Malta published Legal Notice 32 of 2024 on the 20 of February 2024, through which it transposed Council Directive (EU) 2022/2523. The regulations are effective from the 31 December 2023 and apply to constituent entities located in Malta and which are part of either a multinational enterprise group (“MNE”) or large-scale domestic group. Such groups must have an annual consolidated revenue of at least €750 million in at least two of the preceding four fiscal years foregoing the fiscal year in question.

Whilst Malta has transposed a number of administrative and transitional provisions, it exercised its right under Article 50 of the Directive and chose the delayed application of the Income Inclusion Rule (“IIR”) and Undertaxed Profits Rule (“UTPR”). The latter will not apply for six fiscal years running from the 31 December 2023.

Consequently, constituent entities per above cannot fulfil the obligation to file top-up tax information return with the Commission for Tax and Customs. Nevertheless, their ultimate parent entities must nominate a designated filing entity in another Member States or third countries to be able to file said top-up tax information return and ensure compliance with the Directive.

Additionally, the top-up tax due by an ultimate parent entity located in Malta, or by an intermediate parent entity located in Malta, shall be reduced to zero (i) in the first five years of the initial phase of the international activity of the MNE group (ii) in the first five years starting from the first day of the fiscal year in which the large-scale domestic group falls within the scope of the regulations.

N.B. The above is only intended to serve for information purposes and does not constitute legal advice. Should you wish to obtain more information and/or specific advice, you are invited to reach out to our team of qualified professionals who will guide you further.