--- title: IRS Shutting Down Malta Pension Plan Scheme Used by US Taxpayers description: The IRS recently announced the US and Malta have signed an agreement confirming the meaning of pension fund for purposes of the two countries’ income tax treaty. Read more. image: https://info.mooredm.com/hubfs/malta-us-flags.jpg --- [![Moore_Doeren Mayhew_Logo_RGB_500px](https://info.mooredm.com/hs-fs/hubfs/Moore_Doeren%20Mayhew_Logo_RGB_500px.png?width=550&height=60&name=Moore_Doeren%20Mayhew_Logo_RGB_500px.png "Moore_Doeren Mayhew_Logo_RGB_500px")](https://www.mooredm.com) - [ABOUT](https://www.mooredm.com/about) - [SERVICES](https://www.mooredm.com/services) - [INDUSTRIES](https://www.mooredm.com/industries) - [LOCATIONS](https://www.mooredm.com/locations) - [PEOPLE](https://www.mooredm.com/people) - [RESOURCES](https://www.mooredm.com/publications) - [GLOBALVIEW](https://info.mooredm.com/blog) [![GlobalVIEW-Webpage-Header-final-2](https://info.mooredm.com/hs-fs/hubfs/GlobalVIEW-Webpage-Header-final-2.jpg?width=2000&height=500&name=GlobalVIEW-Webpage-Header-final-2.jpg "GlobalVIEW-Webpage-Header-final-2")](https://info.mooredm.com/blog/mooredm.com) February 16, 2022 # IRS Shutting Down Malta Pension Plan Scheme Used by US Taxpayers ![topicIcon](http://www.sparkreaction.com/hubfs/Oceania%20Theme%202016/Images/topicIcon.png) [International Tax](https://info.mooredm.com/blog/topic/international-tax) [![irs-shutting-down-malta-pension-plan-scheme-used-by-us-taxpayers](https://info.mooredm.com/hubfs/malta-us-flags.jpg)](https://info.mooredm.com/blog/irs-shutting-down-malta-pension-plan-scheme-used-by-us-taxpayers) The [Internal Revenue Service (IRS)](http://www.irs.gov) recently announced the United States and Malta have signed an agreement confirming the meaning of pension fund for purposes of the two countries’ income tax treaty. This agreement comes after the IRS learned US taxpayers have been misinterpreting the pension provisions of the treaty to avoid income tax on the earnings of, and distributions from, Maltese personal retirement schemes. In this scheme, US taxpayers with no connection to Malta interpret the treaty to allow them to contribute appreciated property tax-free to certain Maltese personal retirement schemes. The taxpayers then claim there were no tax consequences when the scheme distributed the proceeds. Under US tax law, gains ordinarily would be recognized upon the sale or other disposition of a plan’s assets and distribution of the proceeds of such sale or disposition. Except in the case of a qualified rollover from a pension fund in the same country, a fund, scheme or arrangement is not considered a pension fund if it: - Allows participants to contribute property other than cash. - Does not limit contributions by reference to income earned from employment and self-employment activities. **Examinations Underway** The IRS is actively examining taxpayers who have set up these arrangements. The tax agency recognizes other taxpayers may have filed tax returns claiming treaty benefits because of their participation in these arrangements. These arrangements may have been promoted to US taxpayers who were working in Europe because of their proximity to Malta. The IRS has recommended taxpayers who have participated in a Maltese personal retirement schedule consult an independent tax advisor before filing their [2021 Form 1040](https://www.irs.gov/pub/irs-pdf/f1040.pdf). **Review Your Accounts** Taxpayers should be very careful about considering any arrangement that would seek to misconstrue the provisions of a US bilateral income tax treaty to avoid income tax. If you have a retirement account based in Malta, or anywhere overseas, and would like to discuss this issue, [contact](https://info.mooredm.com/contact-mooredm) our Moore Doeren Mayhew international tax advisors. Contacts: [![Steve-Wedge-1592](https://info.mooredm.com/hs-fs/hubfs/Steve-Wedge-1592.jpg?width=100&name=Steve-Wedge-1592.jpg)](https://www.mooredm.com/people/steven-c-wedge) [Steve Wedge](https://www.mooredm.com/people/steven-c-wedge) [![chad-hatalla-globalview](https://info.mooredm.com/hs-fs/hubfs/chad-hatalla-globalview.jpg?width=100&name=chad-hatalla-globalview.jpg)](https://www.mooredm.com/people/chad-hatalla) [Chad Hatalla](https://www.mooredm.com/people/chad-hatalla) Written by [Moore Doeren Mayhew](https://info.mooredm.com/blog/author/moore-doeren-mayhew) SHARE THIS ARTICLE | [NEXT POST](https://info.mooredm.com/blog/eyes-on-related-parties) ## Get this information delivered straight to your mailbox. [![Subscribe to Our Newsletter](https://no-cache.hubspot.com/cta/default/2333341/72851b22-0bc4-4f0a-8f1a-ef88b5ca3304.png)](https://cta-redirect.hubspot.com/cta/redirect/2333341/72851b22-0bc4-4f0a-8f1a-ef88b5ca3304) ### Recent Posts #### About Us Moore Doeren Mayhew assists privately-controlled businesses—and the families who own them—in building and preserving wealth by providing privileged access to specialists, knowledge, and the highest quality personal service. Our firm combines a breadth of international audit, assurance, tax and consulting services with local market knowledge and international strength. [Learn More](http://www.mooredm.com) #### More Links - [\[fa icon="caret-right"\] Home](http://www.moorestephensdm.com/) - [\[fa icon="caret-right"\] About Us](http://www.moorestephensdm.com/about) - [\[fa icon="caret-right"\] Contact Us](https://info.mooredm.com/contact-mooredm) #### Contact Us \[fa icon="phone"\]  +1 (248) 244-3060 \[fa icon="envelope"\]  [mdm@mooredm.com](mailto:mdm@mooredm.com) \[fa icon="home"\]  305 West Big Beaver Road, Troy Michigan 48084-0231 [Linkedin](https://www.linkedin.com/company/10492787) [Twitter](https://twitter.com/moore__dm) Copyright 2026 \[fa icon="chevron-up"\]Back to top Cookie Settings