Maltese International Trading Companies - Net tax liability: 4.17%

An International Holding Company (IHC) is a company resident in Malta formed with the objective of holding overseas investments and to distribute that income to non-residents.  Non-resident shareholders of IHCs qualify for a full refund of the Maltese tax paid by the company on profits and gains arising from “participating holdings” when such profits are distributed.

Possible Uses of ITCs

An ITC is a very effective international tax-planning vehicle. It can be adopted to:

receive commission income

receive management or operational fees

hold patents, copyrights, franchises & other intangible rights and receive income therefrom

perform re-invoicing operations

mitigate the incidence of withholding taxes on interest and /or royalty income

raise charges for technical and management services.

Objects:

The shares of a Maltese ITC must be subscribed to by at least one non-resident person such as yourself (or company). Its objects must be limited to activities or trading interests outside Malta. Thus, ITCs may hold any type of asset, movable or immovable, not situated in Malta.

An ITC may carry on trading activities outside Malta without restrictions except for banking, insurance and financial investment services for which the Company will require a specific license.

Other permissible activities of an ITC (which constitute an exception to the rule that ITCs' cannot deal with residents of Malta) include:

• purchases for export of goods manufactured, assembled or processed in Malta provided that such purchases are not made from a person who owns directly or indirectly more than fifteen percent (15%) of the ordinary share capital of the ITC;

• trading with other ITC's;

• trading with offshore companies registered in Malta under the Malta Financial Services Centre Act (Chapter 330).

Prohibited Activities

ITCs may not:

• purchase real estate property in Malta
  (but can freely lease/rent office facilities and living accommodation for their use and for the use of their employees.)

• hold shares (e.g. shares in subsidiary companies) on a long term basis; and

• act as a holding company. Holding Companies are regulated by a special tax regime. Click here to learn more about holding companies.

Confidentiality

Confidentiality is governed by the Professional Secrecy Act which has established a high common standard of confidentiality for all professional practitioners. Those who violate professional secrecy may be prosecuted under Section 27 of the Criminal Code and on conviction may be liable to a maximum fine of LM20,000 and/or a 2 year prison sentence.

Shares may also be held on behalf of an undisclosed beneficiary by F&A Services Limited, our nominee company licensed by the Malta Financial Services Centre.

International Trading Company (Index)   Taxation (4.1%)

See also:

Double taxation treaties

Holding Companies

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