Malta Participating Holding Definition Amended

A new definition of Participating Holding Following Malta Budget Implementation Act

Chetcuti Cauchi | Published on 17 May 2018

personal tax in malta

Malta has recently passed the Budget Implementation Act through parliament. This caters for the implementation of a number of Budget measures for the financial year 2018. One of the changes of note, is a change to the definition of a “participating holding".

Participating Holding Redefined: Tax Implications

Income or capital gains derived by Malta companies from a qualifying participating holdings may be exempt from tax in Malta at the option of the company. Prior to the amendments, one of the alternate conditions for an investment to qualify as a participating holding was that it represented an equity holding of at least 10% in another company, which holding conferred an entitlement to at least ten percent of any two of the following: the right to vote, profits available for distribution and assets available for distribution on a winding up.

Percentage shareholding down to 5% following Budget Implementation Act

The recent amendment has brought that percentage shareholding down from 10% to 5% and thus qualifying equity holdings of at least 5% in subsidiaries will give a Malta company the option to claim the participation exemption in respect of income and/or gains derived from such investment.


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