Dividend Tax charges in Malta

Malta’s taxation system is closely similar to that of Great Britain but there are some slight variations when it comes to aspects like the dividend tax. The government's’ strategy on dividend tax affects local companies and foreign businesses differently. Dividend tax is imposed on locals (domicile and tenant) companies—they are obligated to pay their taxes on returns from capital gains and other forms of income.
 
Dividend tax for foreign companies 
The tax rate for dividends in Malta is set at 35%. In a bid to boost foreign investment, the Maltese government has made it possible through the Participation Exemption guidelines—dividend profits obtained from a foreign participating holding can be excused from tax in Malta. In this case, the stockholder will be obliged to request a credit for the tax which has been paid by the enterprise on the respective revenue.
 
A holding company is an entity that is set up with the purpose of holding shares in other subordinate firms. This could involve holding assets, intellectual property or cash either in the state or outside.  A participating holding company is an entity that is holding shares in other companies as well as meeting the conditions set up by the Participating Exemption Policy. 
 
Dividends withholding tax rates
While local companies in Malta are obliged to pay their withholding tax dues on returns apportioned as dividends. This is a different case with foreign companies. They do not bear the burden of withholding tax rates on dividends in Malta as long as they are participating holdings. 
 
This attracts foreign investment and it is also good for the growth of the business. Among other states, Malta has become the jurisdiction of choice for holding companies. The country has enticed a vast number of organizations wishing to set up business from all over the world.
 
Tax reimbursements for Participating Stakeholders 
In the event where a foreign stakeholder doing business in the state, wishes to get a refund on dividends, there are requirements to reflect on. One of the requirements is to have its firm registered in cooperation with the company legislation in the state. This can also be done by companies that are running in the state but being administrated from outside the country.
 
 Learn More!
 It is imperative that you inquire for in-depth information in regards to dividend tax with lawyers and accountants. For more information and legal advice on Maltese tax, reach out to SIGTAX. Our team of accountants, lawyers, and consultants stay au courant with the latest business trends and regulations in Malta. They can also help with legal counsel on how to set up a company in Malta including giving a profound understanding of the nations’ tax system. Thus, you can be confident that you will get relevant info which guides you to do everything the right way and in your favor.

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