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Let's Talk about US Tax Implications of the Malta Treaty

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Yesterday, I was at a meeting.  In the meeting here in Singapore, there were two representatives of a European Financial institution that services US exposed clients.  As frequently happens, they brought up the Malta - US Treaty and the tax planning opportunities that appear to arise from this treaty.

As a result, I thought it is time for me to properly document my thinking on this.  In short, I agree with some of the comments posted online - it's simply too good to be true -
First, it is unlikely that the treaty was intended to provide for a glaring exception to the main tenants of U.S. citizenship based taxation. Secondly, and even more critically, these plans gloss over the issues of residency and jurisdiction. The treaty does not cover Americans who are not resident in Malta, or at least not resident in Malta at the time that contributions to the plan were made. Americans outside of Malta have no standing to make claims under the treaty’s provisions.Aside from the tax and comp…