EXTERNAL TRANSACTIONS ACT

CHAPTER 233

EXTERNAL TRANSACTIONS ACT

To establish a framework for the liberalisation of external transactions

and to provide for the collection of related information.

29th December, 1972;

1st February, 1973

ACT XLIX of 1972, as amended by Acts XXIV of 1973 and LVIII of 1974;

Legal Notice No. 148 of 1975; Acts XXII of 1976, XXXI of 1981, XIII of

1983, II of 2002, IX of 2003, III and XIII of 2004, II of 2005 and I of 2007;

and Legal Notice 411 of 2007 and Act IX of 2025.

PART I

PRELIMINARY

The short title of this Act is the External Transactions Act.

(1)

In this Act unless the context otherwise requires -

"capital transactions" means external transactions arising from

the transfer or movement of capital and includes

(a) transfers of immovable property;

(b) direct investments;

(c) the issue, sale or purchase of securities including

shares and stock in the capital of a company,

debentures, certificates of deposit and any other

similar instrument acknowledging indebtedness;

(d) the issue, sale or purchase of units in a collective

investment scheme, life and annuity long-term

insurance policies whether index-linked or not;

(e) lending, borrowing and payment or receipt of

amortisation on loans;

(f)

granting of guarantees or any other form of security

for payment;

(g) warrants, options, futures and other derivatives as well

as any other financial instrument entered into for

investment purposes;

(h) deposits with credit institutions;

(i)

gifts and endowments; and

(j)

any other type of transaction which the Minister may,

after consultation with the Central Bank, determine by

notice in the Gazette;

"Central Bank" means the Central Bank of Malta established

under the Central Bank of Malta Act;

"current transactions" means external transactions arising from

current flows and include

(a) foreign trade in goods and services including interest

payments, dividend, royalties, reinvested earnings and

distributed profits;

(b) other current business payments arising from services,

short-term banking and credit facilities; and

(c) remittance for family living expenses;

"eligible asset" means deposits as defined in the Banking Act,

securities including shares and stock in the capital of a company,

debentures, certificates of deposit, bonds, notes and any other

instrument acknowledging indebtedness, units in a collective

investment scheme, life and annuity long term insurance policies,

whether index-linked or not, precious metal, bullion, warrants,

options, futures and other derivatives as well as any other financial

instruments entered into for investment purposes, and also includes

any other asset as may be determined from time to time by the

Minister by notice in the Gazette;

"European Union" means the European Union referred to in the

Treaty;

"ext ernal t ransaction s" includ es b oth cap ital an d current

transactions involving operations between resident and non-

resident persons or other entities, whether in or outside Malta, and

may also include operations involving foreign exchange by a

resident or between residents;

" foreign exchange " m eans any note, coin, cheque , draft,

travellers’ cheque, letter of credit, promissory note, bill of

exchange, voucher, credit or debit card or other card or means in

which value is inputted through electronic or magnetic methods and

which any unspecified person is able to use for payment in lieu of

currency, or other means of payment expressed in the currency of

any country which is not legal tender in Malta and references in

this Act to foreign exchange include references to any right to

receive on demand foreign exchange in respect of any credit or

balance at any credit institution anywhere;

" M e m b e r St a t e " m e a n s a s t a t e w h i c h i s a m em b e r o f t h e

European Union;

"Minister" means the Minister responsible for finance;

"monetary instruments" includes cheques, drafts or travellers’

cheques, any anonymous or bearer certificates of a financial or

monetary nature which are convertible into cash, irrespective of the

issuer, and in particular, negotiable and other securities and

instruments, whether denominated in euro or foreign currency;

"National Statistics Office" means the National Statistics Office

established under the Malta Statistics Authority Act;

"non-resident" means

(a) any person, body corporate or other entity which is not

a resident;

(b) any resident trustee in terms of a trust where any of the

beneficiaries are non-resident and in the case of a

discretionary trust, where the power of appointment or

any discretion may be exercised in favour of any non-

resident;

"payment" means -

(a) any event which, wholly or in part, extinguishes a debt

of a sum of money between a resident and a non-

resident in connection with an external transaction;

(b) any transfer of funds, on account or in cash, between

Malta and a foreign country carried out by a resident

who transfers funds to or repatriates funds from his

account held by him abroad;

(c) any transfer of funds on an account or in cash between

Malta and a foreign country for which the principal

and the beneficiary are both residents;

(d) any transfer of funds in foreign exchange carried out in

Malta between residents;

"resident" means

(a) any natural person regardless of nationality whose

centre of economic interest is ordinarily in Malta and

who has resided in or has the intention to reside in

Malta for a continuous period of one year;

(b) any body corporate incorporated in or under the laws

of Malta or of a Member State, or any entity which

operates from or is otherwise registered in Malta or in

a Member State;

(c) any trustee in terms of a trust whose place of residence

is ordinarily outside Malta or any Member State but

where all the beneficiaries of the trust are determined

and are residents and in case of a discretionary trust

where the power of appointment or any discretion may

be exercised only in favour of residents;

"the Treaty" has the same meaning assigned to it by the European

Union Act.

(2) The Minister may appoint the Central Bank to act as agent

for the said Minister for any one or more of the purposes of this

Act, but any such appointment shall be without prejudice to the

exercise of any such power by the Minister.

(3) For such time as the Central Bank is appointed as agent for

the Minister under subarticle (2), the references in this Act to the

Minister shall, to the extent and subject to the terms and conditions

of such appointment, be deemed to include references to the

C e n tr a l B a n k. No ti c e o f an y such a p po in tm e n t, and o f a ny

revocation of, or change in the terms and conditions of such

appointment, shall be published in the Gazette.

