Automatic exchange of information

Malta has been very vigorous in promoting the international exchange of information with the aim of combatting cross-border tax fraud and tax evasion. In this respect, Malta agreed to obligations in respect of exchanging information with other tax authorities. The exchange of financial account information was initially launched through the enactment of Foreign Account Tax Compliance Act (FATCA), back in 2010. Since then, the exchange of information has been further extended through Common Reporting Standard (CRS), Country-by-Country Reporting (CbCR), cross-border arrangements (DAC6), the introduction of reporting obligations of platform operations (DAC7) as well as the proposed reporting requirements in respect of crypto-asset transactions (DAC8).

Subsidiary Legislation 123.127, Cooperation with Other Jurisdictions on Tax Matters Regulations regulates such exchange of information. In this respect, Malta entered into different legal arrangements for exchange of information being the automatic exchange of pre-determined information to another tax authority as well as providing / requesting information to / from another competent tax authority.

DAC 1

Exchange on request and automatic exchange of non-financial information

DAC 1 requires member states to automatically exchange information in respect of income and capital, particularly income from employement, directors' fees, life insurance products, pensions, and ownership of and income from immovable property.

DAC 2

Automatic exchange of financial account information: Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)

Malta is a participant of FATCA, a US based initiative, and CRS, which includes the EU DAC II. Both initiatives require certain entities that hold (or are considered to hold) client “financial accounts” (as defined) to report the information of such accounts to their respective tax authorities. The tax authorities are then required to share this information with the tax authorities of the countries where the account holders are resident for tax purposes.

DAC 3

Automatic exchange of information relating to advance cross-border rulings or advance pricing arrangements

This obliges tax authorities to automatically exchange information on advance cross-border rulings and advance pricing arrangements with other Member States.

DAC 4

Country-by-Country Reporting (CbCR)

A mechanism that requires Multinational Enterprises (MNEs) to provide detailed information about their operations, revenues, profits, taxes paid and other indicators in the jurisdictions where they operate.

DAC 5

Access by tax authorities to beneficial ownership

DAC 5 provides for access by tax authorities to information, procedures, documents and mechanisms for combatting money laundering.

BO Regulations healthcheck

DAC 6

Automatic exchange of information on reportable cross-border arrangements

DAC 6 requires the identification and reporting of cross-border arrangements involving at least one EU Member State and which feature one or more ‘hallmarks’ which are considered to be indicative of potentially aggressive tax arrangements.

DAC 7

Automatic exchange of information reported by platform operators

DAC 7 extends the EU tax transparency rules to digital “platforms” and introduces an obligation on “reporting platform operators” to collect, verify and report specific information with respect to “reportable sellers” that have undertaken “relevant activities” through their platforms.

DAC 7 - The new digital platform reporting rules

DAC 8

Requirements for crypto-assets

DAC 8 introduces reporting requirements for crypto-assets related to transactions carried out by European Union (EU) resident clients of reporting crypto-asset service providers.