MALTA Law and Practice Contributed by: Dr Josef Cachia Fenech Gonzi and Cherise Abela Grech, GTG Legal
investments. These treatments often differ from the standard tax regime applicable to all com - panies. Tax Classification of Funds From a tax perspective, funds are classified as prescribed or non-prescribed. A prescribed fund is considered as such if it holds at least 85% of the value of its total declared assets in Malta, and has been classified as such by the Com - missioner of Inland Revenue. The most notable difference is that a prescribed fund is taxed at the standard corporate rate of 35% whereas the income which is derived by a non-prescribed fund is exempt from Malta tax. If a fund does not meet these conditions, it will be defined as a non-prescribed fund. Taxation of Funds Prescribed funds are taxed based on the source of their income: • 10% final withholding tax is levied on invest - ment income paid by companies and other legal entities, as well as on bonds issued by listed companies and on interest, discounts or premiums earned on Malta government stocks or bonds; • 15% final withholding tax is levied on bank interest income; • 35% tax is levied on income derived from immovable property situated in Malta; • no tax is paid on income which is not sourced in Malta; • no tax is levied on dividends from Maltese companies or from other funds; and • no capital gains are levied on disposal of securities. On the other hand, non-prescribed funds fall out of scope and are not taxed at fund level, except
on gains from immovable property situated in Malta. The tax treatment of funds is completely different from the standard corporate taxation system. 4.3 Government Endorsement The Maltese government has implemented several significant initiatives to enhance equity financing activities, particularly focusing on sup - porting SMEs and start-ups. Malta Development Bank (MDB) The MDB aims to bridge financing gaps by com - plementing private sector financial services. It offers various financial instruments, including loans, guarantees and equity participations, in an effort to support SMEs, infrastructure pro - jects and environmentally sustainable initiatives. The MDB collaborates with commercial banks to facilitate access to finance for businesses that may face challenges in securing traditional fund - ing. Collaborations with the European Investment Fund (EIF) Malta has partnered with the EIF to bolster SME competitiveness through the InvestEU Mem - ber State Compartment. In October 2024, the EIF signed a EUR30 million agreement with the Bank of Valletta, aiming to unlock EUR60 mil - lion in investments for over 140 businesses. This initiative provides SMEs with improved financ - ing conditions, such as lower interest rates and reduced collateral requirements. Malta Enterprise As the government’s economic development agency, Malta Enterprise offers various schemes to support businesses as outlined at 4.1 Subsidy Programmes .
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