KNOWLEDGE BASE

EUROPEAN HOLDING COMPANIES

The Maltese Holding Company

Overview Related Resources Malta Key Elements

HOW TO PROCEED

OVERVIEW

Malta does not operate a specific holding company regime. Accordingly, a Maltese ‘Holding’ Company is a regular company having, as its sole object, the acquisition of participations in other companies. Still, the benefits typically available under such regimes are equally available to Maltese companies in respect of their holding activities.

Legal Form

A Maltese company may be constituted either as a public limited company or as a private limited company.

Formation

The minimum share capital for incorporation of a Maltese company is €46,588 for a public limited company and €1.165 for a private limited company.

25% of the issued share capital of a public company must be paid up whilst 20% of the issued share capital of a private company must be paid up.

A Malta company is typically incorporated within 2-3 days.

Taxation

A company registered in Malta is subject to tax on its worldwide profits at the flat rate of 35%.

Malta operates a full imputation system. As such, dividends distributed by a Maltese company carry a credit in favour of recipient shareholder/s which is equal to the amount of underlying tax paid by the Malta company on the profits out of which the dividend was distributed.

Income

The taxable income of a Maltese company is based on the financial statements of the company (subject to applicable adjustments). Expenses wholly and exclusively incurred in the production of chargeable income are deductible.

Foreign Gains & Profits Exemption

Capital gains realised by a Malta company pursuant to a disposal of its shares in a subsidiary would be exempt from Malta tax to the extent that the Malta company’s investment in the subsidiary would represent a ‘participating holding'. A Malta company would have a ‘participating holding’ in a subsidiary company if the following conditions are satisfied:

A.  The subsidiary does not own, directly or indirectly, immovable property situated in Malta (or rights over such property); and

B.  The shares held by the Malta company in the subsidiary carry at least two of the following rights: (i) a right to votes; and/or (ii) a right to profits available for distribution; and/or (iii) a right to assets available for distribution in the event of a winding up; and

C.  At least one of the following 6 additional qualifying criteria are met:

  • The Malta company holds more than 10% of the shares in the subsidiary; or
  • The Malta company holds shares in the subsidiary having an acquisition value of at least €1,164,000 and for an uninterrupted period of at least 183 days; or
  • The Malta company is entitled, at its option, call for and acquire the balance of shares in the subsidiary; or
  • The Malta company is entitled to first refusal in the event of the proposed disposal, redemption or cancellation of the shares in the subsidiary; or
  • The Malta company is entitled to sit on the board or to appoint a person to sit on the board of the subsidiary as a director; or
  • The Malta company holds shares in the subsidiary for the furtherance of its own business and not as trading stock.

Dividend income accruing to a Malta company from a non-resident subsidiary would be exempt from Malta tax to the extent that the Malta company’s investment in the distributing subsidiary would represent a participating holding (described above) and, additionally, provided that:


  • the distributing subsidiary is resident or incorporated in an EU country or territory; or
  • the distributing subsidiary is subject to foreign tax at a rate of at least 15%; or
  • no more than 50% of the distributing subsidairy’s income is derived from passive interest or royalties; or
  • the Malta company’s holding in the distributing subsidiary is not a portfolio investment and the said subsidiary is subject to any foreign tax at a rate which is not less than 5%.

Additional Advantages of the Maltese 'Holding' Company

Besides the common advantages of a Malta ‘holding company’, additional attractive features of a Maltese company include the following:

  • No Malta tax is generally levied on capital gains realised pursuant to a disposal of shares in a Malta company.
  • No Malta tax is levied or otherwise withheld on dividends distributed by a Malta company.
  • Non-exempt income or gains derived by a Malta company may be taxed in Malta at a combined overall effective rate ranging between 0% and 6.25% by application of Malta’s full imputation and refundable tax credit system;
  • No Malta tax is generally levied or otherwise withheld on outbound payments of interest or royalties.
  • An extensive and expanding double tax treaty network (59 treaties currently in force).
  • Access to the benefits of the EC Tax Directives.
  • Malta does not levy wealth or capital taxes.
  • Malta does not apply any CFC legislation or thin capitalisation or transfer pricing rules.
  • No exit / entry taxes are levied in Malta on a shift of fiscal residence and / or corporate domicile.

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RELATED RESOURCES

Double Tax Treaties

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MALTA KEY ELEMENTS

Formation
Legal Form: Private limited company (Ltd);
Public limited company (Plc)
Minimum Subscribed Capital: €46,588 (public)
€1,165 (private)
Minimum Paid-Up Capital: €11,647 (public)
€233  (private)
Number of Shareholders: 2 (public)
1 (private)
Type of Shares: Ordinary (participating or non-participating, in whole or in part),
Preference
Substance Requirements: Nil
Taxation
Capital Duty: 0%
Net Worth Tax: 0%
Corporate Income Tax: 35%
Double Tax Treaties: 59
Dividends Exemption: 100%
Holding Requirements: 10%
Capital Gains Exemption: Yes
Holding Requirements: 10%
Tax Credit: Yes
Relief of Losses: Carry forward indefinitely
CFC Rules: No
Debt-to-Equity Ratio: No
Withholding Taxes
Dividends: 0%
Interest: 0%
Royalties: 0%
Liquidation: Nil

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FREE INITIAL CONSULTATION

A bespoke 'offshore' solution can be complex and requires careful planning and execution. We therefore encourage our clients to contact us directly, without obligation.

While all of our consultants in our offices provide a Free Initial Consultation, the office and consultant listed below has particular expertise in this area and will gladly assist with advice on how to approach your unique challenge.

Alternatively, to select one of our multilingual offices, click here for a list of our office contact details

OCRA (Malta) Limited
The Penthouse
Tower Business Centre
Tower Street
Swatar BKR3013
Malta – EU

Tel: 
Fax: 
Email: 
+356 2557 2333
+356 2557 2444
malta@ocra.com

Languages spoken in this office: English, Italian and

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Michael J. Zammit (Managing Director)
MALTA OFFICE
Tel: 
Fax: 
+356 2557 2333
+356 2557 2444
Email: ocra@ocra.com
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