The Commissioner for Revenue published the Online Application for the Registration of a Fiscal Unit in terms of the Consolidated Group (Income Tax) Rules which is available as from 18 May 2020 on the income tax portal of the Commissioner for Revenue.
The Commissioner for Revenue has also published guidelines on the registration process. These are available here.
There is no quibbling when it comes to applying IP enforcement measures
The Directive on the enforcement of intellectual property (IP) rights (Directive 2004/48) (“the IP Enforcement Directive”) lays down a number of enforcement measures, procedures and remedies which the Member States of the European Union (EU) must make available to intellectual property (IP) right-holders to fight off IP infringement.[1] In particular these include:
As a result, the IP Enforcement Directive is a significant aid to right-holders. Nonetheless, it seems that a serious obstacle to using the Directive has been encountered in ‘non-cumul’ jurisdictions, that is, jurisdictions which do not admit of concurrent liability in tort and in contract (“the principle of non-cumul”). In the context of IP, a claim for infringement operates under the rules of tort law whereas a breach of contract (for example, in IP licensing agreements or in franchise agreements) is enforceable in terms of the contract at issue.
In IT Development v Free Mobile (Case C-666/18), the European Court of Justice (ECJ) has been called upon to clarify on the availability of the IP Enforcement Directive for the violation of an IP holders’ rights within a contractual context, pursuant to a preliminary reference from France, where the principle of non-cumul is applied.
The facts giving rise to the preliminary reference
The dispute arose when a licensee of a software program modified the software in breach of the terms of the licence. The software development company, the licensor, claimed damages for infringement of its copyright on the software and damages for breach of the software license. The French court of first instance considered that under French law “there are two separate sets of rules relating to liability in intellectual property matters, one being tortious liability in the event of infringement of the exploitation rights of the author of the software, as determined by law, the other being contractual liability in the event of infringement of a copyright reserved by contract”.[2]
Applying this principle of non-cumul “means that, first, one person cannot hold another person liable in contract and tort for the same acts, and that, second, tortious liability is excluded in favour of contractual liability where those persons are bound by a valid contract and the damage suffered by one of them results from non-performance or improper performance of a contractual obligation”.[3] The claim of the software development company which was founded on tortious liability was consequently dismissed.
The software company appealed this decision. There issue was raised whether such a principle of non-cumul is compatible with the IP Enforcement Directive which applies to “any infringement of intellectual property rights”, without distinguishing whether such infringement refers solely to infringement in the strict sense of tortious liability or also to infringement which results from breach of contract.[4]
The ruling of the ECJ
In its ruling the ECJ asserts that “any infringement of intellectual property rights”, within the meaning of Directive 2004/48, refers to both tortious and contractual infringement of IP. The ECJ ruling minces no words when it states that “It is apparent from the wording of that provision, in particular from the adjective ‘any’, that that directive must be interpreted as also covering infringements resulting from the breach of a contractual clause relating to the exploitation of an intellectual property right”.[5] The ECJ ruling also considers that the objective of the IP Enforcement Directive, namely to provide effective legal remedies to IP right-holders, would dictate that the scope of the IP Enforcement Directive should be defined as widely as possible so as to encompass all rights that right-holders may have under EU law.[6]
The ECJ also makes it clear that the above does not prejudice the freedom of the Member States to define which claims or actions are available to the right-holder legal.[7] This effectively means that Member State law may still apply a principle of non-cumul but, irrespective of whether contractual or tortious claims are available, the remedies of the IP Enforcement Directive should always be made available to IP right-holders. Therefore, the ECJ ruling is to the effect that the software developed company is able to benefit from that Directive but not that it can make a concurrent tortious claim.[8]
The effect on IP enforcement in Malta
In Malta the applicability of the non-cumul principle is unclear since the Maltese courts have sometimes rejected the principle and at other times applied it, albeit using different approaches.[9]
In the context of IP infringement, a recent judgment of the Maltese Court of Appeal applies the non-cumul taking a similar approach to that of the French courts in the IT Development v Free Mobile Case. Upholding that principle is not affected by the ECJ’s ruling since the Member States remains free in this regard. Nevertheless, the reasoning of Court of Appeal judgment has been rendered invalid. The judgment asserts that once the IP right-holder has requested measures under the Enforcement of Intellectual Property Rights (Regulation) Act (the transposing legislation of the IP Enforcement Directive), then his/her action should be characterised as tortious and claims for breach of contract should be excluded.[10]
This argument cannot be made anymore since pursuant to the ECJ’s
ruling in the IT Development v Free
Mobile Case decidedly clarifies Maltese
law in this respect. The measures for IP enforcement under the Enforcement of
Intellectual Property Rights (Regulation) Act are always available to a right-holder,
irrespective of whether the principle of non-cumul is applied and irrespective
of whether the right-holder is making a claim in contract or in tort.
