Entertainment activities in Malta
Maltese law provides for the tax treatment of income derived by a non-resident engaged in entertainment activities in Malta. This is extended to the income of sportsmen so that Article 56(18A) of the Maltese Income Tax Act may be applied to non-resident sports professionals.
Notwithstanding any other provisions of this article, where a non-resident derives income from entertainment activities exercised in Malta for a period not exceeding fifteen days in the year preceding a year of assessment, the tax shall be charged at the rate of ten cents (0.10) on every euro of the gross payment receivable in respect of the said activities, and no set-off or refund shall be granted to any person in respect of the tax so charged:
Provided that where the said activities are exercised in Malta for a period exceeding fifteen days, the non-resident person shall declare his income from entertainment activities in a return made in accordance with the Income Tax Acts and he will be charged on such income at the rates laid down in subarticle (1)(c), and in any such case any tax paid on such income in accordance with this article shall be available as a credit against that persons tax liability and where any tax so paid is in excess of such liability it shall be refunded.
Any person who is not a resident in Malta may therefore benefit from a tax rate of 10% on any gross income arising in Malta from sports activities not exceeding the duration of fifteen days during the basis year. This tax is not subject to refunds or set-off.
Where the sportsperson engages in activities which exceed fifteen days, the income derived from such activities during the basis year must be declared in an income tax return and tax will be charged at the following rates:
For every euro of the first 700 – 0c
For every euro of the next 2,400 – 20c
For every euro of the next 4,700 – 30c
For every euro of the remainder – 35c
Entertainers in International Tax Law
While Maltese law does not provide for a definition or description of the activities that amount to a sports professional, the OECD Model Convention provides:
Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.
(Article 17)
In July 2010, a Discussion Draft on the Application of Article 17 (Artistes and Sportsmen) of the OECD Model Tax Convention was published to be discussed by the Working Party on Tax Conventions and Related Questions. The Sub-Group proposed several amendments to the qualification of entertainers and sportsmen, particularly in relation to definition of personal activities and the level of involvement in each state, in order to clarify the allocation of tax liability to the different countries in which income arises.
Tax Structures for International Entertainers
Professional entertainers who are not resident in Malta may benefit from advantageous tax opportunities in Malta. Apart from the Malta Income Tax provisions, the income of entertainment activities may be received in Malta or routed through Malta in the form of royalties.
Image rights and Royalty Structures
- Taxation of Entertainers
- Royalty routing companies in Malta
- Tax residence in Malta: Permanent Residence Permits
For more information about our tax solutions for sports professionals and entertainers, contact our team of Malta Tax Advisors.
