Local regulations transposing DAC7 replaced by Legal Notice 18 of 2025

Legal Notice 8 of 2023, published on 20 January 2023, introduced regulations which transposed the provisions of the seventh update to Council Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC7) into Maltese legislation.

On 17 January 2025, Legal Notice 8 of 2023 was repealed and effectively replaced by Legal Notice 18 of 2025 (the ‘Legal Notice’) with effect from 20 January 2023. The Legal Notice introduces amendments to the Cooperation with Other Jurisdictions on Tax Matters Regulations, Subsidiary Legislation 123.127 (the ‘Regulations’).

The main changes have been summarised below.

Scope

The new Legal Notice aligns Malta’s Regulations with Directive (EU) 2021/514 of the European Parliament and of the Council of 25 March 2023 on administrative cooperation in the field of taxation (commonly referred to as DAC7).

In addition, the Legal Notice updated the definition of the “EU Administrative Cooperation Directive” to reflect its revised name following recent amendments as follows “Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC as amended by Council Directive 2014/107/EU, and Council Directives (EU) 2015/2376, 2016/881, 2018/822, 2020/876 and 2021/514”.

Amendments to Regulation 13: Automatic Exchange of Information

Royalties included in Sub-Regulation (1)

Information available concerning royalties received by residents of Member States is now explicitly included among the specific categories of income and capital that EU Member States are required to exchange with other Member States.

By addressing potential loopholes, this development enhances tax transparency and ensures that tax authorities have the information needed to accurately assess tax obligations.

Reinstatement of Sub-Regulation (10)

The Legal Notice reintroduced Sub-Regulation (10), specifying the effective dates of the various sub-regulations and incorporating some minor amendments, mainly:

• The requirement for the automatic exchange of information regarding royalties is deemed retroactively effective from 1 January 2024; and
• Provisions governing the automatic exchange of information by platform operators are considered retroactively effective from 1 January 2023.

Revisions to Sub-Regulation (12)

Sub-Regulation (12), which pertains to the automatic exchange of information reported by platform operators, has been amended as follows:

1.      Re-registration following revocation

Failure to submit the required information may result in the revocation of the registration of a reporting platform operator. However, in terms of this new amendment, such operators may be allowed to re-register with the Commissioner for Tax and Customs (‘CfTC’), provided they give adequate assurances of their commitment to meeting reporting requirements, including any outstanding unfulfilled reporting requirements.

2.      Removal from the Central Register

The CfTC, as the competent authority of the EU Member State of single registration shall request the removal of a reporting platform operator from the EU Central Register in the following scenarios:

a.      The platform operator informs the CfTC that it has ceased its operations as a platform operator;

b.      There is reasonable evidence to assume that the platform operator has ceased operations, even without notification;

c.      The platform operator no longer meets the criteria of a ‘reporting Malta platform operator’; and

d.      The CfTC revoked the platform operator’s registration.

Data Protection – Regulation 21

A new sub-regulation (8) has been introduced, empowering the CfTC to collaborate with other Member States and the European Commission with the aim of establishing practical arrangements for the purposes of data breach management processes which are aligned with internationally recognised good practices and, where appropriate, a joint data controller agreement, an agreement between the data processor and the data controller, or models thereof.

Clarifications to Regulation 22(1)

Regulation 22(1) has been revised to provide greater clarity regarding the standard forms used for information exchange requests. The requests may be accompanied by additional materials such as reports, statements and other relevant documents. However, they must include the following required details:

1.      The identity of the person under examination or investigation and, in the case of group requests, a detailed description of the group; and

2.      The tax purpose for which the information is sought.

Comments

While the amendments introduced by the Legal Notice in connection with DAC7 may initially seem limited in scope, two key changes are particularly important.

The inclusion of royalties in the categories of income subject to automatic exchange of information by competent authorities marks a significant advancement in enhancing tax transparency and closing potential loopholes. This measure is expected to improve the detection and prevention of tax evasion or avoidance related to royalty payments.

The introduction of a mechanism allowing platform operators to re-register with the CfTC following the revocation of their registration is another notable addition. However, the legislation remains ambiguous on what constitutes ‘adequate assurances’ required to showcase a platform operator’s commitment to meet reporting requirements, a point that has similarly not been clarified in the CfTC’s published guidance on DAC7.

These amendments reflect Malta's ongoing efforts to align with EU standards while also highlighting areas where further clarification may be needed to ensure effective implementation.