[1] Article 2(1), IP Enforcement Directive.
[2] Case C-666/18, IT Development v Free Mobile, para. 20.
[3] Ibid, para. 23.
[4] Article 2(1), IP Enforcement Directive.
[5] Case C-666/18, IT Development v Free Mobile, para. 36.
[6] Ibid, para. 38-41.
[7] Ibid, para. 44-46.
[8] Ibid, para. 42.
[9] See Prof Dr David Zammit, ‘Does the Non Cumul Rule Exist in Our Civil Law?’ (2002), Vol. XVIII, Id-Dritt, pp. 49-68.
[10] Prof. Raymond Mangion v Whitelocke Publications Limited et (Rikors 322/17), Maltese Court of Appeal, dated 31 May 2019.
The COVID-19 pandemic has created an unprecedented crisis practically grinding the world’s economies to a halt and which in turn impacted the backbone of the world trade, the maritime industry. The impact on maritime business is wide-ranging. Lars Jensen, CEO of the Copenhagen-based provider of container shipping analysis SeaIntelligence Consulting estimated that 17 million TEU would eventually be taken out of service globally this year, whilst ports and terminals may suffer a loss of 80 million TEU of handling volume. Ever since the COVID-19 pandemic hit China’s supply crunch, it has resulted in a ripple effect in the global maritime industry whereby the EU and the US were left with insufficient transport capacity for exports out of China. Furthermore, companies wishing to export goods out of China have been faced with a depletion of air freight capacity.
As a result, consumers have been faced with changing their purchasing habits due to the fear of exposure to the virus. Consequently, a great deal of consumers shifted to purchasing goods locally as opposed to goods from other jurisdictions due to the logistics network of imported goods. The risk for disruption in the supply chain is therefore apparent which underscores the necessity to have smart and adaptive supply chains that utilise modern technology to support the supply chain and avoid any obstructions that may occur.
Disrupted supply chains may be the first adverse impact that comes to mind. Yet the complexity and multi-faceted maritime industry has been facing several more challenges on all fronts, namely crew changes and cruise liners.
Seafarers
Seafarers are essential for the movement of goods globally and are considered to be on the frontline of this global calamity. Seafarers have been faced with situations whereby they are required to stay onboard the vessel for longer periods than their original scheduled shift, and sometimes travel to different ports in countries affected by COVID-19, due to various countries imposing restrictions on change of crew unless absolutely necessary. As a result, some authorities are authorising extensions of seafarers service periods beyond the maximum 11 months’ time period permitted under the Maritime Labour Convention, only where strictly necessary to contain the spread of the virus. Disembarkation is not the only problem in crew changes. Seafarers who are currently awaiting deployment are concerned about possible delays in embarkation and postponement of income.
Similar to their overseas counterpart, locally seafarers’ services as established in the Seafarer’s Employment Agreement in terms of the Merchant Shipping (Maritime Labour Convention) Rules, may be extended for a maximum period of three months due to issues in repatriation. A seafarer who has a valid Certificate of Competency issued by a foreign administration that also has a Flag State Endorsement issued in terms of the Merchant Shipping Act and of the STCW Convention, may request to have the validity of their Flag State Endorsement extended beyond their expiry date should it expire during an extended period onboard.
