Table of Contents Why, after 2 years in Malta, I recommend a Malta holding to every entrepreneur What is a Malta holding company? (And why it’s not as complicated as you think) Malta holding tax advantages: The 6% rule and other surprises Legal requirements Malta holding: What you really need Malta holding company costs: Realistic figures instead of marketing claims Malta holding vs. Netherlands, Luxembourg & Co.: The honest comparison Setting up a Malta holding: Step-by-step guide from the field The 5 most expensive mistakes with Malta holdings (and how to avoid them) FAQ: Your most important questions about Malta holdings answered Why, after 2 years in Malta, I recommend a Malta holding to every entrepreneur Do you know what surprised me most after two years in Malta? Not the 316 sunny days a year or that the bus actually arrives on time now and then. It was realizing that Malta is one of the smartest places in Europe for international entrepreneurs—if you know how to take advantage of it. When I moved here in 2022, I thought: “Malta? Isn’t that just for retirees and language students?” Wrong. Now I’m sitting here with an espresso in Valletta, and from personal experience I can tell you: A Malta holding company can legally reduce your tax burden by 80% or more. Sounds too good to be true? Let me show you how it works. In this article, I’ll explain everything you need to know about Malta holdings. Not the marketing talk of consulting firms, but the reality. With real numbers, real costs, and the pitfalls nobody tells you about in advance. Who is a Malta holding actually worth it for? Before we dive into the details: a Malta holding doesn’t make sense for everyone. You should meet at least one of these criteria: Annual turnover over €500,000: For lower amounts, setup and admin costs eat up any tax savings International business: You sell to several EU countries or have clients outside the EU Passive income: Dividends, licences, interest or real estate earnings Exit planning: You’re planning to sell your company in the next 3–7 years If you only work and sell in Germany, save yourself the hassle. Then a Malta holding is like driving a Ferrari for the corner store—over the top. What is a Malta holding company? (And why it’s not as complicated as you think) A Malta holding company is basically a regular Maltese limited company (Limited Liability Company) that owns other companies. The trick is in the Maltese tax system—but more on that in a moment. The basic structure of a Malta holding Picture building a multi-storey house for your businesses: Ground floor: Your operating company (e.g., in Germany) First floor: The Malta holding company Attic: You as a private individual or another structure The Malta holding collects profits from your operating businesses and can forward them to you with significant tax benefits. This works via Malta’s “Full Imputation System”—a term that sounds more complicated than it is. The Full Imputation System explained (no legalese!) Malta has a pretty clever tax system. When your Malta holding company makes a profit, it first pays 35% corporate tax. So far, so normal. Here’s the catch: When the holding distributes these profits to you as a dividend, you get most of the taxes back. Depending on where the profits originate, you can get back up to 6/7 of the taxes paid. That means: An effective tax rate of only 5% on certain income streams. Practical Example: Your German GmbH makes €200,000 in profit and distributes it as a dividend to your Malta holding. The Malta holding pays €70,000 in taxes (35%). When it forwards the €200,000 to you, you get €60,000 of the taxes back. Effective burden: just €10,000 or 5%. What company types are available in Malta? For holdings, mainly two forms are relevant: Company Type Minimum Capital Shareholders Suitable for Private Limited Company €1,164 1–50 Most holdings Public Limited Company €46,588 Unlimited Large structures, IPO planned 95% of the time, a Private Limited Company is enough. It’s quick to set up, cost-efficient, and fully sufficient for your needs. Malta holding tax advantages: The 6% rule and other surprises Now it’s getting interesting. The tax advantages of a Malta holding are impressive—but only if you understand how they work. Let me break down the main mechanics for you. The famous 6% rule for Malta holdings You’ve probably heard that Malta holdings can be taxed at just 6%. That’s true—but only under certain conditions. This 6% applies to so-called “non-resident