Malta Property Holding Company
Property holding companies are legal entities used by net worth individuals or groups of companies to invest in real estate or to hold shares or participations in other companies investing in real estate.
A property holding company may be used to invest in a single property or a large number of properties forming part of a large development project. In some cases, a property holding company will be used for each property forming part of large development project. In addition to the holding of immovable property, property holding companies may engage themselves in other activities such as:
- Leasing real estate to companies forming part of the same group or to un-related third parties; and
- Financing of immovable property development projects
In cross-border scenarios, the ideal location of a property holding company becomes a critical issue and normally takes into consideration and addresses a number of tax issues. Proper structuring may achieve the following benefits:
- Tax efficient repatriation of gains from the sale / transfer of immovable property to the beneficial owners
- Facilitating the transfer of ownership. Selling shares in the holding company itself may be a viable option to transfer the legal title of the immovable property which in certain cases may not attract capital gains tax
- Rental and financing income arises in a tax efficient jurisdiction
Participation Exemption Regime
Income from dividends and capital gains on the disposal of a participation in a non-resident company which qualifies as a “participating holding” are exempt from tax in Malta. For more details kindly click participation exemption.
No withholding tax on dividends distributed by a Maltese company
Malta does not levy any withholding tax on payments of dividends to non-resident shareholders of Maltese companies. This feature of the Maltese tax system facilitates the repatriation of profits to low- taxed jurisdictions.
No capital gains on the transfer of shares in a Maltese company
Capital gains derived by non-residents on the transfer of shares in a Maltese company are not subject to capital gains tax in Malta provided that the assets of the Maltese company do not consist wholly or principally of immovable property situated in Malta.
No Stamp Duty
Malta does not levy any stamp duty on the transfers of shares in a Maltese company by persons who are not resident in Malta provided that certain conditions are met.
No Thin Capitalisation Rules
There are no thin capitalisation rules in Malta. The absence of thin capitalisation rules allows a holding company to finance the acquisition of a participation and push-down debt in a tax-efficient manner.
Provided that certain conditions are met, the holding company may fully deduct any interest on loans received from its shareholders. The absence of thin capitalisation rules increases the attractiveness of using a Maltese holding company also as a tax efficient financing vehicle.