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| 1 | --- |
| 2 | name: malta-transfer-pricing |
| 3 | description: > |
| 4 | Use this skill whenever asked about Malta transfer pricing rules, documentation requirements, or arm's length pricing for cross-border related-party transactions. Trigger on phrases like "transfer pricing Malta", "TP documentation", "master file Malta", "local file Malta", "arm's length Malta", "related party transactions Malta", "CbCR Malta", "country-by-country report Malta", "BEPS Malta", "intercompany pricing Malta", or any question about transfer pricing compliance for Maltese entities within multinational groups. |
| 5 | version: 1.0 |
| 6 | jurisdiction: MT |
| 7 | category: transfer-pricing |
| 8 | depends_on: |
| 9 | - transfer-pricing-workflow-base |
| 10 | --- |
| 11 | |
| 12 | # Malta Transfer Pricing Skill v1.0 |
| 13 | |
| 14 | --- |
| 15 | |
| 16 | ## Section 1 -- Quick Reference |
| 17 | |
| 18 | | Field | Value | |
| 19 | |---|---| |
| 20 | | Country | Malta (Republic of Malta) | |
| 21 | | Tax authority | Commissioner for Tax and Customs (MTCA) | |
| 22 | | Key TP legislation | Transfer Pricing Rules S.L. 123.207 (LN 284/2022, as amended by LN 9/2024) | |
| 23 | | Enabling provision | Article 51A, Income Tax Act (Chapter 123) | |
| 24 | | OECD member? | No (enhanced engagement partner) | |
| 25 | | BEPS signatory? | Yes (Inclusive Framework member; MLI signatory) | |
| 26 | | Effective date | FYs commencing on or after 1 January 2024 | |
| 27 | | Currency | EUR | |
| 28 | | Documentation language | English or Maltese | |
| 29 | | Skill version | 1.0 | |
| 30 | |
| 31 | --- |
| 32 | |
| 33 | ## Section 2 -- Documentation Requirements |
| 34 | |
| 35 | ### 2.1 Master File |
| 36 | |
| 37 | | Item | Detail | |
| 38 | |---|---| |
| 39 | | Required? | Yes, where thresholds met | |
| 40 | | Format | OECD Annex I to Chapter V of the TP Guidelines | |
| 41 | | Filing | Not filed annually; available on request within reasonable timeframe | |
| 42 | | Retention period | 9 years (from later of end of FY or date of arrangement) | |
| 43 | |
| 44 | ### 2.2 Local File |
| 45 | |
| 46 | | Item | Detail | |
| 47 | |---|---| |
| 48 | | Required? | Yes, where thresholds met | |
| 49 | | Format | OECD Annex II to Chapter V of the TP Guidelines | |
| 50 | | Filing | Not filed annually; available on request within reasonable timeframe | |
| 51 | | Retention period | 9 years | |
| 52 | |
| 53 | ### 2.3 Low-Value-Adding Intra-Group Services |
| 54 | |
| 55 | Documentation per OECD Chapter VII is required where relevant. |
| 56 | |
| 57 | ### 2.4 Country-by-Country Report (CbCR) |
| 58 | |
| 59 | | Item | Detail | |
| 60 | |---|---| |
| 61 | | Threshold | Consolidated group revenue ≥ EUR 750 million | |
| 62 | | Filing deadline | Within 12 months of the end of the reporting FY | |
| 63 | | Filing method | Electronic, to Commissioner for Tax and Customs | |
| 64 | |
| 65 | ### 2.5 De Minimis Thresholds (Documentation Obligation) |
| 66 | |
| 67 | Both must be exceeded for TP documentation to be required: |
| 68 | |
| 69 | | Criterion | Threshold | |
| 70 | |---|---| |
| 71 | | Revenue items (aggregate arm's length value of all cross-border P&L items) | EUR 6,000,000 | |
| 72 | | Capital items (aggregate arm's length value of all cross-border B/S items) | EUR 20,000,000 | |
| 73 | |
| 74 | Dividends paid to an associated company are excluded from the revenue threshold; distributions in kind may need to be considered. |
| 75 | |
