The tax treatment of foreign dividends coupled with the expanding list of Maltese Double Taxation Treaties (DTTs) makes Malta a strong contender in the choice of location for an International Holding Company (IHC) and especially for structuring a foreign investment in an EU country -- or in any country for that matter -- via Malta.
With effect from 1st January 2007, Malta has removed the restrictions which previously applied and now grants a tax refund entitlement to all shareholders, both resident and non-resident, in receipt of a dividend from a company resident in Malta, regardless of the source or nature of the underlying income derived by those companies (with an exception for profits derived directly or indirectly from Maltese immovable property). For structures in existence prior to 1st January, 2007, the present tax system shall continue to be applicable until the end of 2010 under agreed transitory provisions.
What is an IHC?
An IHC is a normal private limited liability company that has its objects limited to the ownership, management and administration of equity holdings in other companies. An ’equity holding’ is a holding of the nominal share capital in a company which entitles the holder thereof to certain rights such as the right to attend and vote at General Meetings, to dividends and to the assets of the company on liquidation.
In particular, the fact that this type of company is considered as a normal Maltese company means that it is less likely to appear as a tax-saving vehicle in the eyes of the foreign revenue authorities.
If the shareholders are non-EU residents, the Malta Financial Services Authority (MFSA) will require a banker’s character reference from all of the shareholders of the proposed company to ensure that they are reputable and financially sound.
The minimum share capital required to set up an IHC is € 1164.6 which must be, at least, 20% paid up (i.e. € 233). Any foreign currency may be used.
Shareholders may opt to remain anonymous by utilising the services of a licensed nominee company.
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