S.L. 123.16 Art. 2Arrangements to have effect. The Italy, desiring respect to follows: This Contracting (1) This Contracting irrespective of (2) There income, or on movable or paid by (3) The (a) in (b) in (4) This taxes which or in place of, *as

It is hereby declared -

(a) that the arrangements specified in the Agreement set out in the Schedule to this Order have been made with the Government of the Republic of Italy with a view to affording relief from double taxation in relation to the following taxes imposed by the laws of the Republic of Italy:

(i) the personal income tax (l’imposta sul reddito delle persona fisiche);

(ii) the corporate income tax (l’imposta sul reddito delle persona giuridiche); even if they are collected by withholding taxes at the source (hereinafter referred to as "Italian tax");

(b) that it is expedient that those arrangements should have effect. SCHEDULE

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF MALTA AND THE GOVERNMENT OF THE REPUBLIC OF ITALY FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF FISCAL EVASION

Government of the Republic of Malta and the Government of the Republic of to conclude an Agreement for the Avoidance of Double Taxation with Taxes on Income and the Prevention of Fiscal Evasion, have agreed as

CHAPTER I

Scope of the Agreement

ARTICLE 1

Personal Scope Agreement shall apply to persons who are residents of one or both of the States.

* ARTICLE 2

Taxes Covered Agreement shall apply to taxes on income imposed on behalf of each State or its political or administrative subdivisions or local authorities, the manner in which they are levied. shall be regarded as taxes on income all taxes imposed on total elements of income, including taxes on gains from the alienation of immovable property, taxes on the total amounts of wages and salaries enterprises, as well as taxes on capital appreciation. existing taxes to which this Agreement shall apply are:

the case of Italy:

(i) the personal income tax;

(ii) the corporate income tax;

(iii) the regional tax on productive activities; even if they are collected by withholding taxes at the source (hereinafter referred to as "Italian tax"); the case of Malta: the income tax, (hereinafter referred to as "Malta tax").

Agreement shall apply also to any identical or substantially similar are imposed after the date of signature of this Agreement in addition to, the existing taxes. The competent authorities of the Contracting States the Protocol reproduced in Legal Notice 14 of 2011. shall notify to each other any significant changes which have been respective taxation laws.

(5) Where the Agreement provides that income arising in a Contracting shall be relieved from tax in that State, either in full or in part, and, under force in the other Contracting State, such income is subject to tax by reference amount thereof which is remitted to or received in that other State reference to the full amount thereof, then the relief to be allowed mentioned State shall apply only to so much of the income as is received in the other State.

CHAPTER II

Definitions

* ARTICLE 3

General Definitions

(1) In this Agreement, unless the context otherwise requires:

(a) the term "Italy" means the Republic of Italy;

(b) the term "Malta" means the Republic of Malta;

(c) the terms "a Contracting State" and "the other Contracting State" and Malta as the context requires;

(d) the term "person" comprises an individual, a company and any persons;

(e) the term "company" means any body corporate or any entity which as a body corporate for tax purposes;

(f) the terms "enterprise of a Contracting State" and "enterprise Contracting State" mean, respectively, an enterprise carried on by Contracting State and an enterprise carried on by a resident of the other State;

(g) the term "national" means:

(i) in respect of Italy, any individual possessing the nationality any legal person, partnership and association deriving its from the law in force in Italy;

(ii) in respect of Malta, any citizen of Malta as provided for of the Constitution of Malta and in the Maltese Citizenship legal person, partnership or association deriving its status the law in force in Malta;

(h) the term "international traffic" means any transport by a ship operated by an enterprise which has its place of effective management Contracting State, except when the ship or aircraft is operated solely in the other Contracting State;

(i) the term "competent authority" means:

(i) in the case of Italy, the Ministry of Economy and Finance;

(ii) in the case of Malta, the Minister responsible for authorised representative.

*as amended by the Protocol reproduced in Legal Notice 14 of 2011 application of this Agreement by a Contracting State, any term not defined shall, unless the context otherwise requires, have the meaning under the laws of that Contracting State relating to the taxes which are this Agreement.

