Holding Company in Malta

Since the introduction of the participation exemption regime, Malta has become a destination of choice for foreign investors wanting to set up holding companies. Holding companies are the best solution to hold assets and participations in other companies in Malta. There are two ways of setting up holding companies in Malta:

• - by registering a private limited liability company,
• - by registering a public limited company.

The minimum share capital to register a holding company as a private limited company is approximately 1,200 euros, while the minimum share capital for a public company is nearly 46,000 euros. A Maltese holding company must also have at least two shareholders who can be foreign citizens or corporations. For other requirements about the registration of holding companies, you may rely on our Maltese lawyers.

Participation exemptions in Maltese holding companies

One of the greatest advantages of Maltese holding companies is that incomes or capital gains derived in the country may be exempt from taxation. In order to benefit from the participation exemption, an investment must qualify as a participating holding. The qualification conditions are:

• - the Maltese holding company must hold at least 10% of the shares in a company whose capital is divided into shares, partially or wholly,
• - the holding company is an equity shareholder in another company and is entitled to purchase the remaining shares in the company,
• - the holding company is an equity shareholder in a company and is entitled the right to first refusal in case of redemption or cancellation of the equity shares,
• - the holding company is entitled to sit on the Board of Directors of the other company,
• - the holding company must hold an investment of at least 1,164,000 euros for at least 183 days in another company,
• - the holding company is an equity shareholder in another company, but the holding must be used for business purposes and may not be held as a trading stock.

The equity shares give the following rights to the Maltese holding company:

• - the right to vote,
• - the right to profits shareholders may distribute among them,
• - the right to assets to be distributed in case of company liquidation.

The participation exemption may also apply to holdings in Maltese limited partnerships and investment companies.

Maltese holding companies as tax minimization vehicles

Maltese holding companies are excellent vehicles for tax minimization purposes. Among the tax benefits provided by the registration of holding companies in Malta, there are:

• - dividends received from a participating holding are not taxed in Malta if certain conditions are met,
• - profits earned from the disposal of participation holdings are not taxed in Malta,
• - interests and royalties are not taxed in Malta when distributed to foreign shareholders.

Also, based on the Maltese full imputation taxation system, shareholders in holding companies may benefit from various tax credits. You can also rely on us for EORI registration in Malta.