Malta became one of the most attractive destinations for setting up holding companies in Europe, after the Government introduced the participation exemption a few years ago. Even if it does not have specific laws dedicated to the incorporation of holding companies, Malta has a unique taxation system that turns the country into an ideal location for setting up companies. 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.
| Quick Facts | |
|---|---|
| Legal entities used |
Private or Public Limited Liability Company |
|
Incorporation method |
With the Maltese Registrar of Companies |
|
Incorporation time |
Around 2 weeks |
| Advantages |
It can operate within or outside EU |
| Precautions |
Employer number required |
| Shareholding structure |
1 shareholder |
| Minimum Capital |
EUR1,200 for private LLC; EUR46,000 for public LLC |
| Taxation |
0% tax on dividends and capital gains |
| Control | Foreign ownership available |
| Accounting and Reporting | Annual accounts submitted to the Maltese Government |
| Number of double taxation treaties | More than 70 |
| Company name | Must be unique and approved by Registrar of Companies |
|
Share capital structure |
No restrictions on currency; can be in any denomination |
|
Holding company activities |
– Holding investments; – managing subsidiaries. |
| Accounting standards | Follow International Financial Reporting Standards (IFRS) |
| Annual filing requirement |
Financial statements and annual return |
| Corporate tax rate |
Flat rate is 35%, but Malta provides a 6/7ths corporate tax refund for non-resident, non-domiciled shareholders, lowering the effective tax rate to 5%. |
| Dividend Taxation |
Exemption for dividends received from subsidiaries |
| Registered office |
Must have a registered office in Malta |
| VAT registration |
Pure holding companies are exempt from Maltese VAT, but the tax might be applicable to intra-community acquisitions of services under reverse charge regulations. |
| Shareholders’ liability | Limited to share capital |
| Types of assets owned by the holding company in Malta |
Malta holding companies have the flexibility to hold various assets, including shares, securities, real estate, aircraft, bank accounts, and intellectual property, as well as personal assets like yachts, residential properties, and artworks. |
| Requirement for local bank account (Yes/No) |
Yes |
| Registered agent requirements |
No, but it is recommended to hire our company formation agents in Malta for smooth incorporation of a holding company. |
| Residency requirements for the founder(s) (yes/no) |
No |
| Assistance in opening a holding company in Malta | From initial consultations to navigating legal requirements and paperwork, our team ensures a smooth and efficient incorporation process. |
A step-by-step guide to opening a holding company in Malta
Opening a holding company in Malta involves several steps, and it’s advisable to seek professional advice from legal and financial experts to ensure compliance with local regulations. Here is a general guide to the steps involved in setting up a holding company in Malta:
- Use professional services: Hire our company incorporation specialists in Malta who are familiar with Maltese corporate laws and regulations. They can advise on the procedure and assist you in making informed decisions. With their assistance, you can set up a company in Malta.
- Choose a company name: Choose a unique and acceptable name for your holding company. Ensure that the name complies with the Malta Companies Act.
- Memorandum and articles of association: Prepare the statutory documents, which outline the company’s objectives and internal regulations. These documents need to be submitted to the Malta Business Registry. The basic rules for a company in Malta are outlined in its memorandum of incorporation and articles of association. It’s advisable to have a Maltese company formation agent draft and review these documents. They define shareholder rights, control, and distributions, influencing the roles of company directors. If you do not create specific articles of association, the default rules under the Maltese Company Act will apply to your company.
- Share capital: Decide on the share capital structure for your holding company. This is the amount of money the company will raise by issuing shares. The minimum share capital requirements may vary. For instance, holding companies in Malta can be registered as limited liability companies with a minimum share capital of €1,165.
- Registered office: Have a registered office address in Malta. This is the official address of your company, and all official correspondence will be sent there. Please consult with our company formation agents if you need information about how to open a registered office for a holding company in Malta.
