A tax treaty is supposed to stop two countries from taxing the same income. Most of the time it does, quietly, through residence rules, reduced withholding rates and credits. When it does not, because two tax authorities read the same treaty differently, the treaty itself offers one way out: the mutual agreement procedure, in which the two tax administrations negotiate a solution. It is the least known part of any treaty, and in 2026 Malta changed it in two of its agreements.
On 18 September 2026, Legal Notice 251 of 2026 announced that a protocol to the Malta-Romania tax agreement had entered into force on 22 May 2026. Earlier, Legal Notice 174 of 2026 had declared an additional protocol to the Malta-San Marino convention in force from 22 April 2026. Both protocols do the same kind of thing: they remove time limits that could stop a dispute from being resolved. Here is what changed, from when, and what it means for anyone with income in Malta and one of those two countries.
How Malta's treaties become law
Malta gives effect to its tax treaties by order. Article 76 of the Income Tax Act lets the Minister for Finance declare that arrangements have been made with another government to relieve double taxation, and the treaty text is published as a schedule to a legal notice. Amendments follow the same route: an amending order publishes the protocol, and a separate commencement notice announces the date it entered into force.
That is exactly how both changes arrived. The amending orders, L.N. 97 of 2026 for Romania and L.N. 98 of 2026 for San Marino, were published on 17 April 2026. Each says the protocol will enter into force on a date to be established by notice in the Gazette. The two commencement notices supplied those dates later in the year.
How Malta's treaty network interacts with the refund system and the remittance basis is covered in our guide to Malta's double tax treaties. The two 2026 protocols touch only the dispute article.
What a mutual agreement procedure is
Both treaties follow the familiar structure. If a person considers that the actions of one or both countries result, or will result, in taxation not in accordance with the treaty, they may present their case to the competent authority of their country of residence, irrespective of domestic remedies. That authority first tries to fix the problem itself. If it cannot, it must "endeavour" to resolve the case by mutual agreement with the other country's competent authority.
Three features matter in practice:
- A deadline to start. The taxpayer must present the case within a set period from the first notification of the action that causes the problem.
- No duty to agree. The authorities must try; they are not obliged to reach a result.
- Implementation. If they do agree, the result has to be put into effect, which may mean reopening a tax year that domestic law would otherwise treat as closed.
The two protocols deal with the second and third features in different ways.
Malta and Romania: agreed solutions override domestic time limits
The agreement between Malta and Romania was signed in Bucharest on 30 November 1995 and appears in Maltese law as S.L. 123.42. The mutual agreement procedure is in Article 26.
The protocol, signed in Bucharest on 4 July 2024, deletes paragraph 2 of Article 26 in full and replaces it with this text:
"The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States."
The key words are in the last sentence. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of either country. If Malta and Romania agree that a year should be reassessed or tax refunded, an expired domestic assessment or refund window can no longer block it.
Two points about timing:
- Entry into force. The protocol enters into force thirty days after the later of the two notifications that each side has completed its procedures. L.N. 251 of 2026 fixes that date as 22 May 2026.
- Effect. Under Article II of the protocol, its provisions have effect for taxes on income derived during any calendar year or accounting period beginning on or after 1 January following entry into force. For a protocol in force on 22 May 2026, that points to income derived from 1 January 2027.
What did not change is the deadline to start. Article 26(1) still requires the case to be presented within three years from the first notification of the action resulting in taxation not in accordance with the agreement.
Malta and San Marino: the three-year expiry is gone
The convention between Malta and San Marino was signed in Valletta on 3 May 2005 and amended by a protocol signed in Rome on 10 September 2009. It appears in Maltese law as S.L. 123.97, and the mutual agreement procedure is in Article 24.
Here the problem was different. Article 24(2) already said that an agreement must be implemented notwithstanding domestic time limits. But it also contained a sentence that cut the procedure short:
"The mutual agreement procedure shall expire by the end of the third year following that in which the case was presented by the taxpayer."
In other words, if the two administrations had not settled a case by the end of the third year after it was filed, the procedure simply ended, leaving the double taxation in place.
