Where the profits out of which a di

Where the profits out of which a dividend is distributed consist of "passive interest or royalties", the refund is set at 5/7 of the Malta tax suffered on those profit. "Passive interest or royalties" arise if
(i) income is not derived from a trade or business AND
(ii) such interest or royalties have not suffered
foreign tax or suffered foreign tax, directly, by way of withholding, or otherwise, at a rate of tax which is less than five per cent (5%). If any one of these conditions is lacking, there will be no passive interest or royalties and one would fall under the more beneficial 6/7 refunds regime.