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:
- Is a resident or incorporated in an EU country
- Is subject to foreign tax of at least 15%
- Has 50% or less of its income from passive interest or royalties
- Is not a portfolio investment and has been subject to tax at a rate of at least 5%
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.