What Assets can you Hold in a Holding Company?
An international holding company in Malta can be used for many reasons. Holding Companies can hold shares, securities and assets such as:
- Real Estate Holdings
- Fixed Assets
- Maritime Vessels
- Bank Accounts
- Intellectual Property
- Any other business asset
Advantages of a Corporate Holding Company in Malta?
There are many fantastic tax planning and strategic planning opportunities for investors. Here are six benefits of having a corporate holding company in Malta.
If one of the subsidiary companies goes bankrupt, the bank and lending institution cannot legally pursue the holding company for compensation. However, you can expect the value of the holding company will decline as it will experience a loss in assets.
A parent corporation might structure itself as a holding company to create subsidiaries for each of its business lines. Therefore, this protects not only the parent company but also, limits loss if a subsidiary were to fail.
Instead of a parent company spreading itself too thin; they can reduce the exposure by basing certain subsidiaries in new and more beneficial jurisdictions.
By consolidating all subsidiary companies within one group, it allows for greater efficiency in reporting obligations as well as a simple structure to manage the subsidiary businesses.
- Malta corporate tax system works off of a Full Imputation System. In simple terms, this means that company profits are taxed at the source, but dividends distributed to shareholders are not taxed again.
- The Malta tax refund system enables shareholders of a company registered in Malta to claim up to a 6/7th tax refund of tax paid in Malta. Therefore, we can set up trading companies in Malta to have an effective tax rate of 5%.
- Participation Exemption is the relief from taxation for a shareholder in a company on dividends and capital gains received from the sale of shares. However, this occurs when a Maltese company holds shares in another entity (qualifying as a Participating Holding).
- Malta has come into line with the various EU directives and tax laws. However, this does open up various international tax planning opportunities for businesses. For example:
– EU Parent-Subsidiary Directive – eliminates tax obstacles in the area of profit distributions between groups of companies in the EU.
– Interest and Royalties Directive – eliminates withholding tax obstacles in the area of cross-border interest and royalty payments within a group of companies.
Malta does not levy any withholding taxes on dividends, interest, royalties or liquidation proceeds, paid or distributed to non-residents.