How to Set Up a Holding Company in Malta

Malta is a popular destination for investors who want to set up holding companies. A holding company is a company that owns shares or assets in other companies, without engaging in any operational activities. Holding companies can benefit from tax advantages, asset protection, and access to the EU market.

In this article, we will explain what are the main features and benefits of holding companies in Malta, how to register them, and what are the tax implications.

What are holding companies?

A holding company is a company that holds shares or assets in other companies, without engaging in any operational activities. The main purpose of a holding company is to control and manage its subsidiaries, as well as to receive dividends or capital gains from them.

Holding companies can be used for various reasons, such as:

To consolidate ownership and control of different businesses under one entity
To protect assets from creditors or lawsuits
To reduce taxes by taking advantage of exemptions or treaties
To access new markets or opportunities by investing in foreign companies

Why choose Malta for holding companies?

Malta is an attractive jurisdiction for setting up holding companies because of its:

Stable political and economic environment
Strategic location in the Mediterranean Sea
Membership in the European Union (EU) and the Eurozone
English-speaking population and legal system based on common law
Competitive corporate tax system with generous exemptions and refunds
Extensive network of double taxation agreements with over 70 countries
Flexible company law and regulatory framework

How to register a holding company in Malta?

Holding companies can be registered as private or public limited liability companies (LLCs), 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 company¹.

The registration process involves:

Choosing a unique name for the company
Preparing the memorandum and articles of association that define the objectives, structure, and rules of the company
Appointing at least one director (who can be an individual or a corporate entity) and one secretary (who must be an individual resident in Malta)
Opening a bank account in Malta and depositing at least 20% of the share capital
Submitting all the required documents and fees to the Registry of Companies

The registration process usually takes between two to five days.

What are the tax implications of holding companies in Malta?

Holding companies in Malta can benefit from various tax advantages, such as:

Participation exemption

Malta offers a flexible participation exemption that allows holding companies to exempt from tax dividends or capital gains derived from their subsidiaries if certain conditions are met. These conditions include:

The subsidiary must be resident or incorporated in an EU country; or subject to foreign tax at a rate of at least 15%; or less than 50% of its income must be derived from passive sources; or it must not be held as portfolio investment; AND
The holding company must hold at least 10% of the equity shares (or voting rights) of the subsidiary; OR have an option to acquire them; OR have first refusal rights over them; OR be entitled to sit on its board; AND
The holding period must be at least 183 days; OR there must be an intention to hold them for at least that period.

Tax refunds

Malta has a unique system of tax refunds that allows shareholders (including non-residents) of Maltese companies to claim back part or all of their paid corporate tax upon distribution of dividends. The amount of refund depends on several factors such as:

The type of income generated by the company
The type of account to which the income is allocated (foreign income account or Maltese taxed account)
The type of tax paid by the company (Maltese tax or foreign tax)

The most common refund available to shareholders of Maltese companies amounts to 6/7ths of the tax paid in Malta, resulting in an effective tax rate of 5%. However, other refunds may apply depending on the circumstances.

Double taxation relief

Malta has signed over 70 double taxation agreements with other countries that allow holding companies to avoid or reduce double taxation on their foreign income. Moreover, Malta also offers unilateral relief for foreign taxes paid in countries that do not have a treaty with Malta.

Holding companies in Malta are an attractive option for investors who want to benefit from tax advantages, asset protection, and access to the EU market. Holding companies can be registered as private or public LLCs with a minimum share capital and a simple registration process. Holding companies can also enjoy participation exemption, tax refunds, and double taxation relief on their dividends or capital gains derived from their subsidiaries.

Our team of experienced professionals can help you identify the best structure for your holding company and guide you through the whole process. We will take care of all the legal and administrative requirements, so you don’t have to worry about a thing.

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