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A Malta Holding Company is a company resident in Malta formed with the object of holding shares in other companies as well as any other asset including real estate, cash, movable valuables, shares and securities, and intellectual property whether in or outside Malta. Malta holding companies can be used to distribute income generated by such assets in a tax-efficient manner to shareholders.
Malta does not operate a specific holding company regime. Accordingly, a Maltese Holding’ Company is a regular company having, as its sole object, the acquisition of participations in other companies. Still, the benefits typically available under such regimes are equally available to Maltese companies in respect of their holding activities.
Malta holding companies can be set up in order to hold shares and securities and business assets in any form such as real estate, fixed assets, aircraft, investments, bank accounts and intellectual property as well as personal assets including any luxury items such as yachts, residential property, works of art. Although there is no specific holding company regime, the domestic tax treatment afforded to the different types of income received by such companies as well as the participation exemption regime introduced in 2007 make the setting up of Malta holding companies a very attractive option and an excellent conduit to and from the EU.
Malta Company Formation
The minimum share capital for incorporation of a Maltese company is €46,588 for a public limited company and €1.165 for a private limited company.
25% of the issued share capital of a public company must be paid up whilst 20% of the issued share capital of a private company must be paid up.
A Malta company is typically incorporated within 2-3 days.
Malta Taxation of Holding Companies
A Malta Company is a very effective international tax-planning vehicle. Malta holding companies are onshore holding companies taxed on a worldwide basis at the normal corporate tax rate of 35% reduced to an effective tax rate of 0% in the hands of shareholders, and with the possibility of confidential beneficial ownership.
Malta operates a full imputation system. As such, dividends distributed by a Maltese company carry a credit in favour of recipient shareholder/s which is equal to the amount of underlying tax paid by the Malta Company on the profits out of which the dividend was distributed.
The taxable income of a Maltese company is based on the financial statements of the company (subject to applicable adjustments). Expenses wholly and exclusively incurred in the production of chargeable income are deductible.
Income or capital gains derived by Malta companies from qualifying participating holdings may be exempt from tax in Malta. An investment qualifies as a participating holding where:
(a) Malta holding companies hold directly at least 10 percent of the equity shares of a company whose capital is wholly or partly divided into shares, which holding confers an entitlement to at least ten percent of any two of the following (“equity holding rights”) (a) right to vote; (b) profits available for distribution; and (c) assets available for distribution on a winding up; or
(b) a company is an equity shareholder in a company and the equity shareholder company is entitled at its option to call for and acquire the entire balance of the equity shares not held by that equity shareholder company to the extent permitted by the law of the country in which the equity shares are held; or
(c) a company is an equity shareholder in a company and the equity shareholder company is entitled to first refusal in the event of the proposed disposal, redemption or cancellation of all of the equity shares of that company not held by that equity shareholder company; or
(d) a company is an equity shareholder in a company and is entitled to either sit on the Board or appoint a person to sit on the Board of that company as a director; or
(e) a company is an equity shareholder which holds an investment representing a total value, as on the date or dates on which it was acquired, of a minimum of one million, one hundred and sixty-four thousand euro (€1,164,000) (or the equivalent sum in a foreign currency) in a company and that holding in the company is held for an uninterrupted period of not less than183 days; or
(f) a company is an equity shareholder in a company and where the holding of such shares is for the furtherance of its own business and the holding is not held as trading stock for the purpose of a trade.
Equity shares refers to a holding of the share capital in a company which entitles the shareholder to at least any two of the following three rights: the right to vote, the right to profits available for distribution to shareholders and the right to assets available for distribution on a winding up of the company.
The participation exemption may also apply to holdings in other entities such as a Maltese limited partnership, whose capital is not divided into shares, a non-resident body of persons which has similar characteristics, as well as a collective investment vehicle where the liability of the investors is limited provided the criteria for the application of the exemption are satisfied.
Capital gains derived from the disposal of such participating holdings may be exempt from tax in Malta at the option of the Malta Company. Where Malta holding companies receive dividend income from a participating holding such income may be exempt from tax in Malta also at the option of the company provided that the company in which the participating holding is held falls within one of the following safe harbours:
It is resident or incorporated in the EU;
It is subject to any foreign tax at a rate of at least 15%; or
Less than 50% of its income is derived from passive interest or royalties
Where a participating holding does not fall within one of the safe harbours above, the income derived therefrom may nevertheless be exempt from tax in Malta if both the conditions below are satisfied:
The equity shares held in the non-resident company do not represent a portfolio investment; and
The non-resident company or its passive interest or royalties have been subject to tax at a rate which is not less than 5%.
