As a result of the transposition into Maltese law of the Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (‘ATAD’). The Malta Institute of Taxation is organising a series of seminars dedicated to fully exploring the mechanics and impact of ATAD on the Maltese income tax system. These rules shall enter into force with effect from January 2019 (with the exception of the rule on Exit taxation which shall enter into force with effect from January 2020).

Focusing on exit taxation (Article 5 ATAD)

Exit taxes have the function of ensuring that where a taxpayer moves assets or its tax residence out of the tax jurisdiction of a State, that State taxes the economic value of any capital gain created in its territory even though that gain has not yet been realised at the time of the exit.

It is therefore necessary to specify cases in which taxpayers are subject to exit tax rules and taxed in unrealised capital gains which have been built in their transferred assets.