companies” for passive income. What does “non-resident” mean? Your Malta holding is considered non-resident if it’s not managed from Malta. That means: The management and strategic decisions need to be made outside Malta. What is “passive income”? Dividends from other businesses Interest and loan repayments Licensing fees (patents, trademarks, software) Real estate income Capital gains from business sales The tax refund system in detail Malta has different “accounts” for different types of income. Sounds complicated, but the logic is clear: Type of Income Refund Effective Tax Example EU Dividends 6/7 of taxes 5% Dividend from German GmbH Foreign Dividends 2/3 of taxes 11.67% Dividend from US Corporation Foreign Income 6/7 of taxes 5% Licence fees from Germany Maltese Income None 35% Rents in Malta Utilizing double tax treaties Malta has double tax treaties with over 80 countries. This means: When your Malta holding receives dividends from Germany, it pays only 5% withholding tax in Germany instead of the usual 26.375%. Calculation Example Germany → Malta: German GmbH makes €100,000 profit German corporate tax: ~30% = €30,000 Distribution to Malta holding: €70,000 German withholding tax: 5% = €3,500 Malta holding receives: €66,500 Malta corporate tax: 35% = €23,275 Refund on distribution: 6/7 = €19,950 Total effective burden: €33,825 or 33.8% For comparison: Direct distribution to a German individual would have been over 45% tax. IP holding structures: The holy grail for licensing fees It’s especially interesting for intellectual property (IP). Malta has no licence tax on outgoing licensing fees. That means: Your Malta holding owns patents, trademarks, or software It licenses these to your operating companies The licence fees flow tax-free to Malta When paid out to you: only 5% effective tax I know software entrepreneurs who have reduced their tax burden from 42% to under 15% this way. Legal and cleared by tax advisors. Legal requirements Malta holding: What you really need Now let’s talk legal compliance. Malta is an EU member and has correspondingly strict compliance requirements. But don’t panic—if you do honest business, it’s all manageable. Substance requirements: More than just a shell company The EU has tightened regulations in recent years. Your Malta holding must have “economic substance”—real business presence. Specifically, this means: Registered address in Malta: Not just a PO box, but a real business address Maltese directors: At least one director must be a Malta resident Board meetings: Supervisory board meetings must take place in Malta Accounting: Books must be kept in Malta Reasonable expenses: The holding must incur real costs in Malta Sounds like a lot? It is. But with the right structure and a local partner, it’s manageable. Corporate Service Provider: Your local partner Almost every Malta holding works with a Corporate Service Provider (CSP). That’s a licensed company that takes care of administration: Service What happens Cost per year Nominee Director Maltese director for compliance €3,000–5,000 Registered Office Official business address €1,000–2,000 Accounting Bookkeeping and annual accounts €3,000–6,000 Company Secretary Minutes, compliance tasks €2,000–3,000 My tip: Don’t skimp on the wrong end. A good CSP costs more but saves you plenty of trouble with the authorities later. I recommend planning at least €10,000 per year for all services. Reporting duties and compliance Malta takes compliance seriously. These filings are mandatory: Annual return: Must be filed by January 31 (€85 fee) Beneficial ownership register: Who are the ultimate owners? Tax returns: Tax filing by June 30 Audit: Mandatory for turnover above €700,000 Transfer pricing documentation: For intra-group transactions If you miss a filing, you could face a €2,329 fine. Multiple violations can even lead to the company being dissolved. BEPS and anti-avoidance rules The OECD’s BEPS rules (Base Erosion and Profit Shifting) have toughened regulations worldwide. Relevant for your Malta holding: Principal Purpose Test: Was tax saving the main reason for the structure? Limitation of Benefits: Treaty advantages only with real economic activity CRS (Common Reporting Standard): Automatic exchange of tax information between authorities The days when pure tax optimisation worked without a business reason are over. Your Malta holding must have a real business purpose. Malta holding company costs: Realistic figures instead of marketing claims Let’s talk numbers. Here