ARTICLE 4

Fiscal Domicile purpose of this Agreement, the term "resident of a Contracting State" person who, under the law of that State, is liable to taxation therein by domicile, residence, place of management or any other criterion of a The term does not include any person who is liable to tax in that State in respect only of income from sources situated in that State.

by reason of the provisions of paragraph (1) an individual is a both Contracting States, then his status shall be determined as follows:

shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closest (centre of vital interests). the Contracting State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode. he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national. he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question mutual agreement. by reason of the provisions of paragraph (1) a person other than an a resident of both Contracting States, then it shall be deemed to be a Contracting State in which its place of effective management is

ARTICLE 5

Permanent Establishment the purposes of this Agreement the term "permanent establishment" place of business in which the business of the enterprise is wholly or on.

term "permanent establishment" shall include especially: place of management; branch; office; factory; workshop; mine, quarry or other place of extraction of natural resources;

(g) a building site or construction or assembly project which than twelve months;

(h) the furnishing of services, including consultancy services, enterprise through employees or other personnel, where activities nature continue (for the same or a connected project) within for a period or periods aggregating more than twelve months two-year period.

(3) The term "permanent establishment" shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging enterprise solely for the purpose of processing by another

(d) the maintenance of a fixed place of business solely for purchasing goods or merchandise, or for collecting information enterprise;

(e) the maintenance of a fixed place of business solely for advertising, for the supply of information, for scientific similar activities which have a preparatory or auxiliary character enterprise.

(4) A person acting in a Contracting State on behalf of an enterprise Contracting State - other than an agent of an independent status to whom

(5) applies - shall be deemed to be a permanent establishment in the State if he has, and habitually exercises in that State, an authority contracts in the name of the enterprise, unless his activities are purchase of goods or merchandise for the enterprise.

(5) An enterprise of a Contracting State shall not be deemed permanent establishment in the other Contracting State merely because business in that other State through a broker, general commission agent agent of an independent status, where such persons are acting in the ordinary of their business.

(6) The fact that a company which is a resident of a Contracting or is controlled by a company which is a resident of the other Contracting which carries on business in that other State (whether through establishment or otherwise) shall not of itself make either company establishment of the other.

CHAPTER III

Taxation of Income

ARTICLE 6

Income from Immovable Property

(1) Income from immovable property may be taxed in the Contracting which such property is situated.

(2) The term "immovable property" shall be defined in accordance of the Contracting State in which the property in question is situated. include property accessory to immovable property, rights to which the general law respecting immovable property apply. The term shall also usufruct of immovable property and rights to variable or fixed payments as for the working of, or the right to work, mineral deposits, sources and resources; ships, boats and aircraft shall not be regarded as immovable provisions of paragraph (1) shall apply to income derived from the letting, or use in any other form of immovable property.

provisions of paragraphs (1) and (3) shall also apply to the income from property of an enterprise and to income from immovable property used performance of professional services.

ARTICLE 7

Business Profits profits of an enterprise of a Contracting State shall be taxable only in unless the enterprise carries on business in the other Contracting State permanent establishment situated therein. If the enterprise carries on aforesaid, the profits of the enterprise may be taxed in the other State but of them as is attributable to that permanent establishment.

Subject to the provisions of paragraph (3), where an enterprise of a State carries on business in the other Contracting State through a establishment situated therein, there shall in each Contracting State be that permanent establishment the profits which it might be expected to were a distinct and separate enterprise engaged in the same or similar under the same or similar conditions and dealing wholly independently enterprise of which it is a permanent establishment. determination of the profits of a permanent establishment, there shall deductions expenses which are incurred for the purposes of the establishment including executive and general administrative expenses so whether in the State in which the permanent establishment is situated or far as it has been customary in a Contracting State to determine the attributed to a permanent establishment on the basis of an of the total profits of the enterprise to its various parts, nothing in shall preclude that Contracting State from determining the profits to be an apportionment as may be customary. The method of apportionment however, be such that the result shall be in accordance with the embodied in this Article. profits shall be attributed to a permanent establishment by reason of the by that permanent establishment of goods or merchandise for the purpose of the preceding paragraphs, the profits to be attributed to establishment shall be determined by the same method year by year good and sufficient reason to the contrary.

profits include items of income which are dealt with separately in of this Agreement, then the provisions of those Articles shall not be provisions of this Article. ARTICLE 8

Shipping and Air Transport

(1) Profits from the operation of ships or aircraft in international taxable only in the Contracting State in which the place of effective the enterprise is situated.

