Taxation of Maltese Holding Companies

Malta is a very attractive jurisdiction in which to set up a corporate vehicle to hold one’s own investments. Malta’s domestic tax system, which includes a participation exemption on dividends and capital gains derived from certain holdings ensure that Malta is a prime EU location in which one can hold foreign investments through a Maltese Holding Company.

A company that is registered in Malta may be entitled to claim an exemption (referred to as the participation exemption) in respect of income (e.g. dividends) that the company derives from a “participating holding” subject to the satisfaction of certain conditions. The exemption may also be claimed by the company in respect of gains that it derives from the transfer of a participating holding.

Claiming the participation exemption is optional and accordingly, a company registered in Malta has a right not to apply the participation exemption and to declare the income or gain derived from the participating holding in its income tax return. If the income or gain is declared by the company in its return, the company would be required to pay income tax at the rate of 35%. Should the company opt to claim the exemption, the company would not declare the income in its income tax return. The exempted income or gain will be allocated by the company to the Final Tax Account.

Download the full Article to learn more about:

  • Participating Holding
  • Claiming the participation exemptopn on a gain arising from the transfer of a participating holding
  • Claiming the participation exemption on dividends from the participating holding
  • Non-qualifying holdings
  • Disposal of shares in a Malta holding company
  • Treaty network and EU directives
  • Other features of the Maltese tax system as applicable to a Maltese company

Click here to download the Article by ACT Advisory Services Limited

Information as at 19 October 2014