Cruise liners
Cruise liner companies have been hard hit as they have experienced difficulties when arriving at their scheduled ports. Cruise ships have been stranded at sea, unable to dock at various ports of the world as they were denied entry, travelling along the seas scrambling for safe harbour. Since passengers and crew were denied authorisation to disembark, they were forced to remain in quarantine onboard the vessels finding difficulty in returning home. U.S. cruise liners have already faced costs amounting to nearly $750 million since January as numerous voyages primarily to Asia and the rest of the world have been cancelled. The Cruise Lines International Association had originally suspended operations from US ports for 30 days, however, major cruise liners proposed to restart their operations after the summer season, while other cruise liners have extended their cruising ban even further.
Worse still, a number of passengers and crew tested positive to COVID-19. One of the worst outbreaks of the virus onboard a cruise liner was that on the Diamond Princess, whereby the ship was placed under quarantine as soon as a passenger who had disembarked from the ship tested positive for the virus. The Diamond Princess was placed under lockdown with passengers confined to their cabins for a minimum of 2 weeks. It was reported that a total of over 700 people were infected and resulted in 13 fatalities.
In accordance with Port Notice 5 of 2020, Transport Malta has imposed a temporary indefinite ban on the entry of cruise liners and passenger ships into Maltese ports and territorial waters. By virtue of Legal Notice 92 of 2020, the Superintendent of Public Health extended the existing travel ban on persons to and from Malta whether by air or by sea. However, for obvious reasons this ban has not been imposed over cargo flights, ferry flights, humanitarian flights, repatriation flights and cargo ships, container ships and ro-ro vessels carrying goods and essential commodities and tankers loaded with essential fuels.
Cruise liners may suffer a long term hit following the end of the pandemic as it may undermine people’s confidence in going on cruise liners in the future as travellers may remain fearful of staying in a confined space. Cruise liner companies might therefore have to implement extra measures to win back the confidence of passengers which will require heavy investment at a time in which the industry is already struggling and will prove to be one of the most testing challenges the cruise liners will face.
The local scene: Transport Malta’s response to COVID-19
Transport Malta published a suggestive list of preventive measures which could be adopted by ship operators with the scope of minimising the spread of the novel coronavirus outbreak, such as ensuring all crew are fully aware of how the virus may be spread. Furthermore, ship agents, operators and masters of the ship are obliged, in terms of International Health Regulations, to immediately report any symptoms of the virus to the next port of call Port Health Medic doctor if there is a suspected COVID-19 diagnosis to ensure the safety of all crew until the potential patient is seen to by a medical professional. Transport Malta has advised that strict hygiene on board vessels should be followed at all times. However, since the crew of vessels live in close quarters to each other, stronger measures were needed since social distancing is a harder task to achieve.
In accordance with Port Notice 6 of 2020, crew members are not allowed to disembark from the vessel throughout the duration of its call in Maltese waters and ports. Additionally, shore personnel are only permitted to board vessels if they are in possession of written authorisation from the Port Health Medic. Furthermore, prior to entry in a port, ships are required to provide the Port Health Office with information regarding ports of call of affected countries.
Transport Malta adopted preventive measures in the early stages of the pandemic reaching the Maltese islands in order to minimise the impact of COVID-19 on the maritime industry and in order to ensure an uninterrupted service is provided to the Maltese shipping community under the current exceptional circumstance. With respect to commercial vessel activities, Transport Malta has temporarily extended the expiry of certifications, registrations and permits of commercial vessels, small ships and moorings, including registration of small ships, nautical licenses, certification of commercial vessels, certification of competency and mooring permits provided that the boat owner is in possession of a valid insurance policy. To further assist the shipping industry Transport Malta took the economic measure of deferring the due payment of the respective registration fees and annual tonnage tax by a period of three months from the anniversary with respect to those whereby the anniversary falls on or after 1 April 2020.
