Malta - A Perfect Holding Jurisdiction A legitimate low tax EU jurisdiction, Malta provides a number of benefits for drawing down profit from both EU and other jurisdictions, combined with over 65 tax treaties. 5% effective corporate tax rate, no withholding, capital gains or entry or exit taxes. No inheritance or wealth taxes.

1. Malta’s International Legal & Advisory Firm
income/gains, the recipient shareholders would be entitled to a full (100%)
Malta -
refund of the Malta tax paid by the
A Perfect Holding Jurisdiction
company on such income/gains.
0% Tax
This scenario could be desirable in
Participating Exemption
another, the shareholder prefers to
183 days; or
cases where, for some reason or
(v) holds the shares in the non-resident
receive a part of his earnings in
EU Membership - Benefits
As a full member of the European
Union, Malta enjoys the benefits of EU
company for the furtherance of its
refunds rather than exclusively in
own
dividends.
company but not held as trading
business
of
the
Malta
stock for the purpose of trade.
directives and in particular the Parent
Participating Holding
& Subsidiary Directive, which allows
A shareholding in a non-resident
for profits and gains arising through
A shareholder of a Maltese company
company qualifies as a participating
subsidiaries in one EU member state to
may claim a full 100% refund of the tax
holding if the Maltese company holds
be repatriated to its holding company
paid on the dividends and capital gains
equity
on a 0% tax basis.
received from a participating holding if
company or a qualifying body of
the
Participating Exemption
persons and it:
company satisfies at least one of the
Income derived from a participating
holding or from the disposal of such
holding will qualify for a participation
exemption, which is intended to
exempt from tax dividends and gains
shares
in
a
non-resident
(i) holds directly at least 10% of the
equity shares of the non-resident
company; or
(ii) is an equity shareholder in the non
holding
in
the
non-resident
following anti-abuse provisions:
 it must be resident or incorporated
in the EU;
 it must be subject to foreign tax of a
minimum of 15%;
derived from such holdings. The
-resident company and is entitled
 it must not derive more than 50% of
income derived from a participating
at its option to purchase the
its income from passive interest or
holding which qualifies for a participa-
balance of the equity shares of the
royalties.
tion exemption, may be altogether
non-resident company or has the
Capital gains arising from the disposal
excluded from the tax return and as a
right of first refusal to purchase
of the participating holding would be
result no tax will be due.
such shares; or
0% tax rated in Malta.
In such cases, the Malta holding
company may decide either to:
(a) apply an outright exemption for
Malta tax - the participation exemption (that is it may opt not to pay the
(iii) is an equity shareholder in the non
Foreign Income Tax Account
2/3 & 5/7 Refunds
-resident company and entitled to
be represented on the Board of
There are two cases where the Malta
directors; or
tax refund is lower than the normal 6/7
refund (5% rate) enjoyed by sharehold-
35% tax in the first place); or
(iv) is an equity shareholder which
(b) include such income /gains as part
of the taxable income of the Malta
company and pay tax at 35%. Following the distribution of dividends by the
invests a minimum of €1,164,000
in a company not resident in Malta
and such investment is held for a
minimum uninterrupted period of
Malta holding company out of the said
ers of typical trading companies:
Example 1
Where the profits out of which a
dividend is distributed consist of
"passive interest or royalties", the
Acumum - Legal & Advisory
info@acumum.com | www.acumum.com | Skype ID: acumum
Malta Office: +356 2778 1700
260 Triq San Albert, Gzira, GZR 1150, Malta (EU)
Information for guidance purposes only
© Acumum 2014

2. derived from a Participating Holding or
individual/s ordinarily resident and domi-
from the disposal of such holding,
ciled in Malta.
No Withholding taxes
and any other income derived from
refund is set at 5/7 of the Malta tax suf-
investments situated outside Malta,
Malta does not levy any withholding
fered on those profits. There exists
which are liable to tax in Malta and are
taxes on outbound dividends, interest,
"passive interest or royalties" if:
receivable by a company registered in
royalties and liquidation proceeds.
(i) income is not derived from a trade or
Malta.
Malta’s Tax System
business; and
Non - Qualifying Holdings
(ii) such interest or royalties have not
Following the application of Malta’s tax
suffered foreign tax or suffered foreign
If a subsidiary of a Maltese company
refund system, Malta’s corporate tax rate
tax, directly, by way of withholding, or
does not come within the rules of the
is substantially reduced from 35% to:
otherwise, at a rate of tax which is less
participation exemption, dividends
 6/7ths refund for trading income = 5%
than five per cent (5%). If any one of
arising from the subsidiary, would be
these conditions is lacking, there will be
subject to Malta’s normal tax system,
no passive interest or royalties and one
which after application of tax credits
would fall under the more beneficial 6/7
and refunds would levy a tax rate of
refunds regime; or
6.25%
Example 2
Sale of shares in a Malta Company by
Non-Residents
Any gains or profits derived by non-
Where double taxation relief is claimed,
dividends paid out of profits allocated to
the foreign income account in respect of
tax rate
 5/7th refund for passive income = 10%
tax rate
 2/3 refund for certain passive income
= 6.25% tax rate
Imputation System
0% Shareholder Tax
residents on a disposal of shares or
securities in a company resident in
As one of the few countries to still retain
Malta are exempt from tax in Malta,
a full imputation system, dividends paid
has availed itself of any form of double
provided:
by a Malta company do not attract any
tax relief are subject to a 2/3 refund. In
(i) the company does not have, directly
further tax since they carry a tax credit
these circumstances, the relevant
or indirectly, any rights over immov-
equivalent to the tax paid by the com-
provision relates to profits resulting from
able property situated in Malta, and
pany upon the distribution of profits.
which profits the distributing company
royalties and similar income arising
outside Malta and from dividends, capital
gains, interest, rents, income or gains
(ii) he beneficial owner of the gain or
profit is not resident in Malta and not
owned and controlled by, directly or
indirectly, nor acts on behalf of an
Resident and non-resident shareholders
are entitled to a refund of tax paid by
the company—with no further tax levied
on the shareholders’ income.
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Located in the EU tax efficient jurisdiction of Malta, Acumum Legal & Advisory employs Maltese, UK, & international lawyers &
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Outsourcing
info@acumum.com | www.acumum.com | Skype ID: acumum
Malta Office: +356 2778 1700
260 Triq San Albert, Gzira, GZR 1150, Malta (EU)
Information for guidance purposes only
© Acumum 2014