Taxation of dividends : an analysis of the Maltese and selected foreign taxation mechanisms : a comparative study

Abstract

Payment of dividends to shareholders existed more than 300 years ago. Dividends have survived through all these years and have been customary if not essential for shareholders even though there are contradicting theories on dividend policy. The scope of my thesis is to analyse and compare the tax implications on dividends in Malta and selected foreign tax mechanisms. For the scope of this comparative analysis, three jurisdictions were selected, being Malta, Sweden and the United Kingdom. My thesis first gives an introduction on the evolution of dividends over the years and an explanation of dividend policies and their implications on companies. I then analyse and compare the definition of dividends as found in the legislation of the three selected jurisdictions. The next part of the thesis focuses on the tax implications upon a payment of a dividend in a purely domestic scenario. The study then evolves on the international aspect of dividends and the tax implications of inbound and outbound dividends are considered. The analysis and comparison focuses on the double taxation agreements between Malta and the other two selected jurisdictions as well as the implications of the Parent Subsidiary Directive and ECJ case law. Finally the thesis adopts a forward looking approach commenting on likely future development in the subject area.