In order to better assist the teleworking measures adopted by local companies and to lessen physical contact, Transport Malta have also facilitated its services by introducing online services regarding yacht and boat registration under the Valletta Registry. The online services range from renewal of certification of registry, provisional and permanent registration, transfer of ownership, online payments, and other ancillary services.
Although the world has been facing a reality check through the COVID-19 instigated lockdown, the world remains largely connected through world trade proving the extraordinary strength and tenacity of the maritime industry in sustaining global supply chains in these unprecedented times. Furthermore, this pandemic may also act as a catalyst to spur further innovation in the maritime sector to undertake thorough amendments to limit their carbon footprint.
COVID-19 – Tax deferral fiscal aid scheme
The Maltese Government has introduced various measures in order to assist the stability of the Maltese economy due to the economic downturn resulting from the COVID-19 pandemic. The Tax Deferral Scheme is one of such fiscal measures. Primarily aimed at boosting business liquidity by relaxing pressure on the cash flow of businesses, it also seeks to incentivise the retention of employees.
The scheme is principally aimed at the education, hospitality and tourism, events, hairdresser and beauty, transport, and manufacturing industries. However, the fiscal incentive defines beneficiaries as companies and self-employed persons who have suffered a significant downturn in their turnover due to the economic limitations and considerable cash flow difficulties in the wake of the pandemic. In order for a beneficiary to be considered to have suffered a significant downturn, it must be shown that the beneficiary experienced a minimum 25% plunge in registered sales, which percentage estimate would be calculated on the basis of a three month period as compared with the same three month period in 2019. Nevertheless, each enterprise has a right to prove that it has suffered a significant downturn in turnover in its specific circumstance in order to benefit from the scheme notwithstanding the fact that the 25% threshold has not been satisfied.
The measures enable beneficiaries to benefit from a deferral on the payment of provisional taxes, employee taxes, maternity fund payments and social security contributions, social security contributions of self-employed persons, and VAT which fall due within March -June 2020. It should be noted that under the scheme enterprises will still be required to collect National Insurance on their employees’ wages, however, the said enterprises will keep these dues for the duration of the deferral. As a result of the scheme, beneficiaries would not be charged any interest or penalties for deferring payment of the eligible taxes in accordance with the scheme.
It is advised that companies and self-employed persons who are not adversely hit by the pandemic nonetheless pay the eligible taxes by their due date, not to abuse the scheme. It is essential that enterprises who opt to benefit from the scheme keep a record of the estimates calculated.
The scheme may not be availed of by companies or self-employed persons who were in default of complying with their tax obligations falling due by 31st December 2019 to the extent that the companies or self-employed persons, as the case may be, nor by those who opted to pay VAT under the Mini One Stop Shop. Furthermore, the scheme should be forfeited in the event that the beneficiary is in breach of the terms and conditions thereof and makes use of the scheme under false pretences. As a result, the Commissioner for Revenue will order that the beneficiary settles due payments together with any applicable penalties or interest according to law.
It should be noted that the scheme is solely a deferral of tax payments, therefore the beneficiary is nonetheless obliged to submit all documents and returns which are due to be submitted in March up to and including June, by their respective due date. In order to benefit from the tax deferral scheme, one must complete and submit an online application form, as may be found on the Malta Enterprise website, by no later than 15th May 2020.
The Financial Intelligence Analysis Unit (FIAU) has proposed a series of amendments to Part I of the Implementing Procedures issued under the Prevention of Money Laundering and Funding of Terrorism Regulations (Subsidiary Legislation 373.01). These proposed amendments seek to make certain obligations more practicable particularly for the funds industry.
