MALTA: TAXATION ON ROYALTIES

The Maltese regulation provides a tax exemption on royalties from patented inventions. Royalties and similar income derived from patents in respect of inventions, used in a trade / business, are exempt from tax in Malta. The exemption applies up to the level of the UBO.

In order to be eligible for the exemption, the royalty income must arise from a licensing or similar agreement, the license must have been granted for the use of the patent in a productive economic activity and the licensing of patented knowledge between related parties is allowed as long as the royalty is at arms-length and the entity acquiring the license must be directly involved in a productive economic activity.

The mentioned exemption is applicable whether the patent is registered in Malta o elsewhere and regardless of where the underlying R&D was carried out.

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