Malta Holding Company exemption
The Malta Participating holding exemption exempts from income tax income derived by a Malta holding company from a participating holding
A Malta holding company is an onshore company whose objects would typically include the right to own, manage, and administer property of any kind belonging to it, including patents, copyrights, trademarks, and similar property, personal or real and wherever situated, other than property which it cannot own or otherwise hold under the Laws of Malta or to hold shares and investment portfolios in corporate bodies.
Maltese law offers the opportunity of a fully fledged (100%) participation holding exemption in respect of a income and /or capital gains derived by a Malta holding company from a participating holding or from a disposal of such holding, as long as the company does not hold, directly or indirectly, property situated in Malta or rights over such property.
Alternatively, such Malta holding company may opt to include such income /gains (which are exempt because of the Malta participation holding exemption) as part of its taxable income and pay tax at 35%. Following the distribution of dividends by the Malta holding company out of the said income/gains, the recipient shareholders would be entitled to a full (100%) refund of the Malta tax paid by the Malta holding company on such income/gains. This scenario could be desirable in cases where, for some reason or another, the shareholder of the Malta holding company prefers to receive a part of his earnings in refunds rather than exclusively in dividends.
The Malta holding company exemption (participation holding exemption) exempts from tax income and /or capital gains derived by a Malta holding company registered in Malta from a participating holding or from a disposal of such holding, provided that the company does not hold, directly or indirectly, property situated in Malta or rights over such property. Such a holding typically exists when the shareholding is an equity shareholding of at least 10% and gives the right to vote and the right to receive profits available for distribution.
A number of anti abuse provisions apply. These are automatically satisfied if the foreign entity in which shares are held is situated in any country or territory which forms part of the EU. Alternatively, if this condition is not satisfied, it is also possible for the exemption to apply, inter alia, if the foreign entity in which shares are held is subject to any foreign tax of at least 15%, or, alternatively, if it does not have more than 50% of its income derived from passive interests or royalties.