(2) If the place of effective management of a shipping enterprise ship or boat, then it shall be deemed to be situated in the Contracting the home harbour of the ship or boat is situated, or, if there is no such in the Contracting State of which the operator of the ship or boat is a

(3) The provisions of paragraph (1) shall also apply to profits derived participation in a pool, a joint business or in an international operating

ARTICLE 9

Associated Enterprises

Where -

(a) an enterprise of a Contracting State participates directly the management, control or capital of an enterprise Contracting State; or

(b) the same persons participate directly or indirectly in the control or capital of an enterprise of a Contracting enterprise of the other Contracting State, and in either case conditions are made or imposed between the two their commercial or financial relations which differ from those which between independent enterprises, then any profits which would, conditions, have accrued to one of the enterprises, but, by reason of those have not so accrued, may be included in the profits of that enterprise accordingly.

ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a Contracting resident of the other Contracting State may be taxed in that other State.

(2) However, such dividends may be taxed in the Contracting State company paying the dividends is a resident, and according to the law but -

(a) where the dividends are paid by a company resident resident of Malta who is the beneficial owner thereof, the charged shall not exceed 15 per cent of the gross dividends;

(b) where the dividends are paid by a company resident resident of Italy who is the beneficial owner thereof -

(i) Malta tax shall not exceed that chargeable on the company the dividends in respect of the profits so distributed;

(ii) notwithstanding the provisions of sub-paragraph shall not exceed 15 per cent of the gross amount of if such dividends are paid out of gains or profits year in respect of which the company is in receipt of tax benefits under the provisions regulating aids to industries in Malta, and the shareholder submits returns and accounts to the taxation authorities of Malta in respect of his income liable to Malta tax for the relative year of assessment. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. term "dividends" as used in this Article means income from shares, shares or "jouissance" rights, mining shares, founders shares or other being debt-claims, participating in profits, as well as income from other rights which is subjected to the same taxation treatment as income from taxation law of the State of which the company making the distribution provisions of paragraphs (1) and (2) shall not apply if the recipient of being a resident of a Contracting State, carries on business in the other State of which the company paying the dividends is a resident, through a establishment situated therein, or performs in that other State services from a fixed base situated therein and the holding in respect of dividends are paid is effectively connected with such permanent or fixed base. In such a case the dividends are taxable in that other State according to its own law. a company which is a resident of a Contracting State derives profits from the other Contracting State, that other State may not impose any tax dividends paid by the company, except insofar as such dividends are paid to a other State or insofar as the holding in respect of which the dividends effectively connected with a permanent establishment or a fixed base other State, or subject the company’s undistributed profits to a tax on profits, even if the dividends paid or the undistributed profits consist partly of profits or income arising in such other State.

ARTICLE 11

Interest Interest arising in a Contracting State and paid to a resident of the other State may be taxed in that other State. However, such interest may be taxed in the Contracting State in which it according to the law of that State, but if the recipient is the beneficial interest, the tax so charged shall not exceed 10 per cent of the gross interest. The competent authorities of the Contracting States shall by agreement settle the mode of application of this limitation. Notwithstanding the provisions of paragraph (2) interest arising in a State shall be exempt from tax in that State if -the payer of the interest is the Government of that Contracting State or a local authority thereof; or the interest is paid to the Government of the other Contracting State or local authority thereof or any agency or instrumentality (including a financial institution) wholly owned by that other Contracting State or local authority thereof; or

(c) the interest is paid to any other agency or instrumentality financial institution) in relation to loans made under concluded between the Governments of the Contracting States.

(4) The term "interest" as used in this Article means income from securities, bonds or debentures, whether or not secured by mortgage not carrying a right to participate in profits, and debt-claims of every all other income assimilated to income from money lent by the taxation State in which the income arises.

(5) The provisions of paragraphs (1) and (2) shall not apply if the the interest, being a resident of a Contracting State, carries on business Contracting State in which the interest arises, through a permanent situated therein, or performs in that other State professional services base situated therein and the debt-claims in respect of which the interest effectively connected with such permanent establishment or fixed case, the interest is taxable in that other Contracting State according to

(6) Interest shall be deemed to arise in a Contracting State when that State itself, a political or administrative subdivision, a local resident of that State. Where, however, the person paying the interest, a resident of a Contracting State or not, has in a Contracting State establishment in connection with which the indebtedness on which paid was incurred, and such interest is borne by such permanent establishment, such interest shall be deemed to arise in the Contracting State permanent establishment is situated.