Taxation of the Malta Holding Companies
Where the participation exemption does not apply or where the company does not opt for income or gains to be exempt, Malta holding companies would be subject to tax on income less deductible expenses at the corporate income tax rate of 35%.
Upon receipt of a dividend, the shareholders would be eligible to claim a refund of all or part of the tax paid, depending on the type and source of income received. The shareholder of the Malta company would be eligible to receive refunds as follows:
100% of the Malta tax paid where the investment qualifies as a participating holding and in the case of dividend income, where such participating holding falls within the safe harbours or satisfies the anti-abuse provisions as detailed above.
5/7ths of the Malta tax paid, where the income received by the company is passive interest or royalties or income or capital gains from a participating holding which does not fall within the safe harbours or satisfy the anti-abuse provisions
2/3rds of the tax payable in Malta, where income has benefitted from double taxation relief.
6/7ths of the Malta tax in all other cases.
Withholding tax on dividends
Dividend payments made by Malta holding companies to non-residents are paid free of Malta withholding tax.
Disposal of shares in Malta Holding Companies
A non-resident shareholder of Malta holding companies would be exempt from tax in Malta on the gain derived upon the disposal of shares in a Maltese company whose main assets do not consist of real estate situated in Malta, provided that the ultimate beneficial owner of the gain or profit is not directly or indirectly owned and controlled by, nor acts on behalf of individuals who are resident and domiciled in Malta.
Malta Holding Companies
|Net Worth Tax:||0%|
|Corporate Income Tax:||35%|
|Double Tax Treaties:||59|
|Capital Gains Exemption:||Yes|
|Relief of Losses:||Carry forward indefinitely|
How Global Premier Can Help you
Set up Cyprus IP holding structure
Advise on Corporate Statutory Compliance matters
Advise on Existing IP – Transfer to Cyprus
Ongoing Support after initial set-up
Cyprus is signatory to the following international conventions relevant to IP
EC Regulation on the Community Trademark (CTMR)
Convention Establishing the World Intellectual Property Organization (WIPO)
The Madrid Agreement Concerning the International Registration of Marks (Madrid Agreement, MMA) and Protocol to the Madrid Agreement
The Patent Cooperation Treaty (PCT)
Berne Convention for the Protection of Literary and Artistic Works
Paris Convention for the Protection of Industrial Property
Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms
WIPO Performance and Phonograms Treaty (WPPT)
Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
Trademark Law Treaty
WIPO Beijing Treaty on Audio-visual Performances
Take advantage of the Cyprus “IP Box” Tax Regime
Cyprus offers the lowest tax regime on IP rights in Europe (maximum 2%) while protected by EU regulations on IP and by the fact of Cyprus being a member of all major international IP treaties and protocols.
To take advantage of the Cyprus low tax regime on IP you do not need to have the IP registered in Cyprus; it may be registered anywhere in the world but through a Cyprus company (i.e. the Cyprus company will be the registered holder of the IP). IP includes the following intangibles:
Copyrights (such as films, sound recordings and musical works, broadcasts, publications, software programs, literary works, scientific works, etc.);
Tademarks and designs;
Maximum 2% Tax on Profits generated from IP
Having any type of intellectual property registered through a Cyprus company will benefit you from enjoying an 80% tax exemption of your worldwide income from IP use (lease or sale). In other words, the maximum effective tax rate on your income generated through the use of your IP through Cyprus will be as low as 2%, while at the same time benefiting from Cyprus’ wide double tax treaty network.
Why Global Premier?
What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.
Whilst most providers either specialise on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types.
Therefore Global Premier combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs.
Should you have any question or matter
You would like to discuss or clarify with us
Should you like to receive further Information
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Our multi-lingual team of business advisors is happy to assist you with all upcoming questions and issues in relation to your company.
You may call or email us, and we will be happy to assist you in a fast and efficient manner.
You can also come and visit us at our Limassol offices to discuss issues face to face if you prefer. Just arrange an appointment and we will be happy to meet with you.