The 1977 France-Malta tax agreement: a review of the main articles

France and Malta are bound by an agreement signed in Valletta on July 25, 1977, and in force since October 1, 1979, supplemented by amendments in 1994 and 2008 and modified by the Malta International Law Commission (MILC). It caps dividends paid by a French company at 15%. It includes a remittance rule: if a state taxes income only on the portion transferred or received within its territory, the relief provided by the agreement applies only to that portion. This page presents the articles read in the official text and explains what it does not cover.

A 1977 agreement, two amendments, the MLI, and an arbitration

The BOFiP (Official Bulletin of Public Finances) gives the signature in La Valette on July 25, 1977, and an entry into force on October 1, 1979. A first amendment, signed on July 8, 1994, entered into force on September 1, 1997. A second, signed on August 29, 2008, has been in force since June 1, 2010. The list of agreements (BOI-ANNX-000306, version of April 29, 2026) classifies the agreement as "IR – IF", without mention of inheritance or donation.

The list of conventions amended by the MLI (BOI-ANNX-000511, April 29, 2026) includes Malta: effective in France from January 1, 2020 for taxes withheld at source, and from October 1, 2019 for other taxes. The BOFiP (Official Bulletin of Public Finances) dedicated to Malta (2012 version) makes no mention of it. The consolidated version contains a clause outlining the main purpose and, in Article 26, an arbitration procedure in accordance with Part VI of the MLI.

Taxes referred to: the wealth tax (ISF) is mentioned, the real estate wealth tax (IFI) is not.

Article 2 applies to income and wealth taxes. For France, paragraph 3(a) lists income tax, corporation tax, wealth tax, payroll tax, CSG (General Social Contribution), and CRDS (Contribution to the Repayment of the Social Debt). For Malta, paragraph 3(b) mentions only income tax. The IFI (Real Estate Wealth Tax) is not mentioned: this page does not address its status.

Who is a resident: four criteria in order

Article 4 § 2 governs the case of a natural person resident in both States, in this order: a) the permanent home, then, if he has one in each State, the centre of vital interests; b) the habitual residence; c) the nationality; d) the agreement of the competent authorities, if he has both nationalities or none.

Maximum deductions and key rules

Dividends: 15 % to Malta, holding threshold of 10 % for companies, a tax credit

Article 10, paragraph 1, assigns tax on dividends to the state of residence of the beneficial owner. When a company resident in France pays a beneficial owner resident of Malta, the French tax cannot exceed 15% of the gross amount. Dividends paid by a French company whose beneficial owner is a Maltese company directly holding at least 10% of the paying company's capital are taxable only in Malta.

Conversely, when a Maltese company pays a resident of France, the Maltese tax cannot exceed that which can be charged to the company on the distributed profits; a ceiling of 15 % exists for the profits of a year of tax aid to industry.

Article 10, paragraph 5(a), provides for a payment from the French Treasury to a resident of Malta equal to the tax credit a resident of France would have received, subject to the deduction in paragraph 2(a). Paragraph 5(b) limits this payment to individuals and companies that do not control the company paying the dividends. We quote this text without asserting that this mechanism still exists.

Interest and royalties: 5 % and 10 %

For interest, Article 11, paragraph 2, limits the tax of the source state to 5% of the gross amount. Paragraph 3 reserves for the state of residence the tax on interest paid on a loan "granted or guaranteed by that state or a public body of that state." For royalties, Article 12, paragraph 2, levies 10% of the gross amount. Article 12, paragraph 3, makes an exception for copyright royalties on literary, artistic, or scientific works, including works recorded for radio or television: these are taxable only in the state of residence of the beneficiary, if that resident is the beneficial owner, without the 10% limit.

Capital gains: 365 days, 50 % and participation of 25 %

Article 13, paragraph 1, assigns tax liability to the State where the property is located. Gains on shares, rights, or similar interests, including in a partnership or trust, are taxable in the other State if, at any time during the 365 days preceding the transfer, these securities derive more than 50 % of their value from real estate situated in that other State. Paragraph 3 subjects gains on a substantial interest in a company to the State of residence of that company: the threshold is 25 % or more of the profits. Other gains fall under the State of residence of the transferor (paragraph 4).

Income not mentioned: the actual taxation in the State of residence

Article 22 § 1 allocates income not treated elsewhere to the State of residence, but on one condition: that the resident is subject to tax on this income in that State. Otherwise, it remains taxable in the other State.

The rule of delivery: Article 24 § 3 and point 7 of the protocol

Article 24, paragraph 3, addresses the situation where the agreement exempts, in whole or in part, income in one State, but the legislation of the other State only makes it taxable up to the amount transferred or received in that other State. The exemption is then granted only for the amount transferred or received. Paragraph 7 of the Protocol states the same for all tax relief: it applies only to the portion of income or gains remitted or received in the other State.

French dividends and income remitted to Malta: a numerical example (fictitious profile)

Situation. A fictitious Maltese resident receives €60,000 in gross dividends from a French company. He transfers €24,000 of this to Malta. We assume that Maltese law only taxes the amount transferred, a point this page does not verify.

Issue. He believes that the ceiling of 15 % of article 10 § 2 a) covers the whole of 60,000 €.

Strategy. He interprets point 7 of the protocol as limiting the relief to the portion remitted. He has the treatment of the balance under French law examined, which this page does not address.

Result. According to our interpretation of point 7 of the protocol, and under the assumption above, the 15 % cap would only apply to the portion paid in: it would represent €9,000 of the total dividends, but only €3,600 on the portion paid in (15 % of €24,000). The remaining balance of €36,000 would then not be covered by this cap. This interpretation is not supported by Maltese law. The amounts are hypothetical.

Employees, pensions, wealth

Article 15, paragraph 2, reserves taxation for the State of residence if the stay in the other State does not exceed 183 days during the relevant calendar year, if the employer is not resident there, and if the expense is not borne by a permanent establishment or fixed base. Article 18 assigns pensions to the State of residence and social security benefits to the paying State. Article 23 assigns real estate to the State where it is located and other assets to the State of residence.

French tax credit and ten-year limit

Article 24, paragraph 1, addresses France: Maltese tax is not deductible, but the beneficiary is entitled to a tax credit against French tax. For income taxable only in Malta, this credit is equal to the corresponding French tax. For income taxable in Malta, it is equal to the tax paid in Malta, capped at the corresponding French tax. The text specifies that this credit is granted for only ten years from the entry into force of the amendment of July 8, 1994, a period that may be extended by agreement between the States. We have not yet determined the current effect of this limit; it must be verified before any decision is made.

Amicable procedure, arbitration, denunciation

Article 26 requires that the case be submitted within three years of the initial notification of the measure. If the authorities fail to reach an agreement within three years, arbitration is possible upon written request from the individual, in accordance with Part VI of the MLI. The agreement is of indefinite duration; each State may terminate it, starting in 1981, with six months' notice.

What this page does not cover

Articles 5 to 9, 14, 16, 17, 19 to 21, 25, 27 to 30, the protocol except for point 7, the application to the IFI, Maltese tax law, including the definition of remission, and inheritances and gifts, which the administrative list does not mention for Malta.

What changes depending on your situation

• Your residence as defined in Article 4.
• The nature of the income: dividend, interest, royalty, salary, pension, gain.
• The portion of your income actually remitted or received in Malta.
• The effects of MLI on your situation.

No outcome is guaranteed. For Malta, have local law verified by a local professional.