Over the course of the last several years, an increasing number of international groups have chosen to locate their holding companies in Malta. There are five key reasons for this:
- Participation Exemption
Firstly, for several years now Malta has had what is called a ‘Participation Exemption’ enshrined in its tax law which totally exempts from tax dividends and gains derived from qualifying holdings in other companies. This exemption has been in place since 2007 and has attracted many corporate entities to the Island in that time, but several amendments over the years have actually made it even more attractive, for example by extending the exemption to branch profits and income from collective investment schemes.
- Local Cost Efficiency
It’s no secret that this particular tax arrangement is combined with a generally efficient and stable domestic tax environment to provide an attractive broader package. Malta has no withholding taxes on outbound dividends (or interest, royalties and anything else for that matter), no capital taxes, no controlled foreign company rules, and a competitive corporation tax rate, amongst other benefits. Nevertheless, it is very much an ‘onshore’ jurisdiction due to its full EU membership and is rightly viewed as a compliant and transparent place to do business.
Maltese companies can operate as an international holding company but are not precluded from also carrying out ‘non-holding’ activities. In addition, domestic law provides a strong framework for the creation of companies, trusts, and foundations for wealth structuring and the holding of company assets, intellectual property, and luxury assets including yachts and aircraft, etc.
- International Treaties
The best place to structure a particular corporate entity depends on a huge range of factors, but for several companies it is Malta’s international treaties that make it the most attractive. In addition to being a full EU member state and hence benefiting from EU Treaty protections (with all the associated freedoms of movement and capital, amongst others) it also has a significant network of double taxation agreements, mostly based on the OECD Model Tax Convention and generally more robust than those offered by many other IFCs. This generally makes international trading more efficient and less complex in key EU and non-EU markets.
- Work Environment
Malta is well situated in the Mediterranean and has long been an attractive option for expats, primarily because it offers a rare mix of a Mediterranean climate and lifestyle with an English speaking workforce. Attractive residency and citizenship schemes are available for owners and principals who wish to move to the jurisdiction and there is a highly skilled workforce, plus a strong professional services industry.
As I said above, there is a lot to consider when choosing a jurisdiction to structure in, but there are reasons why Malta is becoming increasingly popular, not the least as a preferred holding company location. If you would like to discuss with me whether it might work for your needs, please just get in touch.