U.S., Malta Move to Limit Use of Pension Plans for Tax Avoidance

The U.S. and Malta have signed an agreement designed to cut off taxpayers’ attempts to use Maltese retirement plans to avoid U.S. taxes, the IRS said Tuesday.

• The agreement addresses concerns that some taxpayers believe they can contribute appreciated property tax-free to Maltese pension plans, then suffer no tax consequences when the plan then sells the property and the taxpayer collects the proceeds.
• Those taxpayers are “misconstruing” the income tax treaty between the U.S. and Malta, the IRS said. The new agreement stipulates that Maltese arrangements generally can’t be considered ...