Intellectual property is perhaps a company’s most valuable asset, and therefore it is of utmost importance that the holder of such intellectual property is adequately protected from unscrupulous third parties. To this effect, Malta has enacted laws which allow maximum protection for the rightful owners and has subscribed to most major international conventions to give peace of mind to the holder of such intellectual property.
Royalties, advances and similar income derived by a person that owns and grants rights to use a ‘qualifying patent’ may be wholly exempt from Malta tax. The Malta tax exemption would only be available pursuant to receipt of confirmation from Malta Enterprise (the domestic agency responsible for the promotion of foreign investment and industrial development in Malta) that royalties which may accrue in terms of a given license agreement would qualify for the said exemption. Such confirmation would be obtained in the form of a certificate pursuant to the submission of a prescribed application to Malta Enterprise for consideration together with all required supporting documentation. The said certificate would be valid for a period not exceeding 3 years. However, upon the lapse of 3 years, an application for renewal may be submitted to Malta Enterprise for consideration.
In order to qualify for such exemption, the patent does not necessarily have to be registered in Malta. Moreover, the activities that actually give rise to such intellectual property do not need to be carried out in Malta.
Of course, dividends payable from such exempt income will remain exempt in the hands of the shareholder.
The Malta tax exemption referred to above shall be extended shortly to apply also in respect of royalties, advances and similar income derived from qualifying copyright and trademarks.