Malta Holding Company
There is no distinction between a Holding and a trading company in the definition of a Maltese Company. This is also true when one looks at the taxation of the Maltese Company.
A holding Company in Malta, a Maltese holding company, or better the non resident shareholder of the Maltese company, is entitled to a refund of the 35% tax paid by companies in Malta in the following proportions:
- Refund on 6/7th of the tax paid by the Maltese company (except on profits on sale of immovable property in Malta, and profits that have been taxed at source on a final withholding regime)
- Refund of 5/7th of the tax paid by the Maltese company on profits that consist of passive interest or royalties
- Refund of 2/3rd of tax paid by the Maltese company on profits that have already claimed relief for double taxation
- Full refund on the Tax on profits of the Maltese Company that are generated from a ‘participating holding’
This full refund allows the Malta holding Company to be a very tax efficient vehicle in international tax planning. A participating Holding by a Maltese Company is defined as a holding by a Maltese Company in a non resident company that qualifies if any of the following is satisfied;
- The holding by the Maltese Company is 10% or more of equity share capital
- The Maltese Company has an investment of minimum €1.16 million held for at least 183 Days
- The Maltese Company is entitled to appoint a director in the non-resident company
- Where the holding is a furtherance of the business of the company in Malta.
The Profits by the Maltese Company from a ‘Participating holding’ are exempt from tax if one of the following is satisfied:
- The non-resident Company is resident in an European Union State; or
- It is subject to foreign tax of 15% or more; or
- It does not have 50% or more of its income derived from passive interest and royalties
If none of the above conditions is satisfied, the both the below conditions need to be satisfied for the participation exemption to apply:
- The holding of the Maltese company is not a portfolio investment. If the non resident company derived more that 50% if its income from portfolio investments this will be deemed as a portfolio investment.
- The non resident company has paid foreign tax of more than 5%.
The content on this website is for information purposes only and should not be taken as tax, legal or any other professional advice.
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