The tax authority of Malta clarifies the tax treatment of fees received by non-resident directors from companies resident in Malta. For this clarification, Malta tax authority has released a guidance note.
Where the company is a resident, income arising from there will be considered as income. This is the direction from the Inland Revenue Department (IRD).
According to IRD, this position is consistent with the Organization for Economic Cooperation and Development (OECD) Model Tax Convention commentary. “Director’s fees” should be interpreted as fees or similar payments received in a person’s capacity as a member of a board of directors and does not include remuneration in respect of other services rendered to the company (such as employment, advisory services etc). Remuneration which covered by the definition of directors’ fees is taxable in the state of residence of the company.
