If you are looking into options of how to incorporate a holding company in Malta, we can help you accomplish this remotely. The holding will allow you to own corporate assets, as well as personal property and other assets. One of the most remarkable advantages of Maltese holding companies is that incomes or capital gains derived in the country may be exempt from taxation.
Holding company in Malta to protect assets and benefit from tax optimization
Malta is an island state that is a member of the EU and provides ample opportunities to protect and increase capital. Through a Maltese entity you can:
- establish a holding and own various type of assets;
- engage in trading activities;
- obtain a license and engage in gambling activity;
- engage in e-commerce;
- manage copyrights and other intangible property.
In this article, we will examine the process of using Maltese company as a holding.
Officially, there are no separate rules for holdings in Malta law. However, under the Income Tax Act and Income Tax Management Act, several terms and conditions are stipulated that allow the company to be used as a holding.
Furthermore, possibility of avoiding capital gains tax under certain conditions is one of the many benefits of holding entity. There is also a tax refund system that allows the shareholder to recover up to 100% of the tax paid.
The most common option for the holding to use tax incentives is to reduce taxes when receiving dividends from companies owned by the holding or, in other words, income from equity participation.
The following tax refund systems are available:
- 100% if the income is received as a result of investments that relate to the participating holding, which meets certain requirements;
- 5/7 tax – the company’s income is an uncontrolled package, royalties or income from the holding entity;
- 2/3 of the tax if income is received when applying the provision on exemption from double taxation;
- 6/7 in other cases.
How to achieve full tax exemption from equity participation income?
In order to take advantage of the benefits for the holding, it is necessary to fulfill some conditions.
- The holding directly owns 15% or more of the company’s shares and these shares grant the right to not less than 5% of (two out of three):
- a right to vote; and/or
- a right to profits available for distribution; and/or
- a right to assets available for distribution in the event of a winding up.
or, the holding
- 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
- has the pre-emptive right to buy shares; or
- is entitled to either sit on the Board or appoint a person to sit on the Board of that company as a director; or
- 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) and that investment is held for an uninterrupted period of not less than183 days; or
- holds such shares for the furtherance of its own business.
Capital gains owned by the holding may be exempt from tax in Malta providing one of the three conditions below are met.
- The holding is a resident or company established in the EU;
- The holding is subject to any foreign tax at a rate of at least 15%;
- less than 50% of its income is derived from passive interest or royalties;
The time required for tax refunds after the distribution of dividends is 3 months.
How to register a holding in Malta?
In terms of incorporation process, a holding company is set up following the same as a regular limited liability company.
The authorized capital of such a company must be from 1250 EUR and it is required to be paid no less than 20% at the time of registration. In parallel, the registration fee is paid, the amount of which depends on the size of the authorized capital.
Single individual or single entity may act as director. The secretary can only be an individual. Both the director and the secretary can be citizens of any country, but we recommend that they be residents of Malta.
Documents for registering a holding in Malta
You will need the following documents:
- Personal statement;
- A certified copy of a foreign passport;
- A certified copy with proof of address of residence;
- A recommendation from the bank in a specified format;
- If you are a politically exposed person, you will be required to provide proof of the origin of funds;
- If the company has more than 25% of outside ownership, declaration of ownership from the side owner.
Fees for registration of the company, acquiring a legal address and a contribution to the Registry, will start from 2,591 EUR in the first year and from 891 EUR in the following years.
You can also request additional services of a director, nominee shareholder, secretary services etc.
How to register a holding in Malta: procedure
- Email us email@example.com, informing us of your intention to set up a holding company in Malta.
- Describe the essence of your business to a consultant, provide information about yourself: this will help us clarify our options of services which we can offer.
- Pay company registration fee. Price starts from 2,591 EUR. We will immediately estimate the cost of additional services, if required.
- After payment you will be required to provide full set of documents. We will then launch the company’s registration process. This will take several working days, providing all the required documents are complete and supplied by you in timely and appropriate form.
After registration, you can open an account, transfer assets to a holding or otherwise dispose of your property. If necessary, we will guide you through advantages of the available tax benefits.
If you would like to learn more of holding in Malta, feel free to contact us at firstname.lastname@example.org