Maltese holding company and taxation

Путешествия бизнес авиацией

Holding companies can be established in Malta to own shares, securities, assets, such as yachts, airplanes, pieces of art, real estate, investments, intellectual property, fixed assets (industrial assets), as well as personal property.

Due to a unique taxation, Malta is becoming increasingly attractive for those wish to establish a holding company. Several tax regimes apply in different cases:

  • Participation exemption.
  • Dividends received are exempt from tax in Malta.
  • Capital gains are exempt from tax.

Participation exemption

The participation exemption applies to dividends and capital gains, derived from the sale of a share or from the transfer of a part or all the property.

Qualifying participation

A qualified exemption means that a company is exempt from income tax and/or tax on the capital gains, received by a holding company, registered in Malta, from qualified participation or disposition of such participation, provided that the company does not directly or indirectly own the property, located in Malta, or the right to such property.

Qualified participation is a case, when a resident company in Malta has interests in another legal entity and:

  • owns directly at least ten percent of the shares of another company, the capital of which is fully or partially divided into shares, and this package gives the right to at least ten percent of any two of the following (“right of possession”):
    • the right to vote;
    • the right to gain profits to be distributed;
    • the right to the assets, distributed in case of liquidation;
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or:

  • the company is a shareholder of another company and has the right, at its discretion, to demand and acquire the entire balance of equity shares, not owned by it;

or:

  • the company is a shareholder in another company and has the right of first refusal in case of a sale, repurchase or cancellation of all company shares, not controlled by the holding company;

or:

  • the company is a shareholder in another company and has the right to participate in the work of its Board of Directors or to appoint its representative to the Board of Directors as a director;

or:

  • the company is a shareholder of another company and has investments in it, representing at least one million one hundred and sixty-four thousand euros (1,164,000 euros) (or an equivalent amount in foreign currency). Such an investment shall belong to the company on a continuous basis for at least 183 days;
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or:

Авиаперелеты на спортивные события

the company is a shareholder in another company, in which possession of such shares is aimed at developing its own business, and they are not used for trading purposes.

Other terms of use

The participation exemption of dividends applies, if the organization, in which qualified participation takes place:

  • is a resident or is registered in the European Union;
  • is taxed at least 15%;
  • does not receive more than 50% of its passive income from interest or royalties.

This is the first set of conditions that constitute part of Malta’s struggle with abuse, regarding exemption from qualified participation. Only one of the three criteria shall be satisfied for the exemption to apply. If neither of the above conditions is met, both conditions below must be fully met:

  • the possession of shares of a legal entity – non-resident of Malta – by a company, registered in Malta, is not a portfolio investment, unless the legal entity above receives more than fifty percent of its income from portfolio investments; AND
  • The profit of a non-resident legal entity is taxed at least 5%.
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The conditions for applying the participation exemption of dividends are not applied in the case of profits, derived from the transfer of participation in capital.

It should be also noted that, from the 2014 reporting year, the rules for participation exemption were expanded are apply also to income and capital gains, related to the PE (permanent establishment), located outside of Malta.

Cofrance SARL provides a full range of services to individuals and their families. With partners in strategic locations, the company can offer clients a range of services, covering important areas of interest, for example: international tax planning; international business planning and continuity business planning.

Cofrance SARL in Malta

Phone:  +35620341636

E-mail: vip@jet.mt

Disclaimer: the information, contained in this article, is intended for information only. The information provided is not intended to replace any accounting, legal, tax or other professional advice or services, and we cannot bear responsibility for any damages of any person as a result of any action or omission.