Legal Notice 411 of 2018 was published on 11th December
2018 by the Minister of Finance (Malta), containing The European
Union Anti-Tax Avoidance Directives Implementation Regulations
(ATAD EU 2016/1164) of July 2016. The legal notice contains four
measures:
- interest
limitation
- general anti-abuse rule
(GAAR)
- controlled foreign company
(CFC) rule
- exit taxation
These rules apply to all companies as well as other entities
that are subject to tax in Malta in the same manner as companies,
including entities that are not resident in Malta but that have a
permanent establishment in Malta.
1. Interest Limitation Rule – effective as from 1st
January 2019
Although the Income Tax Act (ITA) already contained restrictive
rules with respect to deductibility of interest, further to ATAD,
exceeding borrowing costs (i.e. the amount by which the deductible
borrowing costs of a taxpayer in terms of the Income Tax Act,
Chapter 123 of the Laws of Malta ('ITA'), were
