Directors’ fees – Malta tax guidelines

The Inland Revenue Department has issued a guidance note in relation to the tax implications where non-resident directors receive directors’ fees from companies resident in Malta. Directors’ fees are fees and similar payments received by a person in his capacity as a member of a board of directors and does not include remuneration in respect of other services rendered to the company.

Directors’ fees are considered as income arising where the company is resident i.e. where the company has its management and control. This position is the same as that given by the OECD Model Tax Convention commentary, which states that the relative services are considered to be performed in the state of residence of the company.

Therefore any remuneration which falls under the definition of directors’ fees is taxable in the state of residence, the place of effective management of the company. Other remuneration received by directors from the company, in respect of other services rendered to the company is not taxable in Malta if the said person is neither resident nor domiciled in Malta, nor performs the services in Malta, nor has a permanent establishment in Malta.

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