A Maltese property holding company is a great solution when you are thinking about investing in real estate outside Malta. You can use it to invest in a single property or in a whole development project. In addition, you can use it for other activities as well such as:
- Leasing real estate to companies forming part of the same group or to unrelated third parties
- Financing of development projects
Advantages of a property holding company:
- Transferring ownership without any incidence of taxation in Malta by selling shares in the Malta holding company itself rather than transferring the legal title of the property itself.
- Putting the structure into place doesn’t mean a transfer of the property. Malta allows re-domiciliation of foreign companies to Malta.
- Efficient repatriation of gains from the eventual sale of immovable property to the beneficial owners in any jurisdiction without suffering any withholding tax in Malta.
- Low tax burden on rental and financing income arising in Malta.
We re-domicile a foreign owned company – that holds immovable property – to Malta. No stamp duties or taxes are payable since there is no transfer of the immovable asset itself.
Tax on rental income
Your rental income can be subject to an effective tax rate of 5%.
Tax on eventual sale of the immovable property
If you are a non-resident shareholder and would like to sell the property, it can be done in two ways:
- The property holding company can transfer the immovable property itself. In that case, 5% effective tax applies in Malta.
- Alternatively, you can decide to dispose your shares in the holding company – the buyer will acquire the company and the underlying property. That means 0% tax in Malta.
Using a Maltese Property Holding Company
Malta has always been a favourite jurisdiction for a property holding company. Let’s see some attractive features of its tax system:
Participation Exemption Regime
If you have income from dividends and capital gains on the disposal of a participation in a non-resident company which qualifies as a participating holding, then those are exempt from tax in Malta. Learn more about the Participation Exemption Regime.
Tax Refund System
If you have other income from a participating holding such as rental income and interest income from financing activities, then it is subject to corporate income tax. However, you can claim back refunds upon a distribution of dividends.
You can claim one of the following refunds of tax:
- 6/7ths of the Malta tax
- 5/7ths of the Malta tax
- 2/3rds of the tax payable in Malta
- Full refund
As you see, the tax refund system significantly reduces the tax suffered in Malta. Find more details on this in the Refund System article.
No capital gains on the transfer of shares in a Maltese company
If you are a non-resident, capital gains derived 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.
Incorporation of a Maltese Property Holding Company
The process of incorporating a Maltese property holding company is the same as of any other company registered under the
Companies Act. This is an easy and straightforward process in Malta. A company may be registered within 24 hours from the submission of the Memorandum and Articles of Association and other due diligence documents.
Bank Account and Substance Requirements
There is no need to open a bank account with a Maltese bank, however, it is recommended under certain circumstances. No substance requirements, no need to have registered employees, or Maltese resident directors. However, a Maltese company is obliged to have a registered address in Malta. Therefore, we offer a registered address facility, which is a simple way of establishing a legal presence in Malta, without having to go through any short or long term costly arrangements.