Malta’s transfer pricing rules apply to financial years beginning on or after 1 January 2024 and generally capture arrangements between associated enterprises that were entered into or “materially altered” on or after that date. For arrangements entered into before 1 January 2024 that have not been materially altered, the transfer pricing rules apply from basis years commencing on or after 1 January 2027 (for prior coverage, see the article in the December 2025 issue of Transfer Pricing News). A post-1 January 2024 amendment to a legacy intercompany arrangement may bring Malta’s transfer pricing rules into effect earlier than expected.
In many cases, the date an arrangement was entered into will be clear. The more difficult question is whether later changes are significant enough to be treated as a material alteration.
Malta’s transfer pricing rules do not define “material alteration,” although the transfer pricing guidelines indicate that the analysis must be made on a case-by-case basis. The key question is whether a change to an existing related party transaction or arrangement materially affects its substance, taking into account:
In practice, the examples below should be viewed as indicators of a potential material alteration rather than automatic triggers, with the conclusion depending on the facts and circumstances of the arrangement.
The guidelines identify several types of changes that may indicate a material alteration, including:
Whether an arrangement is treated as materially altered can determine when Malta’s transfer pricing rules begin to apply. Businesses should review existing intercompany arrangements, particularly those amended after 1 January 2024, to assess whether additional transfer pricing compliance and documentation obligations may arise.
Audrey Azzopardi
Sara Farrugia
BDO in Malta
What Counts as a Material Alteration?
In many cases, the date an arrangement was entered into will be clear. The more difficult question is whether later changes are significant enough to be treated as a material alteration.Malta’s transfer pricing rules do not define “material alteration,” although the transfer pricing guidelines indicate that the analysis must be made on a case-by-case basis. The key question is whether a change to an existing related party transaction or arrangement materially affects its substance, taking into account:
- Functions performed;
- Assets used; and
- Risks assumed by each party.
In practice, the examples below should be viewed as indicators of a potential material alteration rather than automatic triggers, with the conclusion depending on the facts and circumstances of the arrangement.
Examples of Material Alterations
The guidelines identify several types of changes that may indicate a material alteration, including:
- Changes to the consideration for the performance of the arrangement;
- Changes to the rights or obligations undertaken by the parties that affect the allocation of risks and, consequently, remuneration; and
- Changes to the duration of the agreement.
BDO Perspective
Whether an arrangement is treated as materially altered can determine when Malta’s transfer pricing rules begin to apply. Businesses should review existing intercompany arrangements, particularly those amended after 1 January 2024, to assess whether additional transfer pricing compliance and documentation obligations may arise.Audrey Azzopardi
Sara Farrugia
BDO in Malta