Income Tax Act (Cap. 123), article 41

41. For the purposes of the investment income provisions, the following phrases shall have the meanings given below: (a) "investment income" shall mean only the following categories of income: (i) interest payable by a person carrying on the business of banking under the Banking Act , in respect of a sum of money in whatever currency deposited with it in any account whatever (except interest payable in respect of any bearer account); (ii) interest, discounts or premiums payable by the Government of Malta or by any agency thereof; (iii) interest, discounts o r premiums payable by a corporation or authority established by law; (iv) interest, discounts or premiums payable in respect of: (1) a public issue by a company, entity or other legal person howsoever constituted and whether resident in Malta or INCOME TAX [CAP. 123. 143 otherwise; and (2) a private issue by a company, entity or other legal person howsoever constituted and resident in Malta paid to a collective investment scheme; (v) (1) capital gains arising on the disposal of shares or units in a collective investment scheme where the collective investment scheme redeems, liquidates or cancels such shares or units, such capital gains to be calculated by reference to the price at which the shares or units were allotted or issued by the collectiv e investment scheme or to a value determined in such manner and on the basis of such criteria as may be prescribed: Provided that this item shall not apply to: (i) capital gains arising on the disposal of shares or units held in a prescribed fund of a collective investment scheme; and (ii) capital gains arising on the disposal of shares or units held in a fund of a collective investment scheme that is not resident in Malta if such a fund is not a prescribed fund and the disposal is not made through the services of an authorised financial intermediary; (2) capital gains arising on the surrender or maturity of units and such like instruments relating to linked long term business of insurance where the benefits are at least eighty five per cent determined by reference to the value of units or shares in, or income derived from, collective investment schemes: Provided that in calculating such capital gains - (i) no account shall be taken of any part of the said benefits that is determined by reference to the value of units or shares in collective investment schemes that were held in prescribed funds for a continuous period spanning the whole life of the relevant linked long term contract of insurance or three years from the date of the relevant maturity or surrender whichever period is the lesser; (ii) the cost of acquisition shall be 144 CAP. 123.] INCOME TAX calculated by reference to the total amount of premiums paid in relation to the linked portion of the contract of insurance or to a value determined in such manner and on the basis of such criteria as may be prescribed; (3) capital gains arising on the redemption, liquidation or cancell ation of securities not referred to in items (1) and (2) hereof and not being shares in a company; (vi) profits distributed by a collective investment scheme that is not resident in Malta that are paid through the services of an authorised financial intermediary out of profits that had been allocated in that collec tive investment scheme to a fund that is not a prescribed fund; (vii) interest payable by a person carrying on the business of banking in accordance with foreign legislation in respect of a sum of money in whatever currency deposited with it in any account whatever where the payment of the income from investment is made through an authorised financial int ermediary as is provided for in items (i), (ii) or (iii) of paragraph ( c) of article 41A; (viii) (1) profits distributed by a company that is not resident in Malta (and that is not a collective investment scheme), and where such profits are paid through the services of an authorised finan cial intermediary to an individual who is resident in Malta, provided that such distributed profits constitute income in the hands of such individual that is der ived from shares in such company, each share being a qualifying asset as defined in the provisions of article 9B; Cap. 372. (2) the amount of the net dividend paid by a company registered in Malta in respect of which the recipient shareholder is registered for the purpose of article 48(4) or article 48(4A) of the Income Tax Management Act ; Cap. 372. (3) the amount paid pursuant to article 48(4) or article 48(4A) of the Income Tax Management Act ; (4) the dividend referred to in article 43(6)( a); (5) the income referred to in article 43(6)( b); (b) "payor" shall mean the person who is liable to make, or if d i f f e r e n t , w h o m a k e s a p a y m e n t o f i n v e s t m e n t i n c o m e INCOME TAX [CAP. 123. 145 and with respect to investment income referred to in paragraph (a)(viii)(4) shall mean the company which earned the profits deemed distributed pursuant to article 43(6)(a) and with respect to investment income referred to in paragraph ( a)(viii)(5) shall mean the Commissioner; (c) "recipient" shall mean: Cap. 371. Cap. 330. (i) a person who is resident in Malta during the year in which investment income is payable to him or which is payable to a person under sub- paragraphs (ii) or (iii) ( other than a person who during that year carried on banking business under the Banking Act , or a person carrying on the business of insurance or any other company (hereinafter "owned and controlled company") which is owned and controlled, directly or indirectly, by such persons, excluding an owned and controlled company not carrying on the business of banking or insurance which is listed on a stock exchange recognised by the Commissioner for the purpose of this provision and in respect of which the Commissioner, at his discretion, has issued a determination that such company falls within the purport of this definition, or a company which is registered under article 24 of the Malta Financial Services Authority Act ), or (ii) a receiver, guardian, tutor, curator, judicial sequestrator or committ ee acting on behalf of a person referred to in sub-paragraph (i) of this paragraph, or (iii) a trustee or foundation pursuant to or by virtue of which any money or other property whatsoever shall for the time being be paid or applied to or for the benefit of a person referred to in sub-paragraph (i), or (iv) an EU/EEA individual (and his or her spouse where applicable) in the circumstances envisaged by the first and second provisos to article 56(1)(c): Provided that with respect to the investment income referred to in paragraph ( a)(viii)(2) and (3) a recipient shall be an individual who is resident in Malta and with respect to the investment income referred to in paragraph (a)(viii)(4) and (5) a recipient shall be the individual referred to in article 43(6)( a) and (b), as the case may be, and in the circumstances referred to in article 43(6)( e) such individual must be ordinarily resident and domiciled in Malta. 146 CAP. 123.] INCOME TAX Investment income of collective investment schemes. Added by: IX. 2001.27. Amended by: II. 2003.20; L.N. 409 of 2007.