| 76 | ### 2.6 Scope of Application |
| 77 | |
| 78 | | Criterion | Detail | |
| 79 | |---|---| |
| 80 | | Relationship test (general) | >75% direct/indirect participating rights | |
| 81 | | Relationship test (MNE constituents) | >50% participating rights | |
| 82 | | Entities out of scope | SMEs as defined in EU State Aid Rules | |
| 83 | | Transaction type | Cross-border arrangements only (domestic transactions not in scope) | |
| 84 | |
| 85 | --- |
| 86 | |
| 87 | ## Section 3 -- Arm's Length Standard |
| 88 | |
| 89 | ### 3.1 Definition |
| 90 | |
| 91 | The arm's length amount is the consideration that would have been agreed between independent parties dealing at arm's length in comparable circumstances. |
| 92 | |
| 93 | ### 3.2 Accepted Methods |
| 94 | |
| 95 | Malta follows OECD TP Guidelines. All five OECD methods are accepted: |
| 96 | |
| 97 | | Method | Type | |
| 98 | |---|---| |
| 99 | | Comparable Uncontrolled Price (CUP) | Traditional transaction | |
| 100 | | Resale Price Method (RPM) | Traditional transaction | |
| 101 | | Cost Plus Method (CPM) | Traditional transaction | |
| 102 | | Transactional Net Margin Method (TNMM) | Transactional profit | |
| 103 | | Transactional Profit Split Method (PSM) | Transactional profit | |
| 104 | |
| 105 | ### 3.3 Preferred Method |
| 106 | |
| 107 | No hierarchy prescribed; the most appropriate method for the circumstances must be selected (consistent with OECD "most appropriate method" principle). |
| 108 | |
| 109 | --- |
| 110 | |
| 111 | ## Section 4 -- Filing Obligations |
| 112 | |
| 113 | | Obligation | Detail | |
| 114 | |---|---| |
| 115 | | TP return / declaration | No separate TP return required | |
| 116 | | Annual filing of documentation | No; documentation must be maintained and available on request | |
| 117 | | Attachment to corporate tax return | No | |
| 118 | | CbCR notification | Required where applicable | |
| 119 | | CbCR filing | Electronic filing with MTCA | |
| 120 | |
| 121 | --- |
| 122 | |
| 123 | ## Section 5 -- Deadlines |
| 124 | |
| 125 | | Item | Deadline | |
| 126 | |---|---| |
| 127 | | Documentation preparation | Recommended by the time the self-assessment tax return is filed | |
| 128 | | Documentation submission on request | Within reasonable timeframe upon MTCA request | |
| 129 | | CbCR filing | Within 12 months of end of reporting FY | |
| 130 | | CbCR notification | As per EU DAC requirements | |
| 131 | | Corporate tax return | Generally within 9 months of FY-end | |
| 132 | |
| 133 | --- |
| 134 | |
| 135 | ## Section 6 -- Penalties |
| 136 | |
| 137 | | Offence | Penalty | |
| 138 | |---|---| |
| 139 | | TP documentation failure | No specific TP documentation penalty enacted as of 2025 | |
| 140 | | CbCR non-compliance | EUR 200 to EUR 50,000 (under EU DAC implementation) | |
| 141 | | General non-compliance | Standard income tax penalties may apply if TP adjustments lead to additional tax | |
| 142 | | Estimated assessment | MTCA may estimate income where documentation is inadequate | |
| 143 | |
| 144 | --- |
| 145 | |
| 146 | ## Section 7 -- Advance Pricing Agreements (APA) |
| 147 | |
| 148 | | Item | Detail | |
| 149 | |---|---| |
| 150 | | APA availability | Not formally established under S.L. 123.207 | |
| 151 | | Alternative mechanism | Mutual Agreement Procedure (MAP) under Malta's tax treaties | |
| 152 | | MAP scope | Transfer pricing disputes covered under applicable DTAs | |
| 153 | | MAP fees | No fees charged | |