PART II

LIBERALISATION AND SAFEGUARD MEASURES

Unless otherwise specified by means of regulations or

orders issued by the Minister under articles 4 and 5 all external

transactions and related payments may be carried out without

restriction.

(1) Where exceptional circumstances arise, the Minister

may, on the recommendation of the Central Bank, make regulations

imposing such restrictions on capital transactions and related

payments, whether of a specific or a generic nature, as may be

deemed necessary

Provided that such restrictions shall not be imposed in

relation to a Member State.

(2) For the purposes of subarticle (1), exceptional

circumstances shall be deemed to exist, where the Minister acting

upon the recommendation of the Central Bank, declares that

(a) there is a sudden crisis in Malta’s balance of payments;

or

(b) movements of capital to or from Malta cause or

threaten to cause serious difficulties for the stability of

the financial system.

(3) Regulations made under subarticle (1) shall be revoked by

the Minister without delay as soon as the grounds which gave rise

to such restrictions cease to exist and, in any case, shall not remain

in effect for a period exceeding six months.

The provisions of articles 4 and 5 are without prejudice to

the powers granted by the National Interest (Enabling Powers) Act

to impose controls or restrictions on capital or other transactions or

related payments in respect of any state, person or group of persons

whether arising from Malta’s international obligations under the

United Nations Charter, the Treaty or otherwise unilaterally to

defend Malta’s national interests.

PART III

COLLECTION OF INFORMATION AND ACCESS TO RECORDS

Without prejudice to any other provision of this Act, the

M i n i st er m a y r e q u i r e a n y p e rs o n i n M a l t a t o p r o v i d e s u c h

information and, or clarification as the Minister may consider

necessary for the purpose of ensuring compliance with any

regulations made under Part II of this Act.

The Minister may by regulations require any person to

declare to the Comptroller of Customs the import or export by such

person of banknotes and coins denominated in euro and, or in

foreign currencies, and, or foreign exchange, and, or monetary

instruments, and, or precious metals, and, or precious stones into or

from Malta in such amounts as may be specified in such regulations

and to disclose such other information as may be prescribed in such

regulations regarding such import or export.

Without prejudice to the previous provisions of this Act,

the Minister may after consultation with the Central Bank and the

National Statistics Office by regulations require any person within

such time and in such manner as may be prescribed to furnish the

Minister such information, return or other detail relating to external

transactions as may be required to collect, compile and disseminate

statistical information on external transactions.

(1) Except for the purpose of any prosecution for an

offence against the Act, no information which can be related to an

identifiable person and which is obtained under this Act shall be

disseminated, shown or communicated to any person or body

without the written consent of the individual or his representative.

(2) Notwithstanding the provision of subarticle (1), the

Minister may disclose any information provided or obtained under

this Act, even where this relates to an identifiable person to any

body or authority in Malta responsible for the collection of any tax,

and may likewise, on the basis of any agreement with other states

which provide for the reciprocal exchange of such information

disclose information to similar bodies or authorities in the states

Provided that

(a) the bodies or authorities to whom the information is

disclosed are subject to obligations of secrecy which

are equivalent to those applying under the law of

Malta; and

(b) an undertaking is obtained from such bodies or

authorities that the information provided will only be

used for the purposes for which it was requested and

will be kept confidential and will not be communicated

to anyone who is not employed by the authorities and

who is not subject to a similar duty of secrecy in

respect of the said information.

(1) Regulations under this Act imposing restrictions on

any transactions, or any obligation to report, provide statistics or

other information may also provide -

(a) that any person who contravenes any provisions

thereof shall be guilty of an offence and shall be liable

on conviction to a fine (multa) of not more than forty-

six thousand and five hundred and eighty-seven euro

and forty-seven cents (46,587.47);

(b) for the forfeiture of any monies, wholly or partially,

monetary instruments or other things not declared in

terms of any regulations made under article 7;

(c) for administrative penalties in lieu of criminal

proceedings, the procedures therefor, as well as for

procedures for bringing appeals from decisions in

connection therewith to the Financial Services

Tribunal within such period and under such conditions

as established under article 21 of the Malta Financial

Services Authority Act or such other body as may be

prescribed.

(2) No criminal proceedings for any offence under such

regulations may be commenced without the consent of the Attorney

General.

(1) Any person who, after having registered any eligible

assets in terms of and within the period as may be established in

any scheme as may from time to time be made by the Minister,

would, but for the provisions of this subarticle, have contravened

any restriction, prohibition or requirement under article 39(1) of

the Exchange Control Act as in force on the 1st July, 2003, or such

other law as the Minister may prescribe, shall be deemed not to

have committed an offence under the said article 39 or other law as

prescribed with regard to the eligible assets so registered or monies

or other assets represented by such eligible assets so registered.

(2) The Minister may, by regulations under this subarticle,

make schemes for the registration of eligible assets and upon the

registration of such eligible assets in accordance with such scheme,

the provisions of subarticle (1) shall apply and the eligible assets so

registered may continue to be retained as prior to the date of

registration without the need to obtain such permits or to comply

with such requirements under this or any other law as may be

prescribed.

(3)

(a) Any scheme made by the Minister in accordance with

subarticle (2) may impose such conditions as may

appear to the Minister to the appropriate and may,

without prejudice to the generality of the foregoing,

include -

(i)

the payment of such fee as may be established in

the scheme not being a fee more onerous than

the tax that would otherwise be payable under

the relevant laws;

(ii) the manner in which such fee shall be paid and

recorded;

(iii) the manner in which registration shall be made

and recorded; and

(iv) such circumstances under which any asset may

not be registered.

(b) For the purposes of paragraph (a), the term "relevant

laws" has the same meaning assigned to it in article 9B

of the Income Tax Act.