(7) Where, owing to a special relationship between the payer and or between both of them and some other person, the amount of the having regard to the debt claim for which it is paid, exceeds the amount have been agreed upon by the payer and the recipient in the absence relationship, the provisions of this Article shall apply only to the amount. In that case, the excess part of the payments shall remain taxable to the law of each Contracting State, due regard being had to the other this Agreement.

ARTICLE 12

Royalties

(1) Royalties arising in a Contracting State and paid to a resident Contracting State shall be taxable only in that other State if such beneficial owner of the royalties and the royalties consist of payments received as consideration for the use of, or the right to use, any copyright artistic or scientific work, cinematographic films or tapes for broadcasting.

(2) Royalties arising in a Contracting State and paid to a resident Contracting State may be taxed in that other Contracting State if the royalties of payments of any kind received as a consideration for the use of, or the any patent, trade mark, design, model, plan, secret formula or process, commercial or scientific equipment, or information concerning commercial or scientific experience. However, such royalties may also the Contracting State in which they arise, and according to the law of if the recipient is the beneficial owner of the royalties, the tax so charged exceed 10 per cent of the gross amount of such royalties.

(3) The provisions of paragraphs (1) and (2) shall not apply if the being a resident of a Contracting State, carries on business in the other State in which the royalties arise, through a permanent establishment therein, or performs in that other State professional services from a fixed therein, and the right or property in respect of which the royalties are effectively connected with such permanent establishment or fixed base. In royalties are taxable in that other Contracting State according to its

Royalties shall be deemed to arise in a Contracting State when the payer is itself, a political or administrative subdivision, a local authority or a State. Where, however, the person paying the royalties, whether he is a Contracting State or not, has in a Contracting State a permanent in connection with which the liability to pay the royalties was such royalties are borne by such permanent establishment, then such be deemed to arise in the Contracting State in which the permanent is situated. owing to a special relationship between the payer and the recipient both of them and some other person, the amount of the royalties paid, to the use, right or information for which they are paid, exceeds the would have been agreed upon by the payer and the recipient in the such relationship, the provisions of this Article shall apply only to the amount. In that case, the excess part of the payments shall remain according to the law of each Contracting State, due regard being had to the provisions of this Agreement.

ARTICLE 13

Capital Gains from the alienation of immovable property, as defined in paragraph 6, may be taxed in the Contracting State in which such property is from the alienation of movable property forming part of the business permanent establishment which an enterprise of a Contracting State has Contracting State or of movable property pertaining to a fixed base resident of a Contracting State in the other Contracting State for the performing professional services, including such gains from the such a permanent establishment (alone or together with the whole of such a fixed base, may be taxed in the other State. However, gains alienation of ships or aircraft operated in international traffic, as well as alienation of movable property pertaining to the operation of such aircraft, shall be taxable only in the Contracting State in which the place of management of the enterprise is situated. from the alienation of any property other than those mentioned in and (2) shall be taxable only in the Contracting State of which the resident.

ARTICLE 14

Independent Personal Services Income derived by a resident of a Contracting State in respect of services or other independent activities of a similar character shall be in that State. However, such income may be taxed in the other Contracting State in the following circumstances:

(a) if he has a fixed base regularly available to him in the other State for the purpose of performing his activities (in which much of the income as is attributable to that fixed base may that other Contracting State); or

(b) if his stay in the other Contracting State is for a period amounting to or exceeding in the aggregate 183 days calendar year.

(2) The term "professional services" includes, especially, scientific, literary, artistic, educational or teaching activities independent activities of physicians, lawyers, engineers, architects, accountants.

ARTICLE 15

Dependent Personal Services

(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, other similar remuneration derived by a resident of a Contracting State an employment shall be taxable only in that State unless the employment in the other Contracting State. If the employment is so exercised, such as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1), remuneration resident of a Contracting State in respect of an employment exercised Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period exceeding in the aggregate 183 days in the calendar year

(b) the remuneration is paid by, or on behalf of, an employer resident of the other State; and

(c) the remuneration is not borne by a permanent establishment base which the employer has in the other State.