Customer due diligence when this has already been carried out by the customer’s agent (Section 4.3.3)
The Implementing Procedures already contemplate situations where a subject person is dealing with an agent of the customer rather than with the customer itself. Apart from obliging the subject person to identify and verify the customer, the Implementing Procedures also verify the identity details of the agent.
The proposed amendment contemplates easing the customer due diligence obligations of banks (as subject persons) when dealing with a customer agent. According to the proposed amendment, where accounts are opened by an agent on behalf of major international entities and the list of signatories is voluminous, rather than having to collect verification documents on each and every authorised signatory, it suffices to obtain the confirmation of the account holder that it has verified the identity of those signatories. This is the case where an institutional investor such as funds (the agent) opens an account for the investors (the principals).
Banks may only benefit from this mitigated customer due diligence obligation if the account holder is itself a subject person in Malta, or is established in the European Economic Area (EEA) or in a reputable jurisdiction wherein it is subject to equivalent due diligence obligations; and if there is no adverse information in its regard. Furthermore, the said mitigated customer due diligence must be applied on a risk basis, that is, it cannot be benefitted from where it is deemed that there is a high risk of money laundering or of financing of terrorism.
The amendment is clearly intended to avoid the doubling of customer due diligence processes on opening of accounts with banks when due diligence on the customer has already been carried out by an agent, such as an institutional investor, according to Maltese law or the equivalent.
Change in Fund Administrators (Section 4.6.6)
The Implementing Procedures adopt the general principle that when a subject person acquires the business of another subject person or of a third party it is not necessary to undertake customer due diligence measures again provided that it has also acquired the records of all customers and these are not deficient. The amendments propose a new sub-section to deal with the specific scenario of a subject person acquires the business of servicing a collective investment scheme from a previous fund administrator or from a third party service provider carrying out anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.
In such a case the fund administrator/third party service provider might not only have to transfer to the acquiring subject person the due diligence records on the collective investment scheme but also on its investors. A problem has arisen in the past since a particular investor might be an investor in the collective investment scheme to be serviced by the new subject person as well as an investor in another collective investment scheme which is to remain in the business of the previous fund administrator/third party service provider. The latter would not be able to transfer the due diligence records on that investor where a common set of documentation would have been collected.
In these circumstances, the proposed amendment seeks to allow the outgoing fund administrator/third party service provider to merely provide a copy (electronic or otherwise) of the documentation collected on the investor to the incoming subject person with a declaration outlining why the documentation in original cannot be made available.
Simplified due diligence (Section 4.8.1.1)
Where a customer presents low risk of money laundering or terrorist financing the subject person may carry out simplified due diligence. A proposed amendment seeks to highlight instances when simplified due diligence may apply, namely, where the customer is a collective investment scheme, a nominee holding financial instruments, or an omnibus securities’ account. In these instances, simplified due diligence means that the subject person would not have to identify the beneficiaries or customers of these entities. This is subject to the entities meeting their own customer due diligence obligations and to the subject person obtaining confirmation of this from them.
Outsourced/Group MLRO (Section 5.1.2)
A group of subject persons has the possibility of appointing a single Group Money Laundering Reporting Officer (MLRO). A new proposal seeks to extend such possibility to appoint a group MLRO to groups comprising entities undertaking equivalent relevant activities or relevant financial business outside of Malta.
Conclusion
The amendments to the Implementing Procedures being proposed are intended to better cater for particular situations encountered in the financial services industry. These amendments would be particularly helpful when dealing with entities which have several beneficiaries, like funds, and where dealing with customer due diligence obligations may encounter a number of difficulties due to the number of persons involved. The proposals seek, therefore, to avoid unnecessary duplication of due diligence measures by: allowing banks to rely on the due diligence carried out by the fund itself without having to carry out due diligence on each fund investor; allowing incoming fund administrators to better rely on the due diligence that had been carried out by the outgoing fund administrator; extending the application of simplified due diligence so that a subject person may rely on the due diligence carried out by the customer itself with respect to its beneficiaries; and allowing the appointment group MLROs.
