In 2007, when the Government introduced the participation exemption, Malta became one of the most attractive destinations for setting up holding companies in Europe. Even if it does not have a legislation dedicated to the incorporation of holding companies, Malta has a unique taxation system which turns the country into an ideal location for setting up companies with the purpose of holding shares in other business structures. It is good to know that Maltese holding companies may operate both in and outside the European Union. Support for establishing a holding company in Malta can be provided by our team of company formation agents in Malta.
Why set up a holding company in Malta?
Legal entities used
Private or Public Limited Liability Company
With the Maltese Registrar of Companies
Around 2 weeks
It can operate within or outside EU
Employer number required
EUR1,200 for private LLC;
EUR46,000 for public LLC
0% tax on dividends and capital gains
Foreign ownership available
Accounting and Reporting
Annual accounts submitted to the Maltese Government
Number of double taxation treaties
More than 70
One of the main reasons to open a holding company in Malta is the flexibility it offers. Maltese companies can be used for several purposes, among which:
•holding real estate assets;
•holding shares and securities;
•holding intellectual property rights.
Holding companies can be registered as private or public limited liability companies, as established by the Maltese Commercial Code. The minimum share capital for registering a Maltese holding company will depend on the type of company selected and it is EUR 1,200 for a private company and approximately EUR 47,000 for a public company. Holding companies are usually registered in two or three days, especially when requesting the services of company formation representatives in Malta.
Public limited liability companies are subject to varied requirements, and among these, the obligation of declaring the entire financial status comprising information about the profit and loss. The good news is that a public LLC under which a holding company can run is that such a company can be established by more than 50 shareholders. Also, in the case of private limited liability companies, these can turn into public ones if appropriate documents are submitted to the Registrar of Companies in Malta, including the one stating the intention of changing the status of the business. In matters of documents preparation for your holding company in Malta, feel free to address to our company formation agents in Malta and ask for immediate support.
The participation exemption for Maltese holding companies
Based on the Maltese taxation system, the incomes or capital gains resulted from qualifying participation holdings may benefit from tax exemptions. Participating holdings qualify for tax exemptions in Malta if the Maltese holding company owns at least 10% of the equity shares of a company and the holding offers the following rights:
•to distribute profits,
•to distribute assets in case of company dissolution.
Additionally, the participating holdings must meet at least one of the following conditions:
•the Maltese holding company owns at least 10% of the shares in a subsidiary company,
•the shares’ minimum value must be EUR 1,164,000 for at least 183 days,
•the Maltese company must be allowed to purchase the balance of shares in the subsidiary,
•the holding company has the right to first refusal in case of redemption or cancellation of the shares,
•the Maltese holding company must have the option of appointing a director in the subsidiary,
•the holding company’s shares must be used for business purposes and not as trading stock.
The video below shows the main advantages of Maltese holding companies:
Reasons to establish a holding company in Malta
Being extremely tax-efficient entities, Maltese holding companies are appealing to international investors wanting to thrive in this part of Europe. There are no taxes on capital gains and on dividends, so these are among the reasons why holding companies are set up in Malta. Also, investors who want to consolidate the existing subsidiaries in Malta under the control of one company can choose Malta for establishing a holding company. Raising capital and attaining greater proficiencies in term of distribution of such a capital among subsidiaries are also reasons for international players to settle holding companies in Malta. Expanding the business operations in other markets and having extra acquisitions can be made with the help of holding companies in Malta. The flexibility of a holding company enables foreign investors to have additional operations, among which, varied trading activities with no restrictions in this sense. It is good to know that the incorporation and the operational costs of a holding company in Malta are lower compared to other European countries where this entity is allowed. If you would like to know more about the incorporation of a holding company in Malta, do not hesitate to solicit assistance from our company formation specialists in Malta. Also, with the help of our local advisors, you can benefit from complete accounting services for your holding company in Malta.
Is there any withholding tax on dividends for Maltese holding company?
No, there is no need to concern about the withholding tax on dividends of holding companies in Malta, as such tax is not imposed, regardless if the stockholders are residents or not. However, companies must register for VAT in Malta.
Advantages of holding companies in Malta
Apart from the participating holding regime, Malta is a preferred destination for setting up a holding company because it offers other advantages among which:
Dividends resulted from participating in both EU and non-EU holdings benefit from special tax regimes,
Malta does not impose thin capitalization rules,
Malta has an extensive list of double tax treaties, which provide for additional tax exemptions and deductions,
Malta does not impose any net worth tax,
There are no interest or royalties taxes in Malta,
Holding companies can appeal to any of the EU directives applicable to this regime.
How can our company formation agents help?