(3) Notwithstanding the preceding provisions of this Article, remuneration respect of an employment exercised aboard a ship or aircraft in international may be taxed in the Contracting State in which the place of effective the enterprise is situated.

ARTICLE 16

Directors’ Fees Directors’ fees and similar payments derived by a resident of a Contracting in his capacity as a member of the board of directors or other similar company which is a resident of the other Contracting State may be taxed State.

ARTICLE 17

Artists and Athletes

(1) Notwithstanding the provisions of Articles 14 and 15, income entertainers, such as theatre, motion picture, radio or television musicians, and by athletes, from their personal activities as such may Contracting State in which these activities are exercised. income in respect of personal activities as such of an entertainer or not to that entertainer or athlete himself but to another person, that notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the State in which the activities of the entertainer or athlete are exercised.

ARTICLE 18

Pensions and Annuities

Subject to the provisions of paragraph (2) of Article 19, pensions and other remuneration, and annuities, paid to a resident of a Contracting State shall be in that State. used in this Article -

the term "pensions and other similar remuneration" means periodic payments made after retirement in consideration of past employment, or way of compensation for injuries received in connection with past employment; the term "annuity" means a stated sum paid periodically during life, or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

ARTICLE 19

Government Service Remuneration, other than a pension, paid by a Contracting State or a an administrative subdivision or a local authority thereof to any respect of services rendered to that State or subdivision or local thereof shall be taxable only in that State.

However, such remuneration shall be taxable only in the other Contracting services are rendered in that State and the recipient is a resident of that Contracting State who -a national of that State; or did not become a resident of that State solely for the purpose of performing the services. Any pension paid by, or out of funds created by, a Contracting State or an administrative subdivision or a local authority thereof to any respect of services rendered to the State or subdivision or local thereof shall be taxable only in that State.

However, such pension shall be taxable only in the other Contracting State if is a national of and a resident of that State.

provisions of Articles 15, 16 and 18 shall apply to remuneration or pensions services rendered in connection with any trade or business carried on by Contracting States or a political or an administrative subdivision or a local thereof. provisions of paragraph (1)(a) shall likewise apply in respect of paid, under a development assistance programme of a Contracting political or administrative subdivision or a local authority thereof, out of exclusively supplied by that State, those subdivisions or local authorities specialist or volunteer seconded to the other Contracting State with the consent of that other State.

ARTICLE 20

Teachers, Students and Trainees

(1) A professor or teacher who makes a temporary visit to a Contracting for a period not exceeding two years for the purpose of teaching research at a university, college, school or other educational institution, or immediately before such visit was, a resident of the other Contracting be exempt from tax in the first-mentioned Contracting State remuneration for such teaching or research.

(2) Payments which a student or trainee who is or was formerly Contracting State and who is present in the other Contracting State purpose of his education or training receives for the purpose of his education or training shall be exempt from tax in that other Contracting provided that such payments are made to him from outside that other State.

(3) Remuneration which a trainee who is or was formerly a Contracting State derives from an employment which he exercises Contracting State for the purpose of practical training for a period of reasonably required to conclude his training shall not be taxed in that

(4) Remuneration which a student who is or was formerly a Contracting State derives from a part time employment which he exercises other Contracting State for a period of time which is reasonably required his studies shall not be taxed in that other State.

ARTICLE 21

Other Income

(1) Items of income of a resident of a Contracting State, wherever dealt with in the foregoing Articles of this Agreement shall be taxable State.

(2) The provisions of paragraph (1) shall not apply if the recipient income, being a resident of a Contracting State, carries on business Contracting State through a permanent establishment situated therein, that other State professional services from a fixed base situated therein, or property in respect of which the income is paid is effectively connected permanent establishment or fixed base. In such a case the items taxable in that other Contracting State according to its own law.

CHAPTER IV

Method for Elimination of Double Taxation

ARTICLE 22*

Elimination of Double Taxation

(1) Double taxation shall be eliminated in accordance with paragraphs of this Article.

