Numerous advantages outside of the tax benefits make Malta an attractive Holding Company Jurisdiction.
Tax planning opportunities arise when looking into establishing a Malta Holding Company. Typically, these tax advantages benefit large
corporations who are looking at structuring their business more efficiently. However, this can extend to SME’s also who plan on expanding operations or structuring their business to reduce tax leakage.
Malta Participation Exemption
Malta Participation Exemption when a Maltese company holds shares in another entity qualifying as a Participating Holding can be exempt from Malta tax on dividends received, and potential capital gains arising on the sale of shares.
Participating Holding is found when a Maltese company holds equity shares in another entity, and the Maltese company satisfies the below criteria:
No Withholding Tax on Dividends Distributed
No Malta tax is generally withheld on the payment of dividends by a Maltese registered company to its shareholders, regardless of whether the shareholders are a resident or a non-resident in Malta.
No Capital Gains Tax on the Disposal of Shares
Capital gains received by a non-resident shareholder upon disposal of shares in the Malta Company are usually exempt from Malta tax.
No Tax Upon Acquiring Shares in Subsidiaries
Acquiring shares in a subsidiary would not generate any Malta tax regardless as to whether the shares are obtained via a rights issue or a share transfer.
As Malta is a member of the EU, you can benefit from EU directives put in place.
Intellectual Property (IP) and Royalty Structures
Setting up an IP and royalty structure in Malta maximises any potential future earnings. Any income earnt through the use of your intellectual property can benefit from Malta’s tax refund system as well as the participation exemption scheme.
The Maltese tax regime does not contain thin capitalisation rules.
Establishing a Malta Holding Company
When forming a Malta Company, there is no difference between a Holding Company and a Trading Company. However, the difference lies in the articles of the Malta company. Nevertheless, a group Holding Company may be organised for various reasons, including:
With jurisdictions and governments increasing their need for due-diligence and transparency for Directors, Shareholder and UBO’s, offshore companies have been put under pressure. Financial institutions and governments may see an offshore company as high risk or as a negative. Therefore, Malta is an excellent alternative as a Holding Company Jurisdiction due to the fantastic tax incentives; however, Malta remains compliant with EU principals and directives as well as the OECD.
Creating a Malta Holding Company can be a very simple and straightforward process. As Malta Company Formation agents, we can assist you through the whole process. Contact us for a free no-obligation consultation, and we will talk you through the process of setting up a Malta Holding Companies as well as all the tax, compliance & legal advice.