New tax ruling regarding the tax treatment regarding the reimbursement received from Malta

25 February 2016
Jordi Brotons
AAMC Abogados Tax advisor. Lawyer

The Spanish General Directorate of taxes has recently issued a binding resolution regarding the tax treatment in Spain of the tax reimbursements received by corporate shareholders of Maltese entities under the tax refund scheme applicable in Malta. 

In this binding resolution, the Spanish authority qualifies such refund as dividends to which the Spanish participation exemption should apply (provided that the respective requirements were met and that such refund was directly linked to the dividend distribution).

With this clarification, the use of a Maltese double tier structure becomes unnecessary, when such option is used for the sole purpose of safeguarding the qualification of the refund received by the corporate shareholder resident in another country (Spain, in the present case). This makes it easier and more cost-effective to manage the operation in Malta.

This binding resolution, which is in line with the interpretation of other EU-members tax authorities regarding the same matter, is an important clarification to Spanish investors who wish to take advantage of Malta’s benefits for the internationalization of their operations.