Holding Company Directive

THE PARENT-SUBSIDIARY DIRECTIVE
Malta can also be a party to the Parent-Subsidiary directive.  This directive covers income derived from a participating holding  or a disposal of such holding.

In accordance with current legislation, when dividends distributed from an EU participating holding to a company registered in Malta, are exempt from withholding tax under the Parent Subsidiary directive, the Participation exemption  will apply only when such profits are not deductible by the relevant subsidiary in the other EU member state.

What is a Participation Holding?
To have a participation holding, a company must satisfy at least one of the following conditions:-

1. The holding of at least 10% in a company registered outside Malta;
2. The holder of such shares is entitled to call for and acquire the entire balance of the equity shares not held;
3. The shareholder is entitled to the first refusal in the event of a disposal, cancellation or a redemption of all shares;
4. The shareholder is entitled to sit on the Board of Directors or appoint a person to sit on the Board as a Director;
5. The shareholder holds an investment of a total value of Eur 1,164,000 and the holding is held for an uninterrupted period of not less than 183 days;
6. The shareholder holds the shares for the furtherance of its business and not held as trading stock.