Malta Introduces Transfer Pricing Rules

Malta has published transfer pricing rules which will apply from 1 January 2024.

The rules will apply to cross-border arrangements between related companies, but not to micro, small or medium-sized enterprises (as defined by the EU State Aid Regulations). The rules do not apply to securitisation transactions, nor if the aggregate arm’s length value of income and expenditure of a revenue nature does not exceed €6 million, or income and expenditure of a capital nature does not exceed €20 million, in the year in question.

In ascertaining the total income of any company, the rules make reference to the arm’s length principle, which is defined as the amount that independent parties would have agreed to in comparable circumstances. The rules make room for further guidance as to the methodology that should be used when determining the arm’s length amount and the documentation that is expected to be relevant, to be issued by the Commissioner for Revenue.

Advance pricing rulings and agreements, i.e. both unilateral and multilateral, are catered for by the rules, and the Commissioner may issue renewable transfer pricing rulings in order to provide certainty in relation to the application of the rules.

The rules are only relevant for the purposes of the Income Tax Acts (and not for VAT).

Contact us if you have questions about this update.