are the real costs of a Malta holding—without the usual “from €5,000” teaser offers that end up costing twice as much. One-off setup costs Setting up your Malta holding entails these costs: Position Cost Note State fees €245 Registration with Malta Business Registry Legal fees €2,500–5,000 Lawyer for formation documents Due diligence €1,500–3,000 Know-Your-Customer checks Apostille €200–500 Certification of foreign documents Bank account opening €0–2,000 Some banks require setup fees Total €4,445–10,745 Depending on structure complexity Ongoing yearly costs These are the actual annual costs: Service Cost/year Necessity Corporate Service Provider €8,000–15,000 Absolutely essential Accounting & Audit €5,000–10,000 Legally required Tax advisory €3,000–8,000 Highly recommended Bank account €500–2,000 Account maintenance fees Government fees €500–1,000 Annual return, etc. Total €17,000–36,000 Depending on complexity Reality check: Budget at least €20,000 per year for a fully functional Malta holding. Anything less is either dubious or you won’t get all the necessary services. Break-even analysis: When is a Malta holding worth it? With €20,000 annual costs, you need to save at least €100,000 in taxes to make it worthwhile. That’s achievable with: Dividends: From about €500,000 per year Licence fees: From about €300,000 per year Capital gains: Often from €200,000 (one-off) Hidden costs nobody mentions From my experience, here are additional costs you can expect: Travel costs: 2–3 Malta trips per year for meetings (€1,500) German tax advisor: For double tax treaty applications and compliance (€3,000–5,000) Transfer pricing studies: For larger structures (€5,000–15,000) Legal opinions: For complex structures (€2,000–8,000) Currency exchange: Exchange fees for international transfers All in, you’re realistically looking at €25,000–45,000 in yearly costs. It sounds like a lot—but with the right turnover, you’ll save several times that much in taxes. Cheap alternatives and their limits Some providers advertise “Malta holding from €5,000”. Here’s how they do it: Shelf company: Pre-formed company (cheaper, but less flexible) Managed director services: Very basic nominee structures Minimal compliance: Only what’s absolutely required by law The problem: At the first tax audit or large transaction, you’ll hit limits. For serious international business, you need a professional structure. Malta holding vs. Netherlands, Luxembourg & Co.: The honest comparison Malta isn’t the only option for holdings in Europe. Here’s how Malta stacks up against other popular jurisdictions. Malta vs. Netherlands: The classic comparison The Netherlands was long the standard for European holdings. Since anti-avoidance rules, this has changed: Criterion Malta Netherlands Winner Effective tax 5–11.67% 25.8% Malta Substance requirements Medium High Malta DTA network 80+ countries 95+ countries Netherlands Setup costs €5,000–10,000 €8,000–15,000 Malta Ongoing costs €20,000–35,000 €25,000–40,000 Malta Reputation Good Excellent Netherlands Conclusion: Malta wins on cost and tax rate, Netherlands on reputation and DTA network. For mid-sized entrepreneurs, Malta is often the better choice. Malta vs. Luxembourg: Premium vs. Pragmatic Luxembourg is the premium solution for holdings—but also much more expensive: Luxembourg advantages: Best reputation, excellent banks, strong DTA network Luxembourg disadvantages: High costs (€50,000+ per year), complex substance rules Malta advantages: Similar tax benefits at much lower cost Malta disadvantages: Less prestigious, smaller DTA network Luxembourg makes sense for €5M+ annual turnover. Below that, Malta is the better deal. Malta vs. Cyprus: Mediterranean competition Cyprus is Malta’s direct Mediterranean competitor: Aspect Malta Cyprus Corporate Tax 5% (effective) 12.5% Dividend tax 0% 0% IP regime Available 80% deduction EU reputation Good Problematic Banking Stable Since 2013 more challenging Cyprus once had advantages, but after the banking crisis and golden passport scandals, Malta is the safer option. Malta vs. Ireland: The green alternative Ireland actively courts international business: Ireland strengths: 12.5% corporate tax, big tech firms, English-speaking Ireland weaknesses: High substance requirements, expensive wages Malta alternative: Lower effective tax, lower costs For large tech companies, Ireland is attractive. For smaller holdings, Malta is more cost-efficient. New developments: Pillar 2 and minimum tax The OECD 15% minimum tax (Pillar 2) changes the rules. But: Applies only from €750M turnover: Most mid-sized companies aren’t affected Malta benefits: Other countries must raise taxes, Malta keeps its edge Safe harbor rules: Effective tax rates below 15% often remain possible For most entrepreneurs, Pillar 2 doesn’t change Malta’s attractiveness. Setting up a Malta holding: Step-by-step guide from the field Now to the practical part. I’ll guide you through the entire formation process—including every pitfall I personally encountered. Phase 1: Planning and preparation (4–6 weeks) Step 1: Advisory and structure planning Find an experienced advisor familiar with both Maltese and German tax law. This costs €3,000–5,000 but saves you much trouble down the line. Analysis of your existing structure Designing the optimal holding structure Calculating tax implications Clarifying compliance requirements Step 2: Selecting a Corporate Service Provider Get at least three quotes. Important questions: How long have they been operational? Do they have German clients? What licenses do they have? Can they provide references? Step 3: Prepare documents You need (all apostilled): Passport Proof of address (not older than 3 months) CV Bank or asset statement Complete due diligence questionnaire Phase 2: Incorporation (2–4 weeks) Step 4: Name reservation Reserve company name at the Malta Business Registry (€45). Takes 1–2 days. Tips: Name should sound neutral and international Avoid “Holding” in the name (raises suspicion) Check trademark rights in relevant countries Step 5: Memorandum & Articles of Association Your lawyer prepares the formation documents. Watch for: Broad purpose clause (for flexibility) Correct number of authorised shares Proper nominee structure mapping Step 6: Registration Submission to the Malta Business Registry. Normally 3–5 business days—unless everyone goes on holiday at the same time (happens more often than you’d think). Phase 3: Operationalisation (4–8 weeks) Step 7: Apply for tax number At the Malta Tax Authority (IRD). Takes 2–3 weeks. You’ll get: Tax Identification Number (TIN) VAT number (if required) PAYE number (for salaries) Step 8: Open bank account This is often the hardest part. Maltese banks have become very cautious with holdings. Recommended banks: Bank Pros Cons Minimum deposit Bank of Valletta Largest bank, good digitisation Conservative for holdings €25,000 HSBC Malta International, good IT High fees €50,000 Lombard Bank Pragmatic for holdings Smaller bank €10,000 MeDirect Online-focused Limited services €1,000 Documents needed to open an account: Certificate of Incorporation Memorandum & Articles Board resolution to open account IDs of all directors and shareholders Due diligence documents Business plan and financial projections Step 9: Tax registrations Registrations with relevant authorities: Malta Business Registry (annual return) Malta Financial Services Authority (for investment services) Malta Gaming Authority (for gaming) Data Protection Officer (if needed) Phase 4: German integration (2–4 weeks) Step 10: Apply for double tax treaty In Germany, you must apply the DTA: Request certificate of residence from Malta Application at the German Federal Central Tax Office Processing time: 4–8 weeks Step 11: Check for German permanent establishment Important: The Malta holding must not have a German permanent establishment. That means: No fixed business facility in Germany No permanent representative Management and control from Malta Typical timeline and pitfalls Realistic total duration: 3–6 months Frequent delays: Bank account: May require 2–3 attempts Apostille: German authorities often need 4–6 weeks Due diligence: Queries cause delays Holiday times: In August nothing happens in Malta My tip: Allow plenty of time and don’t start in July. The best time to incorporate is September to November. The 5 most expensive mistakes with Malta holdings (and how to avoid them) After two years in Malta and countless talks with other entrepreneurs, I have a clear list of the most common (and costly) mistakes. Let me show you the biggest pitfalls. Mistake #1: Choosing cheap providers The mistake: “Malta holding for €5,000” sounds tempting. But what you really get: Shelf company with no bespoke structure Minimal service and support No proactive tax advisory Problems at the first tax audit The cost: I know someone who had to make his “cheap” Malta holding compliant for €15,000 afterwards. Plus €8,000 in tax advice because the structure didn’t work. Here’s how to