European Holding Companies

Malta Holding Company Information

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Maltese Holding Company Overview


Definition

A Maltese Holding Company is a regular company which sole objective is to hold participations in other companies.

Legal Form

A Maltese company can be constituted either as a public limited company or as a private limited company.

Formation

The minimum share capital for incorporation of a Maltese company is Lm20.000 for a public limited company and Lm500 for a private limited company.
For a company incorporated as a public limited company, at least 25% of the share capital must be paid up while for a company incorporated as a private limited company only 20% of the share capital must be paid up.

Taxation

A Maltese is a company registered in Malta and is fully subject to tax on its profits at tax rate of 35%.
Malta uses a full imputation system through which tax paid by the company is imputed as a credit to the shareholder on payment of dividends.
Taxable income is divided between Malta Taxed Account and Foreign Income Account. The foreign income account includes dividends, capital gains from the sale of shares, interest, royalties and rents from branches or subsidiaries outside Malta.

Income

The taxable income of a Maltese company is based on the financial statements of the company subject to adjustments. Expenses incurred exclusively for the purposes of the business are deductible while expenses incurred with exempt income are not deductible.

» Foreign Profits Exemption

A non-resident shareholder (or a Maltese company 100% owned by non-residents) receiving profits from the company’s Foreign Income Account distributed as dividends receives a full credit of the 35% tax paid by the company if the following conditions are met:
- the Maltese company holds at least 10% of the share capital of the subsidiary;

Or in case the previous condition is not met, the company must show that:
- the Maltese company has the right to purchase the balance of the equity shares of the subsidiary;
- the Maltese company is entitled to be represented in the board of the subsidiary;
- the value shares held is more than Lm500.000;
- shares are held for business purposes.

If any of the previous conditions is met, the shareholder is still entitled to a partial refund of 2/3 of the tax paid.
Profits includes dividends, capital gains, interest, rents and royalties, profits of a foreign branch and profits from other Maltese companies that provide from their Foreign Income Accounts.

» Interest and Royalties Exemption

Interest and royalties paid to non-residents not connected to a permanent establishment in Malta are exempt from tax.

Besides the common advantages of a holding company, the Maltese company may also enjoy from the following:

» Exemption from Withholding Tax on Payment of Dividends, Interest and Royalties

Dividends, interest and royalties paid to non-residents are exempt from withholding tax.

	Formation
	Legal Form:		Private limited company (Ltd); Public limited company (Ltd)
	Minimum Subscribed Capital:		Lm20.000 (public) Lm500 (private)
	Minimum Paid-Up Capital:		Lm5.000 (public) Lm100 (private)
	Number of Shareholders:		1 (public) 1 (private)
	Type of Shares:
	Substance Requirements:		Nil
	Taxation
	Capital Duty:		0%
	Net Worth Tax:		0%
	Corporate Income Tax:		35%
	Double Tax Treaties:		41
	Dividends Exemption:		100%
	Holding Requirements:		10%
	Capital Gains Exemption:		Yes
	Holding Requirements:		10%
	Tax Credit:		Yes
	Relief of Losses:		Carry forward indefinitely
	CFC Rules:		No
	Debt-to-Equity Ratio:		No
	Withholding Taxes
	Dividends:		0%
	Interest:		0%
	Royalties:		0%
	Liquidation:		Nil

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Double Tax Treaties	39KB