Malta: New relief at source process for interest payments distributed from Maltese debt securities
LuxCSD1 informs clients that effective
1 March 2024
the new relief at source process as shown below will be applicable for interest payments from Maltese debt securities with record date on or after 1 March 2024.
Withholding tax rate
Currently, income payments from Maltese debt securities are paid gross by default, as it is assumed that clients do not hold Maltese debt securities on behalf of Maltese resident beneficial owners (see Other Services - Malta). Under the new process, the following default withholding tax rates will apply:
Income distribution type | Default withholding tax rate |
Corporate bonds – interest | 15% |
Corporate bonds – redemption | 0% |
Government bonds – interest | 15% |
Government bonds – redemption | 0% |
Eligible beneficial owners
The following beneficial owners are eligible to obtain relief at source from withholding tax on interest payments from Maltese debt securities:
Beneficial owner type | Withholding tax |
Non-residents – all | 0% |
Maltese residents – individuals | 15%a or 0% |
Maltese residents – legal entities (other than investment funds) | 15%a or 0% |
Maltese resident – legal entities (prescribed investment funds) | 10% |
Maltese resident – legal entities (non-prescribed investment funds) | 0% |
Undisclosed | 15% |
a. If clients hold Maltese debt securities on behalf of a Maltese tax resident beneficial owner that is subject to the maximum default withholding tax rate of 15% through LuxCSD, the respective client must disclose to LuxCSD the details of the Maltese resident beneficiary as described below since such disclosure is required by the local Central Securities Depository for reporting purposes.
Documentation requirements
In order to obtain a reduced tax rate via relief at source on behalf of eligible beneficial owners or in order to provide the required disclosure for Maltese resident beneficial owners that are subject to the default withholding tax rate of 15%, clients must submit the following documentation to LuxCSD before the relevant deadlines:
One-Time Certificate for Maltese Debt Securities
The certificate must be completed by the client and remains valid until revoked.
Per-Payment Instruction
Clients holding the debt securities via an omnibus account on behalf of multiple beneficial owners that are non-residents and or Maltese residents must in addition to the One-Time Certificate also send a per-payment instruction.
The per-payment instruction must be submitted via an MT565 Corporate Action Instruction message in Xact via Swift or a corporate action instruction in Xact Web Portal, when requesting relief at source or providing the required disclosure for interest payments from Maltese debt securities.
The per-payment instruction must be provided per each tax rate requested, if applicable, and must include:
- LuxCSD account number;
- ISIN code;
- Corporate ID;
- Total holdings;
- Requested tax rate; and
- Number of securities to which the requested tax rate applies.
Additionally, the following formatting information is required in the per-payment instruction, in the following sections, depending on the beneficial owner type:
Beneficial owner details | Xact via Swift (Sequence C: BENODET) | Xact Web Portal (Section: Beneficial owner details) |
All beneficial owners | ||
Legal status:
| :70E::CETI | Narrative |
Maltese residents only | ||
Full name | :95V::OWND | Party |
Address for tax purpose | :95V::OWND | Party |
Country of tax residence | :94C::DOMI | Country of domicile |
Tax number / Company registration number (legal entities only) OR ID card number (individuals only) | :95S::ALTE//TXID | BO TIN |
a. If clients hold Maltese debt securities on behalf of a Maltese tax resident beneficial owner that is subject to the maximum default withholding tax rate of 15% through LuxCSD, the respective client must disclose to LuxCSD the details of the Maltese resident beneficiary as described below since such disclosure is required by the local Central Securities Depository for reporting purposes.
For full formatting requirements of these instructions, clients should refer to the MT564 Corporate Action Notification message and to the Xact via Swift User Guide.
Deadlines
The deadlines for the submission of the documentation to obtain a relief at source of withholding tax or to provide the required disclosure for fully taxed Maltese tax residents on interest payments from Maltese debt securities are as follows:
Deadline for receipt by LuxCSD | |
Document | Relief at source |
One-Time Certificate for Maltese debt securities | Five business days prior to the first income record date, by 10:00 CET. |
Per-payment instruction | One business day prior to each income record date, by 10:00 CET. |
Impact on clients
Clients must, as of 1 March 2024 and prior to the relevant LuxCSD deadline, provide the new certification as per the above guidelines. Otherwise, LuxCSD will apply the new default rate of 15% withholding tax on interest payments from Maltese debt securities.
Important note: No quick or standard refund is available through LuxCSD.
Clients are therefore strongly recommended to provide the required certification as soon as possible and prior to the relevant deadlines.
Further information
For further information, please contact the Tax Help Desk, LuxCSD Client Services or your Relationship Officer.
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1. LuxCSD refers to LuxCSD S.A., registered office at 42, Avenue J.F. Kennedy, L-1855 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B-154.449.