Malta One of the Best Jurisdictions to Set Up your Holding Company

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General Information

Malta ’s strategic geographical location played a decisive role in its history and continues to play a very important part in its economic, political and cultural development and prosperity today. Having implemented a sound legislative framework over the past decade, Malta’s accession as a member of the European Union has stimulated significant developments in the islands’ economy, brought about principally by a boost of inward direct investment into the country. With its highly educated workforce and the comparatively lower cost of professional services when compared with other EU centres, Malta has become firmly established as a reputable business and financial centre offering attractive business solutions for individuals and international corporations alike.

The population of the Islands is approximately 400,000. Maltese society is homogenous having its own identity and language. The natural population growth has in recent years been supplemented by a net inflow of Maltese who had previously emigrated to America, Canada, Australia and the United Kingdom.

With a Gross Domestic Product growth rate of 6.6% in 2018, Malta remains one the best performing economies in the European Union.

When a prospective business investor takes into account the country’s advantageous tax regime, skilled workforce, modern infrastructure and connectivity to European and other markets, the appeal becomes greater.

As an EU member, Malta provides business operators with an EU-compliant, yet flexible domicile. In addition, Malta’s allure also lies in the fact that it has a vibrant Mediterranean culture and excellent standard of living for investors and potential employees relocating from overseas.

As a European Union member state with a gateway to Africa, there are many benefits when you are registering a company in Malta.

The island nation is a member of the Schengen zone and has a positive ‘can do’ attitude when it comes to business.

The first thing that any prospective business owner must do, is decide on a name to register with the Malta Financial Services Authority’s Registry of Companies.

Malta Tax Advantages

One of the lowest effective corporate taxes in the European Union

Malta corporate tax rate of 35% might look extremely high and very noncompetitive when compared to the rest of the European Union. However, it is entirely possible to reduce this tax rate to between 5% and 7% by simply distributing all profits to a holding company which is registered in another country.

Malta has several tax benefits which will reduce the company income tax through the full imputation and tax credits available when distributing profits to the shareholders.

Typically, Cyprus and Gibraltar are both to be considered as eventual options for this purpose too.

Share capital requirement is only €1,165

Setting up a company in Malta can be done more cheaply than most other places around the world. This is due to the minimum amount of required share capital to start a business being only €1,165. And most important, only 20% of this capital needs to be in the business bank account, meaning it takes less physical money to start up in business.

More like-minded entrepreneurs

The ease of setting up a company in Malta has attracted entrepreneurs from all over the world to the island. This can make it easy to find advice to help you successfully run your business but is also great for making social contacts.

Location of an International Holding Company

Most relevant features

Ideally the holding company should be resident in a jurisdiction which:

Has a good double tax treaty network, thereby minimising withholding tax on dividends received.

Exempts dividend income from taxation.

Does not charge capital gains tax on the disposal of subsidiaries.

Does not impose withholding tax on distributions from the holding company to its parent or shareholders.

Does not impose capital gains tax on profits arising from the sale of shares in the holding company by non-resident shareholders.

Does not impose capital duty on the transfer of shares.

Has certainty of tax treatment.

Malta holding companies can benefit from all of the above.

Malta Holding Companies

Benefits

Qualifying dividends and capital gains derived from a "participating holding" are (at the option of the taxpayer) exempt from Malta tax.

The Budget Implementation Act (2018) introduced changes to the treatment of shareholding participations, reducing the applicable tax rate from 10% to 5%.

Sale of Shares in the Holding Company

Malta does not charge capital gains tax on the sale of shares in Malta companies.

Malta does not impose withholding tax on the distribution of dividends to shareholders or parent companies.

Zero withholding tax is applicable, regardless of where in the world the shareholder is resident.

In Malta there is no capital duty on the issue of share capital and there is no stamp duty payable on subsequent transfers.

In order for a holding to be classified as a 'participating holding', one of the following conditions must be satisfied:

- the company holds directly at least 5% of the equity shares of a company not resident in Malta, OR

- the company is an equity shareholder in a company not resident in Malta and has the option to acquire all of the equity shares, OR

- the company is an equity shareholder in a company not resident in Malta and is entitled to first refusal on any proposed disposal, redemption or cancellation of the equity shares of that company, OR

- the company is an equity shareholder in a company not resident in Malta and is entitled to either sit on the Board or appoint a person to sit on the Board of that company as a director, OR

- the company is an equity shareholder and invests a minimum €1,164,000 in a company not resident in Malta. This investment must be held for an uninterrupted minimum period of 183 days, OR

- the company is an equity shareholder in a company not resident in Malta and the holding of shares is to further develop business for that company, not as trading stock.

(*) Additional anti-abuse provisions are applicable.

In Conclusion

A Malta holding company is an attractive option for international trading groups.

In resume, the potential advantages include:

- The benefits available through Malta's extensive double tax treaty network.

- Exemption of dividends from taxation in Malta.

- Exemption from capital gains tax on the disposal of participating holdings.

- The absence of capital gains tax on the sale of shares in a holding company by foreign shareholders.

- The absence of withholding tax.

Why TBA

What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.

Whilst most providers either specialised on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types.

Therefore, TBA combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs

Should you have any question or matter you would like to discuss or clarify with us
or

Should you like to receive further Information
about our application services and fees, …

Our Business Development Managers Team will be ready to guide and assist