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Tax on Malta Holding Companies

The domestic tax treatment in relation to the different types of income makes a holding company in Malta a very attractive option.

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Taxation of Malta Holding Companies

Malta does not have a specific holding company structure, however, the domestic tax treatment in relation to the different types of income makes a holding company in Malta a very attractive option. The participation exemption together with the tax refund system make it ideal to hold shares, securities and business assets in a holding company. Also, personal assets including yachts, residential property, aircrafts and art can benefit from tax on forming holding companies in Malta.

 

Benefits Of Holding Companies In Malta

  • Reputation of an EU jurisdiction
  • Participation exemption regime
  • No restrictions to holding activities. May also carry out trading activities.
  • No withholding tax on outbound dividends
  • Gains on disposal of shares by non-residents are exempt from tax in Malta

Malta Holding Company Highlights

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Participation Exemption

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No Restrictions on Holding Activities

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No Withholding Tax on Outbound Dividends

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Gains on Disposal of Shares Are Exempt

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EU member State

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Tax Benefits of Malta Holding Companies

Where the company does not opt for participation exemption, or in case it does not apply, holding companies are subject to 35% tax on income less deductible expenses. After dividends are distributed, shareholders are entitled to claim tax refunds of all or part of the tax incurred on the company level. The following tax refunds are available for companies in Malta:

  • 100% of the Malta tax paid where income or gains are derived from an investment which qualifies as a Participating Holding (PH) and in the case of dividend income, where such PH falls within the safe harbours or satisfies the anti-abuse provisions as detailed below.
  • 5/7ths of the Malta tax paid, where the income received by the company is passive interest or royalties or income from a PH which does not fall within the safe harbours or satisfy the anti-abuse provisions
  • 2/3rds of the tax payable in Malta, where income has benefited from double taxation relief.
  • 6/7ths of the Malta tax in all other cases.

Whether shareholders are resident or non-resident in Malta, no tax I generally withheld on dividends distributed by a Maltese registered company to its shareholders.

Furthermore, disposal of shares in a Maltese company by non-residents are generally exempt from tax in Malta.

 

VAT Exemption for Holding Companies

Pure holding companies fall outside the scope of VAT in Malta, except in the case of Intra-Community Acquisitions of services, which are subject to the reverse charge rules.

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