified the LML on 18 December 2018. The tax treaty also contains “standard articles” relating to the elimination of double taxation (according to the credit method), the mutual agreement procedure (MAP) and the exchange of information.
On 18 December 2018, Malta ratified the multilateral agreement on the implementation of measures to prevent base erosion and profit transfer, better known as the Multilateral Instrument (LIV). Malta has expressed a number of reservations, and these can be done by accessing www.oecd.org/tax/treaties/beps-mli-position-malta.pdf The MLI is the “good guy” with the sad “multilateral instrument” names, while the “bad guys” perceived “bad” cool names, for example.B. twice as much, single as. The “single malt” was “removed” before Christmas, with the Irish and Maltese tax authorities meeting in an agreement of the competent authority. This announced that the single malt regime would not be tolerated if MLI came into effect. This agreement on the relevant authorities was reached last year, but Malta and we had to hand over our IU ratifications to the OECD. Malta has its share in this regard and we then signed our treaty last week, so that our treaties will be one when the MLI comes into force. But the MLI is not just a matter of Malta; it concerns most of our tax treaties, and the power of this super-contract that prohibits single malt can therefore be invoked by other parties (and us) if the tax authorities see legal reasons not to like the agreements.
Minister Donohoe welcomes the agreement reached between the Tax Commissioners and the Maltese tax administration to prevent the “single malt” structure announced by the Irish Ministry of Finance from signing an agreement on the competent authority between the tax commissioners and the Maltese tax administration to prevent “single malt” structures. The structure, which is often used by U.S. companies to reduce tax debt, involves placing intellectual property in an Irish-based company, considered a resident of Malta because of its effective management, and then transferring payments for related sales through another Irish-based company, which pays deductible royalties to the Malta-based company. Discussions with Malta are ongoing and have resulted in an agreement from the competent authority.