- Appointment of directors and company secretary: A private Maltese holding company is required to have a minimum of one director, whereas a public company must have at least two directors. Directors can be individuals, whether residents or non-residents, and they can also be local or foreign corporations. Additionally, all companies must appoint a company secretary, who must be an individual. Unless the company qualifies as a private exempt company, the company secretary cannot be the sole director of the company.
- Shareholders: Identify and appoint shareholders for the company. Shareholders can be individuals or entities, and there is no restriction on nationality. Typically, a company is established with a minimum of two shareholders, unless it is registered as a single-member company.
- Taxation considerations: Understand tax laws and how they apply to holding companies in Malta. Malta has an attractive tax regime for holding companies, including participation exemption and double taxation relief.
- Bank account: Open a bank account in Malta for your holding company. The chosen bank will require the necessary documentation, such as the company’s registration certificate and identification documents for directors and shareholders. After obtaining your Certificate of Incorporation, which verifies details such as your company’s name, you can proceed to open a bank account for it. Besides this, our specialists can also help you set up a company in Malta.
- Application for registration: Submit the necessary documents, including the memorandum and articles of association, to the Malta Business Registry for registration.
- Tax registration: Register for taxation purposes with the Maltese Inland Revenue Department. This includes obtaining a tax identification number (TIN) for the company.
- Compliance and ongoing obligations: Ensure ongoing compliance with Maltese laws, including filing annual returns, financial statements, and other regulatory requirements.
Please note that this is a general guide, and the specific requirements and processes may vary based on the nature of your business and any subsequent changes in local regulations. It is strongly recommended to consult with our company incorporation consultants familiar with Maltese corporate law throughout the entire process. Also, you can discover an infographic with details about holding companies in Malta:
The participation exemption for Maltese holding companies
Based on the Maltese taxation system, the incomes or capital gains resulting 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 vote;
- 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:
Is there any withholding tax on dividends for Maltese holding companies?
No, there is no need to be concerned 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. Malta sets specific thresholds that determine the obligation for companies to charge Value Added Tax (VAT). The applicable threshold for your business hinges on the nature of your operations, such as supplying goods, low-value-added services, or other activities.
In summary, if your annual turnover is below €10,000, you are likely exempt from VAT charges; if it exceeds €35,000, you are obligated to charge VAT. For turnovers falling between €10,000 and €35,000, the requirement depends on various factors. Regardless of meeting the turnover threshold, it is necessary to register your company with the VAT authorities. Once VAT charging begins, it must continue unless your annual turnover drops below a distinct threshold, which is lower than the entry threshold for the VAT system. You are welcome to get in touch with our agents if you are planning to open a company in Malta. With their assistance, you can also get guidance on VAT regulations.
Tax 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 resulting 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 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, are 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 the convenient tax structure applicable in this country. Below you can find interesting information, figures, and statistics about investments in Malta:
- USD 206 billion was the total FDI stock in Malta in 2018, where 97% of the investments were 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
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.
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.
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 on this matter, please get in touch with our specialists in company formation in Malta.
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.
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.
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.
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.
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.
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.
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.
The business environment of Malta: Attracting holding companies and foreign investments
One compelling reason to establish a holding company in Malta is its remarkable flexibility, catering to diverse purposes such as holding real estate assets, shares, and securities. Maltese holding companies, whether private or public, can be registered efficiently, typically within two to three days, with minimum share capital requirements varying based on company type. Public limited liability companies face additional obligations, including comprehensive financial status declarations, yet offer advantages such as the ability to have over 50 shareholders. The allure of Maltese holding companies extends to their tax efficiency, with no taxes on capital gains and dividends, making them attractive to international investors seeking to consolidate subsidiaries, raise capital, and enhance proficiency in distribution. Malta’s business-friendly environment, and favorable tax regime, with a potentially reduced corporate tax rate, contribute to its appeal as a financial destination. The ease of starting a business, straightforward formalities, and supportive laws for foreign investments further position Malta as an attractive choice. 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 let businessmen enjoy a fast start to 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 macro-economy 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 contact our company formation agents in Malta.