Malta Personal Retirement Scheme Listed Transaction

The Internal Revenue Service (IRS) and the U.S. Department of the Treasury (USDT) have published in the Federal Register a proposed new regulation to fill the loopholes for tax avoidance in connection with Malta pension plans by individuals subject to U.S. income taxes. Specifically, so far, individuals could „invest“ in Malta pension plans by transferring their assets (stocks, cryptocurrency, etc.) to such plan and then subsequently sell their plan shares at some later point in time or draw retirement from the plans as usual. That way, affected individuals were able to circumvent capital gains tax that would have had to be paid had they sold their assets to the market – without transfer to a pension plan.
In order to close this tax loophole, the government of Malta and the U.S. have already agreed that pension plans will no longer classify as such, if the non-cash contributions made to them aren’t tied to the amount of income earned by an individual. Additionally, the two Departments now propose to classify Malta personal-retirement schemes as “listed transactions“ which means that individuals subject to U.S. income tax and their advisors must file any such transactions with the IRS. Failure to do so would result in significant financial penalties as outlined in the document.
Accordingly, new § 1.6011–12 – Malta Personal Retirement Scheme Listed Transaction – would be added to Statutory Instrument 26 CFR Part 1.
Details on the proposed new paragraph may be found here.