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Malta’s International Legal & Advisory Firm
income/gains, the recipient shareholders would be entitled to a full (100%)

derived from a Participating Holding or

individual/s ordinarily resident and domi-

from the disposal of such holding,

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Malta - A Holding Jurisdiction - Participation Exemption


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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.

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Malta - A Holding Jurisdiction - Participation Exemption

  1. 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 | | 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. 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. Acumum - Legal & Advisory ‘Uniquely local - Uniquely International’ Located in the EU tax efficient jurisdiction of Malta, Acumum Legal & Advisory employs Maltese, UK, & international lawyers & tax accountants - with extensive on-location & off-shore international experience - providing appropriate, bespoke solutions. Taxation Corporate & Company Formation Financial Services Licenses Gaming Aviation Insurance Licenses Intellectual Property Trusts & Foundations Maritime & Yachts Telco, Tech, Media Estate & Wealth Management Arbitration & Litigation Immigration & Residency Divisions Compliance Accounting, Tax & Back Office Outsourcing | | Skype ID: acumum Malta Office: +356 2778 1700 260 Triq San Albert, Gzira, GZR 1150, Malta (EU) Information for guidance purposes only © Acumum 2014