The IRS has now issued their opinion on their understanding of the meaning of pension fund for purposes of the United States–Malta income tax treaty (Treaty). The competent authorities, CA, have entered into this agreement on December 23, 2021, after becoming aware that U.S. taxpayers with no connection to Malta were misconstruing the pension provisions of the Treaty to avoid income tax on the earnings of, and distributions from, personal retirement schemes established in Malta.

U.S. and Malta competent authorities’ understanding that (except in the case of a qualified rollover from a pension fund in the same country) a fund, scheme, or arrangement is not operated principally to provide pension or retirement benefits if it allows participants to cont