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 person’s 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
For more information about our tax solutions for sports
professionals and entertainers, contact our team of
Malta Tax
Advisors.
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