*as amended by the Protocol reproduced in Legal Notice 14 of 2011. resident of Italy owns items of income which are taxable in Malta, Italy, its income taxes specified in Article 2 of this Agreement, may include upon which such taxes are imposed the said items of income, unless provisions of this Agreement otherwise provide. case, Italy shall deduct from the taxes so calculated the income tax paid in an amount not exceeding that proportion of the aforesaid Italian tax items of income bear to the entire income. in Malta for which deduction is granted is only the pro rata amount to the foreign income which is included in the aggregate income. deduction shall be granted if the item of income is subjected in Italy tax or to a final withholding tax, or to substitute taxation at the same final withholding tax, also by request of the recipient, in accordance with

Subject to the provisions of the law of Malta regarding the allowance of a Malta tax in respect of foreign tax, where, in accordance with the this Agreement, there is included in a Malta assessment income from Italy, the Italian tax on such income shall be allowed as a credit relative Malta tax payable thereon. (Deleted by the Protocol reproduced in Legal Notice 14 of 2011).

CHAPTER V

Special Provisions

ARTICLE 23

Non-discrimination nationals of a Contracting State, whether or not they are residents of one Contracting States, shall not be subjected in the other Contracting State to any any requirement connected therewith, which is other or more than the taxation and connected requirements to which nationals of that the same circumstances are or may be subjected. taxation on a permanent establishment which an enterprise of a State has in the other Contracting State shall not be less favourably other State than the taxation levied on enterprises of that other State same activities.

provision shall not be construed as obliging a Contracting State to grant to the other Contracting State any personal allowances, reliefs and taxation purposes on account of civil status or family responsibilities personal circumstances which it grants to its own residents. where the provisions of Article 9, paragraph (7) of Article 11, or of Article 12 apply, interest, royalties and other disbursements paid by of a Contracting State to a resident of the other Contracting State shall, of determining the taxable profits of such enterprise, be deductible same conditions as if they had been paid to a resident of the first State.

Enterprises of a Contracting State, the capital of which is wholly or partly controlled, directly or indirectly, by one or more residents of the other State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is burdensome than the taxation and connected requirements to which enterprises of that first-mentioned State are or may be subjected.

(5) In this Article the term "taxation" means taxes of every kind and

ARTICLE 24

Mutual Agreement Procedure

(1) Where a resident of a Contracting State considers that the actions both of the Contracting States result or will result for him in taxation accordance with this Agreement, he may, notwithstanding the remedies the national laws of those States, present his case to the competent authority Contracting State of which he is a resident or, if his case comes under of Article 23, to that of the Contracting State of which he is a national. must be presented within three years from the first notification of the rise to taxation not in accordance with the Agreement.

(2) The competent authority shall endeavour, if the objection appears justified and if it is not itself able to arrive at an appropriate solution, case by mutual agreement with the competent authority of the other State, with a view to the avoidance of taxation not in accordance Agreement. Any agreement reached shall be implemented notwithstanding limits in the national laws of the Contracting States.

(3) The competent authorities of the Contracting States shall resolve by mutual agreement any difficulties or doubts aris interpretation or application of the Agreement. They may also consult the elimination of double taxation in cases not provided for in the Agreement.

(4) The competent authorities of the Contracting States may communicate each other directly for the purpose of reaching an agreement in the preceding paragraphs.

* ARTICLE 25

Exchange of Information

(1) The competent authorities of the Contracting States shall information as is forseeably relevant for carrying out the provisions Agreement or to the administration or enforcement of the domestic laws taxes of every kind and description imposed on behalf of the Contracting of their political or administrative subdivisions or local authorities, taxation thereunder is not contrary to the Agreement as well as to evasion and tax avoidance. The exchange of information is not restricted 1 and 2.

(2) Any information received under paragraph (1) by a Contracting be treated as secret in the same manner as information obtained under laws of that State and shall be disclosed only to persons or authorities courts and administrative bodies) concerned with the assessment or collection enforcement or prosecution in respect of, the determination of appeals the taxes referred to in paragraph 1, or the oversight of the above. Such authorities shall use the information only for such purposes. They may information in public court proceedings or in judicial decisions.

*as substiotuted by the Protocol reproduced in Legal Notice 14 of 2011. case shall the provisions of paragraph (1) and (2) be construed so as to Contracting State the obligation: carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public). information is requested by a Contracting State in accordance with this other Contracting State shall use its information gathering measures to requested information, even though that other State may not need such for its own tax purposes. The obligation contained in the preceding subject to the limitations of paragraph (3) but in no case shall such be construed to permit a Contracting State to decline to supply solely because it has no domestic interest in such information.

case shall the provisions of paragraph (3) be construed to permit a State to decline to supply information solely because the information is other financial institution, nominee or person acting in an agency or capacity or because it relates to ownership interests in a person.

