The Inland Revenue Department has issued a guidance note in relation to the tax implications of directorship fees received by non-resident directors of Maltese companies. Directors’ fees are fees and similar payments received by a person in his capacity as a member of a board of directors. These are to be considered as income arising where the company is resident, i.e. where the company has its management and control, and are taxable therein.
This position is the same as that given by the OECD Model Tax Convention commentary, which states that the relative services are considered to be performed in the state of residence of the company. These fees do not include remuneration in respect of other services rendered to the company and thus any other remuneration received by directors from the company, such as, for example, fees for sitting on an advisory committee is not taxable in Malta if the said person is neither resident nor domiciled in Malta, nor performs the services in Malta, nor has a permanent establishment in Malta.
