A lot of investors are opening holding companies in Malta in order to benefit from the participation exemption regime. Holding companies serve as a great avenue for investors who want to hold assets in Malta or participate in other Maltese companies and yet benefit from the same operations and tax planning arrangements as other Maltese companies.
What is a holding company and what does it do
Holding companies facilitate the easy growth of companies that want to extend into new markets. They also help with the acquisition of more assets and expansion of a company into different markets. Their assistance spread even to finances where they can help an enterprise to acquire capital and distribute it among its subsidiaries. The role of a holding firm, in other words, is to function as a bridge in the management systems of the sister companies and to improve the effectiveness of their finances.
Influence of Malta's holding company business setups
The government of Malta has a plausible tax system which is relatively low and favourable for foreign investors. Thus, having a holding company in Malta can positively influence your tax planning. Holding companies entitle their proprietors to tax reimbursements and exemptions on dividend profits and capital gains.
Malta structured the system in a way that doesn’t align the government with any holding company system. The system was also designed in a way that benefits both the trading and holding companies, making them enjoy the same remunerations. The ability of holding firms to offer fiscal services to companies in Malta makes them very valuable.
Holding company exemptions
Maltese holding companies enjoy several benefits in the state, one of which is the exemption of taxes. Maltese enterprises which acquire shares from their subsidiaries enjoy tax freedoms. The exemption also occurs with dividends and capital returns that come from subsidiaries which are Maltese enterprises.
In addition, the tax is exempted on dividends from a company in Malta to a local or foreigner and exemption also applies on capital gains or on the sale of stocks by foreigners in a Maltese corporation. However, this is only possible if the holding firm is a 'qualifying' holding company. A qualifying holding company is one which has voting power and has a right to assets and distribution of earnings. Another condition for the holding firm to qualify for tax exemptions is the value of shares that the subsidiary company has and the liberties these stocks allow to the holding firm.
VAT exemption for pure holding firms
The holding firms in the category of pure holding enterprises are VAT free. This benefit may cease on intracommunity acquisitions. Malta has done a tremendous job in making the business environment convenient as far as holding enterprises are concerned.
Professional Assistance
For further details on how to create a holding firm and the conditions for qualifying for tax exemptions, contact 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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