The additional protocol, signed in San Marino on 1 April 2024, deletes that sentence. It entered into force on the date of the later notification through diplomatic channels and took effect from then. L.N. 174 of 2026 states that it is deemed to have come into force on 22 April 2026.
The deadline to start, however, is shorter than in the Romania agreement. Article 24(1) requires the case to be presented within two years from the first notification of the action resulting in taxation not in accordance with the convention. That has not changed.
Why two small protocols matter
Neither protocol changes a tax rate, a residence rule or a withholding percentage. They change something less visible: whether a dispute can be finished.
For San Marino, the change removes a hard stop: a case that took longer than three years after filing used to lapse, and now it does not. For Romania, the rewritten paragraph states in terms that an agreed solution overrides domestic time limits in both countries, so a reassessment or refund agreed between the authorities cannot be blocked by an expired domestic deadline. The San Marino change has applied since April 2026; the Romania change applies for income derived from 2027.
The EU route for Malta-Romania cases
Romania is an EU member state, so a Malta-Romania dispute has a second route that a Malta-San Marino dispute does not. The EU Tax Dispute Resolution Directive was implemented in Malta by L.N. 159 of 2019, the European Union Tax Dispute Resolution Mechanisms Directive Implementation Regulations, in force since 1 July 2019. They cover disputes between Malta and other member states over treaties that eliminate double taxation of income.
The main steps under those regulations are:
- Complaint. The affected person files a complaint with the Commissioner for Tax and Customs, in Maltese or English, within three years of receiving the first notification of the action, and files the same complaint simultaneously with the competent authority of each other member state concerned.
- Acceptance. The Commissioner decides whether to accept or reject the complaint within six months. If no decision is taken in time, the complaint is deemed accepted.
- Mutual agreement. Once accepted, the authorities have two years to resolve the dispute, extendable by up to one year.
- Implementation. An agreed decision is binding on the Commissioner, subject to the taxpayer accepting it and renouncing other remedies, and is implemented irrespective of time limits in Maltese law.
- Advisory Commission. If the complaint is rejected, or the authorities fail to agree within the time limit, the affected person can ask for an Advisory Commission, in writing, within 50 days of the relevant notification. The Commissioner must take the steps to set it up within 120 days of the request.
The directive route has hard deadlines and an independent body at the end. The treaty route, even after the 2026 protocol, has neither: the authorities must try to agree, but nothing forces a result. For a Malta-Romania case, it is worth considering both from the start.
Who should take note
The changes are narrow, but they matter for specific groups:
- Maltese residents with Romanian income, such as rental income from property in Romania, employment split between the two countries, or pensions from Romania.
- Romanian nationals living in Malta who keep income or assets in Romania, and who may face conflicting residence claims.
- Companies with a San Marino link, such as a Maltese company with a San Marino shareholder or a San Marino company with Maltese operations, where questions of permanent establishment or dividend treatment can arise. Our guides on the Maltese corporate tax system and the participation exemption for holding companies explain the domestic side.
- People who changed residence between Malta and either country, where both may treat the person as resident in the year of the move. How residence and domicile work in Malta is set out in our piece on non-dom and special tax status.
Practical steps if you are taxed twice
- Note the date of the first notification. Every deadline runs from it: two years under the San Marino convention, three years under the Romania agreement and three years under the EU regulations.
- File with the right authority. Under both treaties the case goes to the competent authority of the country where you are resident. In Malta, that is the Commissioner for Tax and Customs.
- Keep domestic remedies in mind. The treaty procedure runs irrespective of domestic remedies, but an objection or appeal at home has its own deadlines. Under the EU route, accepting an agreed decision means renouncing other remedies.
- For Malta-Romania cases, compare the routes. The treaty route now guarantees implementation of an agreement for income from 2027; the EU route adds firm deadlines and an Advisory Commission.
- Prepare the full file. The EU regulations list what a complaint must contain, including the tax periods, the facts, the structure of the transactions and the tax charged in each country. The same information is the core of a treaty case.
As of 25 October 2026, both protocols are in force: the San Marino change since 22 April 2026, and the Romania change since 22 May 2026, with effect for income derived from 1 January 2027.
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