Italy is to remove Malta from its list of tax haven jurisdictions following talks between the two countries going back two years.

The aim behind the 'black list' of the Italian Controlled Foreign Companies (CFC) law is to tax subsidiaries of Italian companies located in so called low tax jurisdictions even if the profits of the relative subsidiaries are not distributed to the Italian parent company

Malta featured on the black list prior to its EU membership and although pursuant to its EU membership not all types of Maltese companies were blacklisted, all Maltese companies were construed to be de facto blacklisted due to the uncertainty resulting from the lack of clarity of the wording on the legislation, sources in the financial services sector said.

The Maltese Foreign Ministry had insisted that Malta should be removed from the list after Maltese tax legislation was given the green light by the EU Code of Conduct (Business Taxation) Group.

In March last year Malta and Italy reached a new double taxation avoidance agreement which further clarified the situation.

The Italian Minster of Finance signed the relative decree removing Malta from the black list on Tuesday. The decree has to be published on the Gazzetta Ufficiale to come into force.