ARTICLE 26

Diplomatic and Consular Officials this Agreement shall affect the fiscal privileges of diplomatic or officials under the general rules of international law or under the provisions agreements.

ARTICLE 27

Refunds withheld at source in a Contracting State will be refunded at the taxpayer or of the Contracting State of which he is a resident, if the the said taxes is regulated by the provisions of this Agreement. for refund are to be filed within the time limits prescribed by the law Contracting State obliged to make repayment and are to be accompanied by an certificate from the competent authorities of the other State of which the resident. This shall certify that the conditions which give rise to refund have been fulfilled. competent authorities of the Contracting States shall by mutual settle the mode of application of this Article, in accordance with the Article 24 of this Agreement. CHAPTER VI

Final Provisions

ARTICLE 28

Entry into Force

(1) This Agreement shall be ratified and the instruments of ratification exchanged at Rome as soon as possible.

(2) The Agreement shall enter into force after the exchange of ratification, and its provisions shall have effect:

(a) in Italy, as respects income assessable for any taxable commencing on or after the first day of January, 1976;

(b) in Malta, in respect of taxes which are levied for any year beginning with the year of assessment which brings income of 1976.

(3) Any claim for refund or credit arising in accordance with this respect of any tax payable by a resident of a Contracting State referring taxable periods commencing on or after the 1st January 1976 and until force of this Agreement shall be lodged within three years from the date force of this Agreement or from the date when the tax is charged, whichever later. Nothing herein contained shall reduce any longer time limit available resident for this purpose under the law of the Contracting State of resident.

ARTICLE 29

Termination This Agreement shall remain in force indefinitely but either of the States may, on or before the thirtieth day of June in any calendar year after the expiration of a period of five years from the date of its entry to the other Contracting State, through diplomatic channels, written termination and, in such event, the Agreement shall cease to be effective:

(a) in Italy, as respects income assessable for any taxable commencing on or after the first day of January in the next following that in which notice of termination is given;

(b) in Malta, in respect of taxes which are levied for any year on income derived during any period commencing on the January in the year next following that in which notice of given, or in subsequent years.

IN WITNESS WHEREOF the undersigned, duly authorised thereto, this Agreement. DONE at Valletta this 16th day of July, 1981 in duplicate, in the English languages, both texts being equally authentic. the Government of For the Government of Republic of Malta the Republic of Italy

Robert Stivala, Maurizio Battaglini Ministry of Finance, Ambassador of Italy Customs and People’s Financial Investments.

PROTOCOL

signing of the Agreement concluded today between the Republic of Malta Republic of Italy for the avoidance of double taxation and the prevention of with respect to taxes on income, the undersigned have agreed upon the additional provisions which shall form an integral part of the Agreement.

reference to Article 3, in the event of agreement being reached between and Italy regulating their respective rights over the continental shelf allied matters, the Contracting States will enter into negotiations in order amend the definitions of Italy and Malta taking account of the agreement reached.

reference to Article 5, an offshore drilling site is included in the expression "a mine, quarry or other place of extraction of natural resources" paragraph (2)(f). thereof. reference to paragraph (3) of Article 7, the expression "expenses which incurred for the purposes of the permanent establishment" means expenses directly connected with the activity of the permanent establishment.

With reference to Article 8, where profits derived from the operation of a ship in international traffic by an enterprise whose place of effective management is situated in Malta are exempt from tax under the provisions of article 86 of the Merchant Shipping Act, or under any identical or similar provisions, such profits may be taxed in Italy unless is proved to the satisfaction of the competent authorities of Italy that more than twenty per cent of the capital of the company owning the relative ship is owned, directly or indirectly, by persons not residents of Malta. With further reference to Article 8, an enterprise of a Contracting State deriving profits from the operation of ships or aircraft in international traffic shall not be subject to any local income tax imposed in the other Contracting State.

reference to paragraph (1) of Article 24, the expression "notwithstanding the remedies provided by the national laws" means that the agreement procedure is not alternative to the national contestation proceedings which should, in any case, be initiated within the time limits of national law.

provisions of paragraph (3) of Article 27 shall not prevent the competent authorities of the Contracting States from adopting, by mutual agreement, other procedures for the reduction of taxation in accordance Agreement. VII Notwithstanding the provisions of paragraph (2) of Article 28, of Article 8 shall be applicable as respects income derived taxable period commencing on or after the 1st January, 1969.

