Malta Participation Exemption
Malta Participation Exemption is an exemption from taxation for a shareholder in a company on dividends received, and potential capital gains arising on the sale of shares.
When a Maltese company holds shares in another entity (including companies and limited liability partnerships) qualifying as a Participating Holding, consequently, the Maltese company may claim a Participating Exemption from Maltese tax on income and capital gains. We can offer tax advice as well as the Malta Company Formation service as an all-in-one provider. Contact us today for a consultation so we can plan and structure your business.
Malta Participating Holding
Malta Participation Exemption is found when a Maltese company holds equity shares in another entity and the Maltese company:
A: the voting rights,
B: the dividend rights
C: the rights to assets on a winding-up of the equity shares; or
Anti-Abuse Conditions for Malta Participation Exemption
Concerning dividends, the Participation Exemption is relevant if the entity in which the Participation Holding held is accountable to one of the below conditions:
However, if the conditions for the application of the Participation Exemption concerning dividends do not apply in the case of gains derived from the transfer of a Participating Holding, such gains are therefore exempt with no further prerequisites.
Malta Participation Exemption is not available in situations where immovable property (or any rights over the immovable property) situated in Malta is owned, directly or indirectly, by the subsidiary of the Maltese company.
Malta’s Participation Exemption – Equity Holding
Equity holding means a holding of the share capital in a company where the shareholding entitles the shareholder to at least any two of the following three equity rights:
The Commissioner of Inland Revenue may also determine that an equity holding exists if, in substance, the Maltese company holds entitlement to at least two of the equity holding rights.
