Holding company in Malta: the refund system, effective rate and comparison with Andorra

In brief

Malta has a high nominal rate, but an imputation system that refunds most of the tax to shareholders when they receive a dividend. The result is a low effective rate, at the price of a two-stage mechanism: the tax is paid by the company, then refunded to the shareholder.

The mechanism

The nominal rate of corporate income tax is 35 %verified on 12/10/2026. When profits are distributed, the shareholder can apply for a refund: about six sevenths of the tax paid for trading income, giving a maximum effective rate of 5 %verified on 12/10/2026, and five sevenths for passive interest and royalties, giving 10 %verified on 12/10/2026. The refund is claimed from the Maltese tax authority, by the shareholder and not by the company.

The participation exemption

An exemption exists for dividends and capital gains from a "qualifying participation". The Maltese company must directly hold at least 5 %verified on 12/10/2026 of the shares, with rights of at least 5 %verified on 12/10/2026 on two of the following: voting, distributable profits and assets on liquidation. Alternative routes exist, including an investment of at least 1,164,000 €verified on 12/10/2026 held for 183 daysverified on 12/10/2026. For dividends, the subsidiary must also pass an anti-abuse test: be established in the European Union, bear foreign tax of at least 15 %verified on 12/10/2026, or derive less than half of its income from passive interest and royalties. The capital gains exemption does not apply if the company being sold holds Maltese real estate.

Who it suits

Malta attracts structures that can bear a refund and substance procedure, especially in international services sectors. Cash is tied up between the payment of the tax and its refund.

Compared with Andorra

Andorra directly exempts dividends from shareholdings subject to conditions, with no advance tax or refund. The general Andorran rate is 10 %verified on 09/10/2026. The Andorran regime is easier to read; in return, Malta is a member of the European Union and benefits from the European directives. See the holding company in Andorra.

For a French resident

The Maltese effective rate after refund is less than half the French rate of 25 %verified on 09/10/2026: if the tax actually borne is compared with French tax, the structure may fall under the privileged tax regime of Article 238 A. The comparison is based on the tax actually borne and is made case by case.

To verify

The figures on this page come from foreign firms and authorities, verified on 12 October 2026: they are dated in our database and should be confirmed with local advice before any decision. This page is a guide, not tax advice. The effect of Pillar Two on the Maltese system is not confirmed here, and the exemption conditions are taken from firm summaries, to be confirmed against Maltese law (Income Tax Act).

Other countries

Comparison of countries for a holding company, holding company in Andorra, Luxembourg, Netherlands, Cyprus. Test the Andorran conditions in the holding simulator.