Participating
Holding
For a Maltese resident company to hold a “participating
holding” in a company incorporated abroad, it must hold at least 10% of the
equity shares in the non-resident company. In the case of a shareholding of less
than 10%, such holding may still qualify as a “participating holding” if the
Malta Company:
-
holds 10% or more of
the shares of the foreign company; or
-
is entitled at its
option to purchase or has the first right of refusal on a disposal of the
balance of the equity shares of the foreign company; or
-
is entitled to be
represented on the Board of Directors of the foreign company; or
-
holds as shareholding
exceeds EUR1,165,000 or equivalent in foreign currency and such holding is
held for an uninterrupted period of 183 days; or
-
holds
equity shares in the
foreign company for the furtherance of the business of the Maltese
company (not trading stock).
Participating Exemption
At
the option of the taxpayer, dividends and capital gains derived from a PH are
exempt from Malta tax.
Light anti-abuse provisions apply if
the PH is acquired after 1/1/2007:-
the foreign subsidiary must:
-
be resident or incorporated in an EU country or territory; OR
-
be subject to any foreign tax of at least 15%; OR
-
not have more than 50% of its income derived from passive interest or
royalties;
Where none of the conditions set out above are satisfied then both of the
following two conditions must be satisfied for the income to be eligible for the
participation exemption:
-
the equity holding by the company registered in Malta in the body of persons
not resident in Malta is not a portfolio investment and for this purpose the
holding of shares by a company registered in Malta in a body of persons not
resident in Malta which derives more than fifty per cent of its income from
portfolio investments shall be deemed to be a portfolio investment; AND
-
the body of persons not resident in Malta or its passive interest or
royalties have been subject to any foreign tax at a rate which is not less
than 5%.
See also:
International Trading Companies
International
Holding Companies
Malta Online Gaming Licences
.