| 154 | | MAP timeline | Varies; depends on treaty partner cooperation | |
| 155 | |
| 156 | --- |
| 157 | |
| 158 | ## Section 8 -- Safe Harbours |
| 159 | |
| 160 | Malta does not currently have formal safe harbour provisions for transfer pricing. |
| 161 | |
| 162 | | Area | Detail | |
| 163 | |---|---| |
| 164 | | Low-value intra-group services | OECD Chapter VII simplified approach (5% cost-plus) may be accepted but is not a statutory safe harbour | |
| 165 | | Interest rates | No safe harbour; arm's length rate must be demonstrated | |
| 166 | | Routine services | No simplified pricing rule; standard TP analysis required | |
| 167 | | SME exemption | SMEs (per EU State Aid Rules) are entirely outside scope of the TP Rules | |
| 168 | | De minimis | Transactions below EUR 6m revenue / EUR 20m capital thresholds: no documentation required but arm's length must still be applied | |
| 169 | |
| 170 | ### 8.1 SME Exclusion as Practical Relief |
| 171 | |
| 172 | The exclusion of SMEs from the scope of S.L. 123.207 provides significant practical relief for Malta's predominantly SME economy. SME definitions follow EU State Aid Rules: |
| 173 | - Fewer than 250 employees |
| 174 | - Annual turnover ≤ EUR 50 million OR balance sheet total ≤ EUR 43 million |
| 175 | - Not more than 25% owned by non-SME entities |
| 176 | |
| 177 | --- |
| 178 | |
| 179 | ## Section 9 -- Recent Developments |
| 180 | |
| 181 | | Date | Development | |
| 182 | |---|---| |
| 183 | | November 2022 | S.L. 123.207 Transfer Pricing Rules introduced (LN 284/2022) | |
| 184 | | January 2024 | LN 9/2024 amendments: extended scope to pre-2024 arrangements materially altered on/after 1 Jan 2024 | |
| 185 | | January 2024 | Commissioner's Guidelines published (interpretive guidance) | |
| 186 | | January 2027 | Full application to all pre-2024 arrangements (grandfathering ends) | |
| 187 | | Ongoing | BEPS Pillar Two: Malta implementing GloBE rules (15% minimum tax) via EU Minimum Tax Directive | |
| 188 | | Ongoing | No BEPS Pillar One Amount B adoption announced | |
| 189 | |
| 190 | --- |
| 191 | |
| 192 | ## Section 10 -- Interaction with Other Skills |
| 193 | |
| 194 | | Related skill | Interaction | |
| 195 | |---|---| |
| 196 | | malta-income-tax | TP adjustments increase/decrease chargeable income for self-assessment | |
| 197 | | malta-vat-return | TP adjustments may affect the value of supply for VAT purposes | |
| 198 | | Corporate tax (general) | TP rules apply when determining the total income of a company from cross-border arrangements | |
| 199 | | Financial statements | Related-party disclosures under IAS 24 should be consistent with TP documentation | |
| 200 | | CbCR | Feeds into global TP risk assessment by tax authorities | |
| 201 | |
| 202 | --- |
| 203 | |
| 204 | ## Disclaimer |
| 205 | |
| 206 | This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon. |
| 207 |
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About
Use this skill whenever asked about Malta transfer pricing rules, documentation requirements, or arm's length pricing for cross-border related-party transactions. Trigger on phrases like "transfer pricing Malta", "TP documentation", "master file Malta", "local file Malta", "arm's length Malta", "related party transactions Malta", "CbCR Malta", "country-by-country report Malta", "BEPS Malta", "intercompany pricing Malta", or any question about transfer pricing compliance for Maltese entities within multinational groups.
MTty-2025
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