A Malta holding company benefits from a favorable tax regime, including potential tax exemptions on dividends and capital gains, making it an attractive jurisdiction for international business and investment.
A Malta Holding Company is formed for the purpose of holding one or more assets, including real estate, cash, movable valuables, shares and securities, investment portfolios, yachts and aircraft, works of art as well as intellectual property.
Typically, a holding company is not involved in trading activities, such as the sale of goods or provision of services. However, Maltese law does not restrict a company from engaging in both holding and trading activities, allowing a Maltese registered company to pursue either or both, depending on the shareholders' intentions.
Essentially, when selecting a suitable jurisdiction to set up a holding company, factors such as legislative framework, economic stability, and tax efficiency are all highly valued considerations.
In this article, we're going to discuss:
- Why set up a Holding Company in Malta?
- The Tax Treatment
- Summation of Benefits
- Re-Domiciliation of Companies
Why set up a Holding Company in Malta?
Here are the top reasons why you should set up a holding company in Malta:
- Firstly, the ease of the initial setting-up of the Malta Holding Company
- Additionally, the ongoing advantages of operating a Malta Holding Company
The Tax Treatment for a Malta Holding Company
Participation Exemption
Malta offers a highly attractive and flexible participation exemption whereby dividend income and capital gains derived by the Maltese Holding company may be exempt from tax, subject to certain conditions being satisfied.
Double Taxation Agreements and European Union Directives
Moreover, holding companies in Malta benefit from an extensive network of double taxation treaties, as well as the European Union (EU) directives in force. Malta currently has over 70 double taxation treaties with jurisdictions across all continents. Furthermore, Malta's tax system is fully compliant with EU non-discrimination principles, ensuring fair treatment in cross-border transactions.
On Non-resident Shareholders
In addition, Malta generally does not impose any withholding taxes on dividends, interest, or royalties paid to non-resident shareholders, whether the shareholders are corporate entities, trusts, or individuals. This makes Malta an attractive jurisdiction for international investors.
Summation of the Benefits of Taxation for Malta Holding Companies
Re-Domiciliation of Companies
While incorporating a new holding company in Malta is one of the most attractive options, shareholders with an existing holding entity outside Malta can also choose to re-domicile their company to Malta under the Continuation of Companies Regulations. This allows businesses to benefit from Malta’s favorable tax regime without the need to establish a new entity.
Re-domiciliation allows an existing company, originally incorporated under the laws of another jurisdiction, to continue its operations under Maltese law without requiring liquidation in its original jurisdiction. However, it's important to note that certain conditions must be met for a successful re-domiciliation.
In conclusion, if you're interested in setting up a holding company in Malta or re-domiciling your existing entity, we would be delighted to assist you. Contact our specialists to learn more about the benefits Maltese law provides and how we can support your business needs.