DONE at Valletta this 16th day of July, 1981 in duplicate, in the English languages, both texts being equally authentic.

For the Government of For the Government the Republic of Malta the Republic of Italy Robert Stivala, Maurizio Battaglini Secretary, Ministry of Finance, Ambassador of Italy Customs and People’s Financial Investments.

Legal Notice 14 of 2011: PROTOCOL TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC MALTA AND THE GOVERNMENT OF THE REPUBLIC OF ITALY AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES INCOME AND THE PREVENTION OF FISCAL EVASION

The Government of Malta and the Government of the Italian Republic, conclude a Protocol to amend the Agreement for the avoidance of double with respect to taxes on income and the prevention of fiscal evasion, with Protocol and Exchange of Notes, signed at Valletta on 16th July, 1981 referred to as "the Agreement"), have agreed as follows: ARTICLE I Paragraph (3) of Article 2 "Taxes Covered", shall be deleted and replaced following: "(3) The existing taxes to which this Agreement shall apply are:

(a) in the case of Italy:

(i) the personal income tax;

(ii) the coporate income tax;

(iii) the regional tax on productive activities; even if they are collected by withholding taxes (hereinafter referred to as "Italian tax");

(b) in the case of Malta: the income tax, (hereinafter referred to as "Malta tax").". ARTICLE II reference to Article 3 "General definitions", letter (i), subparagraph (i) of shall be replaced by the following: the case of Italy, the Ministry of Economy and Finance;".

ARTICLE III reference to Article 22 "Elimination of double taxation", paragraph (2) deleted and replaced by the following: a resident of Italy owns items of income which are taxable in Malta, Italy, in determining its income taxes specified in Article 2 of this Agreement, may include in the basis upon which such taxes are imposed the said items of income, unless specific provisions of this Agreement otherwise provide. such a case, Italy shall deduct from the taxes so calculated the income tax paid in Malta but in an amount not exceeding that proportion the aforesaid Italian tax which such items of income bear to the entire income. The tax paid in Malta for which deduction is granted is only the pro rata amount corresponding to the foreign income which is included in the aggregate income. However, no deduction shall be granted if the item of income is subjected in Italy to a substitute tax or to a final withholding tax, or to substitute taxation at the same rate as the final withholding tax, also by request of the recipient, in accordance with Italian law.". Paragraph 4 of Article 22 shall be deleted.

ARTICLE IV "Exchange of information" shall be deleted and replaced by the

The competent authorities of the Contracting States shall exchange such information as is forseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf the Contracting States, or of their political or administrative subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement as well as to prevent fiscal evasion and tax avoidance. The exchange of information is not restricted by Articles and 2. Any information received under paragraph (1) by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. no case shall the provisions of paragraph (1) and (2) be construed so to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with administrative practice of that or of the other Contracting

(b) to supply information which is not obtainable under the normal course of the administration of that Contracting State;

(c) to supply information which would disclose any trade, industrial, commercial or professional secret or trade information the disclosure of which would be contrary policy (ordre public).

(4) If information is requested by a Contracting State in accordance this Article, the other Contracting State shall use its gathering measures to obtain the requested information, that other State may not need such information for its own The obligation contained in the preceding sentence is limitations of paragraph (3) but in no case shall such construed to permit a Contracting State to decline to supply solely because it has no domestic interest in such information.

(5) In no case shall the provisions of paragraph (3) be construed Contracting State to decline to supply information solely information is held by a bank, other financial institution, person acting in an agency or a fiduciary capacity or because to ownership interests in a person.".

ARTICLE V Each Contracting State shall notify to the other the completion of required by its domestic law for the entry into force of this Protocol. shall enter into force on the date of the receipt of the later of these notifications its provisions shall thereupon have effect in both States. This Protocol shall remain into force as long as the Agreement remains

In Witness thereof the undersigned, being duly authorized thereto respective Governments, have signed this Protocol.

Done in duplicate in Rome this 13th day of March 2009 in the English languages, all texts being equally authentic.

Tonio Borg Vincenzo Scotti For the Government For the Government of Malta of the Italian Republic