ARTICLE · 17 MAY 2018

New Notional Interest Rules 2017 - Updated

Griffiths + Associates Ltd

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Legal Notice LN 262 of 2017 has just been tabled in parliament with effective date for tax years starting for YA 2018.

MaltaTax

Peter Griffiths

Legal Notice LN 262 of 2017 has just been tabled in parliament with effective date for tax years starting for YA 2018.

The salient features are the following:

A notional interest charge can be claimed by a company resident in Malta or a permanent establishment in Malta of a foreign company. This notional interest is calculated on risk capital - this is loosely defined as share capital, share premium, positive retained earnings, loans or other debt borrowed, or any other item showed as equity.
The notional interest rate to be used is 5% plus the YTM of 20 year Malta Government Stock, at the moment standing at around 2.1%. Hence, the total notional interest rate that can currently be claimed is 7.1%.

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