The support of our company incorporation representatives in Malta is recommended for investors from abroad who want to set up a holding company in Malta. The formation of holding companies benefits from the lack of harsh bureaucracies, and even so, instead of dealing with the language barriers or all sorts of problems in matters of legislation, it is ideal to have the assistance and the experience of a local team of company formation agents in Malta. Our team is at your disposal with all kinds of services, among which, support for tax compliance, acquisitions, accounting services and representation with a power of attorney for any kind of business structure available in Malta.
Short conclusion about Maltese holding companies
Holding companies in Malta have an advantageous taxation structure and are proper options for foreign entrepreneurs interested in expanding their portfolios in a country that offers many benefits in the business climate. We remind that Malta signed around 70 double taxation treaties with countries worldwide and the provisions of these agreements are also applicable to holding companies established in Malta. International trading companies are attracted by the benefits of holding companies in Malta, especially for the convenient tax structure applicable in this country. Below you can find out interesting information, figures and statistics about the investments in Malta:
•USD 206 billion was the total FDI stock in Malta in 2018, where 97% of the investments was directed to the financial and insurance sector;
• there are more than 200 foreign companies established in Malta, the insular country;
•84th is the ranking for Malta among 190 countries, as stated by the “2019 Doing Business Report”;
•Malta has connections with more than 115 international ports, developing a solid collaboration in matters of trading activities;
• even if it is a small country, foreign investors are aware of the business potential of Malta and the reasons why holding companies can be successful.
FAQ about holding companies in Malta
1. How is a holding company registered in Malta?
Private and public limited liability companies are suitable for holding companies in Malta. EUR 1,200 and EUR 47,000 respectively represent the minimum share capital for holding companies established as private or public LLCs.
2. How long does it take to register a holding company in Malta?
It takes around 3 days to register a holding company in Malta, yet you should ask for complete assistance and guidance from our team of specialists to benefit from the entire support. The formalities can be explained by our agents in Malta.
3. Can a holding company in Malta appoint a director?
Yes, owners of Maltese holding companies have the choice of appointing their managers or directors. This is one of the advantages of a holding company in Malta, but for more details in this matter, please get in touch with our specialists in company formation in Malta.
4. Is the tax structure advantageous for holding companies in Malta?
Yes, dividends and capital gains are not subject to taxation. This is quite an advantage for international entrepreneurs who want to enjoy tax advantages and direct a part of the profits through investments in the firm.
5. Are holding companies protected by the double taxation treaties signed by Malta?
Yes, Malta signed several double taxation agreements for protection against fiscal evasion and paying the taxes twice. All you need to know about taxation in Malta can be discussed with our company formation agents in Malta.
6. Is the registration of a holding company formation in Malta expensive?
No, the costs for registering a holding company in Malta are affordable and are among the lowest among the EU countries.
7. Why is a holding company in Malta beneficial?
Besides the taxation regime that is advantageous for holding companies in Malta, having control over other companies is quite important to international or local entrepreneurs. The existing subsidiaries can be consolidated with the help of holding companies.
8. Is a holding company in Malta flexible?
Yes, flexibility is one of the characteristics of holding companies registered in Malta. Entrepreneurs can develop other operations too, as such entities are quite advantageous from this point of view.
9. How many shares a Maltese company need to own in another company?
At least 10% shares in a company in Malta are necessary to register a holding company in this country. Maltese holding companies are suitable business ideas for many entrepreneurs from overseas.
10. Can I ask for support for registering a holding company in Malta?
Yes, one of our company formation specialists in Malta can assist entrepreneurs in registering holding companies in Malta. The formalities of a holding company in Malta are not complex and can be explained by one of our specialists in business formation in Malta.
Reasons to invest in Malta
The small insular state is home to more than 30.000 companies established with foreign capital. The business environment in Malta is quite representative among international business players who want to expand their portfolios in a solid financial destination. Here are a few of the most important features of Malta, in terms of investments:
The taxation regime in Malta is quite appealing and beneficial. Even though the corporate tax is set at 35%, the rate can be significantly smaller under certain circumstances.
It is quite simple to start a business in Malta because the formalities are relatively straightforward and lets businessmen enjoy a fast start of the operations. This is a great business advantage for foreigners in Malta. The limited liability company is the most popular business structure under which a limited liability company can run its activities.
The macroeconomy is stable in Malta and it represents another significant benefit for investors in the small insular state.
Having a relaxed set of laws referring to foreign investments is another important advantage of Malta. The Maltese government offers many important investment encouragements to attract foreigners to start their activities in this country.
No matter if you want to open a holding company or another type of business in Malta, you can rely on the support of our company formation specialists in Malta and see how they can help you with the formalities. It is quite recommended to have support by your side and to make sure you understand the business direction in this country.
For complete information about the taxation of holding companies, please contactour company formation agents in Malta.
Call us now at +356 21 376 686 to set up an appointment with our specialists in company formation in Valletta, Malta. You can incorporate your company without traveling to Malta.
As a Ciantar Associates client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Malta.