Malta has recently introduced its own set of transfer pricing rules through Legal Notice 284 of 2022. Through these new rules, which are apply on new arrangements entered into since the 1st of January 2024 and those materially altered after this date, Malta is looking to adhere to global principles which affect cross border transactions.

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It is important to note that group entities falling within the definition of a micro, small or medium sized enterprise per Article 2 of the EU Commission Regulation (EU) No 651/•2014 will be exempt from these rules.

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However, these rules may apply to any cross-border arrangement which has been entered into between associated enterprises.

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Associated enterprises are defined as enterprises where one enterprise holds at least 75% of the voting rights or ordinary capital in the other body of persons, directly or indirectly. For multinational groups with total consolidated group revenue of at least EUR 750 million, this threshold is reduced to 50%. Additionally, associated enterprises may be deemed as such by virtue of any powers conferred by the articles of association or any other legal document that may be regulating the other body of persons.

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The rules cover “cross-border arrangements,” which include both resident companies and permanent establishes involved in arrangements with non-resident companies and permanent establishments. Here for the purposes of these rules, permanent establishments are treated as separate and independent enterprises and hence, may trigger significant transfer pricing considerations for their respective group.

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Lastly, the rules specify a de-minimis exemption, which applies when both the below situations apply in the year preceding the Year of Assessment:

• the aggregate arm’s length value of all items of income and expenditure of a revenue nature forming part of cross-border arrangements in the relevant financial year does not exceed €6,000,000; and

• the aggregate arm’s length value of all items of income and expenditure of a capital nature forming part of cross-border arrangements in the relevant financial year, does not exceed €20,000,000.

 

The rules provide a framework for unilateral transfer pricing rulings and advance pricing agreements. Taxpayers can request a unilateral ruling for €3,000, valid for five years, with a renewal option for €1,000 if there are no material changes. Similarly, advance pricing agreements (APAs) can be requested for €5,000, also valid for up to five years, and can be bilateral or multilateral. APAs can cover tax treatment of cross-border arrangements from their effective date and retroactively for three years if already started. Directly interested parties must notify their respective authorities of any material changes within 30 days to maintain the validity of APAs. Renewals under the same conditions require a €2,000 fee.

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​Here at CSB Group, our team of tax experts is here to help your business navigate the complexities which transfer pricing may bring. We may assist with determining whether your group falls within the scope of transfer pricing, assisting with the provision of our recommendations and advice as well as assistance with determining the preparation of the respective documentation required in determining a transfer price. Contact us for tailored assistance in global business taxation.