Participation exemption makes Malta attractive for EU holding companies

Malta’s participation exemption is making it an increasingly attractive home for EU holding companies, says Elaine Scicluna Lewis, Head of Accounting at TMF Group Malta.

Malta is renowned for offering one of the most efficient holding structures in Europe and is fast becoming the jurisdiction of choice for an increasing number of multinational groups.

Following the introduction of its participation exemption in 2007, Malta has enhanced its position as a premier EU holding company location. The country’s 100% participation exemption relieves income tax both on the dividends derived from a participating holding and on gains derived from the transfer thereof.

Recent amendments have significantly extended the participation exemption provisions which now exempt branch profits and income derived from collective investment schemes.

Maltese holding companies benefit from the application of all EU directives as well as Malta’s growing network of double taxation agreements – more than 67 to date - largely based on the OECD Model Tax Convention.

To make it an even more attractive destination, Malta does not levy any withholding taxes on outbound dividends, interest, royalties and liquidation proceeds; it also has no net worth/wealth tax or similar taxes on capital, no controlled foreign company (CFC) rules, no thin capitalisation rules and no transfer pricing rules.

But there are conditions attached, of course. For more on participating holdings, dividend distribution and a look at the conditions one must satisfy when working with a Maltese holding company, read my report on Malta’s participating holding exemption.

TMF Group’s Malta team are the local experts in corporate services.

 
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