The Competent Authority Agreement outlines the shared understanding of the authorities in Ireland and Malta that the BEPS Multilateral Convention on Tax Treaties will, once it is in effect in both jurisdictions, make clear that it is not the purpose of the bilateral Ireland-Malta Tax Treaty to enable an aggressive tax planning structure referred to as the ‘Single Malt’. This Agreement will ensure that the Treaty does not enable that structure.
Currently, where payments are made by an Irish-resident company to an Irish-incorporated company which is managed and controlled in Malta, and such payments are not received in Malta, double non-taxation could arise: The payments will be tax-deductible in Ireland but will not be subject to tax in Malta as they are not received in Malta.
The purpose of the Competent Authority Agreement is to ensure that such double non- taxation will no longer occur. The relevant payments made by an Irish-resident company to an Irish-incorporated company which is managed and controlled in Malta will be subject to Irish corporation tax once the Competent Authority Agreement comes into effect and, on that basis, there will be no cost to the exchequer.