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Holding Company in Malta

Updated on Monday 23rd October 2017

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In 2007, when the Government introduced the participation exemption, Malta became one of the most attractive destinations for setting up holding companies in Europe. Even if it does not have a legislation dedicated to the incorporation of holding companies, Malta has an unique taxation system which turns the country into an ideal location for setting up companies with the purpose of holding shares in other business structures. Maltese holding companies may operate both in and outside the European Union.

 

Why set up a holding company in Malta?

One of the main reasons to open a holding company in Malta is the flexibility it offers. Maltese companies can be used for several purposes, among which:

  • ·         - holding real estate assets,
  • ·         - holding shares and securities,
  • ·         - holding intellectual property rights.

Holding companies can be registered as private or public limited liability companies, as established by the Maltese Commercial Code. The minimum share capital for registering a Maltese holding company will depend on the type of company selected and it is EUR 1,165 for a private company and approximately EUR 46,000 for a public company. Holding companies are usually registered in two or three days, especially when requesting the services of company formation agents in Malta.

 

The participation exemption for Maltese holding companies

Based on the Maltese taxation system, the incomes or capital gains resulted from qualifying participation holdings may benefit from tax exemptions. Participating holdings qualify for tax exemptions in Malta if the Maltese holding company owns at least 10% of the equity shares of a company and the holding offers the following rights:

  • ·         - to vote,
  • ·         - to distribute profits,
  • ·         - to distribute assets in case of company dissolution.

Additionally, the participating holdings must meet at least one of the following conditions:

  • ·         - the Maltese holding company owns at least 10% of the shares in a subsidiary company,
  • ·         - the shares’ minimum value must be 1,164,000 euros for at least 183 days,
  • ·         - the Maltese company must be allowed to purchase the balance of shares in the subsidiary,
  • ·         - the holding company has the right to first refusal in case of redemption or cancellation of the shares,
  • ·         - the Maltese holding company must have the option of appointing a director in the subsidiary,
  • ·         - the holding company’s shares must be used for business purposes and not as trading stock.

The video below shows the main advantages of Maltese holding companies:

Advantages of holding companies in Malta

 

Apart from the participating holding regime, Malta is a preferred destination for setting up a holding company because it offers other advantages among which:

  • -       dividends resulted from participating in both EU and non-EU holdings benefit from special tax regimes,
  • -       Malta does not impose thin capitalization rules,
  • -       Malta has an extensive list of double tax treaties, which provide for additional tax exemptions and deductions,
  • -       Malta does not impose any net worth tax,
  • -       there are no interest or royalties taxes in Malta,
  • -       holding companies can appeal to any of the EU directives applicable to this regime.

 

For complete information about the taxation of holding companies, please contact our company formation agents in Malta.

 

 

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