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Holding Company Formation in Malta

What is a Holding Company

A holding company is able to control the policies and management of another company by owning sufficient voting shares. A holding company’s purpose is solely owning another company or companies; it does not have any additional business.

Integritas can see that your holding company is formed in as little as 48 hours. Read below to find out the benefits that await you.

Benefits of Holding Company Formation in Malta

Holding companies in Malta profit from a number benefits, including:

  • low incorporation costs
  • low maintenance costs
  • favourable net tax rates
  • no withholding tax on payment of dividends, interest or royalties
  • no exit taxes
  • no payroll based tax or trade tax
  • no wealth taxes
  • more than 60 double taxation treaties signed
  • no controlled foreign company legislation or transfer of pricing rules
  • no thin capitalization rules

Additionally, companies in Malta which carry out international activities are relieved from duty on documents. Effectively, this means that increases of share capital and transfer of shares are relieved from tax.

If the company's assets do not include immovable properties located in Malta, capital gains (which are derived by non-residents on such capital increases and the transfer of shares) are not subject to tax in Malta.

Malta’s Beneficial Tax Laws for Holding Companies

A holding company based in Malta is subject to the standard corporation tax of 35% of the company's income tax.

In view of the fact that Malta has a full imputation system of corporation tax, any income tax paid by a Maltese holding company will be fully charged or credited to the shareholder receiving the company's dividends. This way the shareholder benefits from the full alleviation of double taxation of company profits.

The shareholder of the company would be eligible to a refund of any tax paid by the company of 5/7ths, 6/7ths or 7/7ths depending on the source of income of the company. This typically results in an effective net tax rate applicable to the shareholder of approximately 10%, 5% or 0% respectively.

If double taxation relief is claimed on the income this refund may be reduced. Usually it is refunded within a period of 3 weeks after the date on which the refund becomes due.

Income which originates from a participating holding (amongst others, where the parent company)

  • (a) holds at least 10% of the equity in the subsidiary or
  • (b) invests a minimum of €1.5 million in the subsidiary and holds that investment for more than 183 days or from the disposal of such holding will meet the criteria for a participation exemption (whereby the latter is used to exempt dividends and gains derived from such holdings from paying tax).

Any income therefore, which derives from a participating holding and qualifies for a participation exemption need not be declared in the company’s income tax return.

However, with regards to income which is derived from a participating holding and qualifies for a participation exemption, tax may be paid and then a tax refund of 100% claimed.

Process of Holding Company Formation

In Malta a holding company can be incorporated within 48 hours after receiving all the necessary documents.

The minimum share capital of a Malta holding company is €1,165, which can be paid up 20%.

The Registry fee is €245, based on the minimum share capital. The company can be set up with one or more shareholders, but it requires at least one director and one company secretary.

Every holding company registration is renewed annually, based on the minimum share capital the registration fee is €100.

Let Integritas Get You Started

The Integritas Group assists clients with the full process of holding company incorporation. We provide a full range of services, including directorship, registered office, fiduciary shareholding, company secretary, payroll, tax and VAT and accounting services.

To get assistance in the process of Holding Company Formation in Malta, Contact Us!

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