New Amendments to the Maltese participation exemption scheme (2021)

New amendments to the Maltese participation exemption regime have just been published. Henceforth, the exemptions will no longer apply to income derived from a participation qualified as a Participating Holding in an entity that is resident for tax purposes in a jurisdiction included in the European Union (EU) list of non-cooperative jurisdictions, for a minimum period of three months during the year immediately preceding the assessment year.

However, if satisfactory proof is presented to the Maltese tax authorities that such entity maintains enough workers, with significant functions in that jurisdiction, commensurate with the type and extent of the activity carried on in that jurisdiction and the income derived therefrom, the exemptions could still apply.

Where such 3 months are consecutive and fall in 2 subsequent consecutive base years, the exemption will not apply in respect of any such income derived in either of the two years.

The list of non-cooperative jurisdictions for tax purposes adopted by the European Council (on February 22nd, 2021) comprises:

  • American Samoa
  • Anguilla
  • Dominica (new)
  • Fiji
  • Guam
  • Palau
  • Panama
  • Samoa
  • Trinidad And Tobago
  • U.S. Virgin Islands
  • Vanuatu
  • Seychelles

Malta has one of the widespread participation exemption regimes in the EU. Dividends and capital gains related to a participating holding (PH) are excluded from taxation in Malta.

Check here the requirements for applying to this regime or contact us to learn more about Malta's advantages for the management of international businesses.

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