avoid it: Invest in a reputable CSP (€10,000+ per year) Obtain multiple offers and compare Ask for references and talk to current clients Check licenses and regulation Mistake #2: Ignoring substance requirements The mistake: Thinking a Malta holding is just a shell company without real activity. The reality: EU anti-avoidance rules require real economic substance. Without the right substance: DTA advantages denied German tax authority won’t recognise the Malta holding Back-taxes plus interest apply What you need: Real business activity in Malta Qualified staff locally Regular board meetings Reasonable operating expenses Ignoring costs = €50,000+ back-taxes Mistake #3: Creating a German permanent establishment The mistake: Running the Malta holding from Germany in practice. Warning signs: You make all important decisions from Germany Business contacts run through your German address Contracts are negotiated and signed in Germany Management effectively takes place in Germany The consequence: Germany taxes the Malta holding as a German company. Effective tax rate: 30%+ instead of 5%. Here’s how to do it right: Board meetings only in Malta Document key decisions made in Malta Contracts signed by the Maltese director Separate emails and communications Mistake #4: Neglecting transfer pricing The mistake: Not setting group transfer prices at market rates. Example: Your German GmbH pays your Malta holding 90% of its profit as a “management fee”. The German tax office asks: “Is that market-standard?” The solution: Prepare transfer pricing documentation (€5,000–15,000) Provide evidence for market-standard terms Regular updates of transfer prices Economic analysis by experts Without proper transfer pricing documentation, profits can be adjusted and penalties apply in Germany. Mistake #5: Forgetting exit strategy The mistake: Not planning the dissolution or sale of the structure. Problems without exit planning: High dissolution costs (€10,000–20,000) Tax disadvantages on liquidation 6–12 months’ time required Compliance risks until final deletion Better planning: Exit clauses in CSP agreements Annual review of structure efficiency Alternative structures in mind Liquidity planning for dissolution costs Bonus mistake: Underestimating banking A Malta holding without a bank account is useless. But Maltese banks have become very cautious with holdings. Common banking problems: Account opening takes 3–6 months High minimum deposits (€25,000+) Strict due diligence requirements Regular compliance reviews Pro tip: Start the banking process in parallel with incorporation, not after. And always have a plan B (second bank). Real talk: A Malta holding is not a “set and forget” solution. It needs ongoing care, professional advice and real business activity. Underestimate that, and you’ll pay for it. If you do it right, you’ll save taxes for decades. FAQ: Your most important questions about Malta holdings answered How long does it take to set up a Malta holding? The pure formation takes 2–4 weeks. Until everything is operating (with bank account and German registrations), allow 3–6 months. The real bottleneck is usually the bank account opening. Can I set up a Malta holding as a German citizen? Yes, without any problem. You don’t even need to live in Malta. It’s only essential that the company is itself based and managed in Malta. What is the minimum deposit required for a Malta holding? Legally €1,164 in share capital is sufficient. Practically, you’ll need a minimum deposit of €10,000–50,000 to open a bank account, depending on the bank. Do I have to personally move to Malta? No, but you do have to travel regularly to Malta for board meetings and to meet substance requirements. Plan 4–6 trips to Malta per year. How does it work with German taxes? You remain tax resident in Germany, but the Malta holding can, by applying DTAs, reduce German withholding tax on dividends from 26.375% to 5%. That saves a lot of tax. What happens in a German tax audit? The German tax office mainly checks: 1) Is the Malta holding truly resident in Malta? 2) Is there a German permanent establishment? 3) Are transfer prices market-standard? If your documentation is good, it’s not a problem. Can I bring existing companies into a Malta holding? Yes, but it’s complex for tax purposes. In Germany, a transfer can be tax neutral but requires careful planning and professional advice. Which industries are best suited for Malta holdings? Especially suitable: Software/IT, e-commerce, consulting, real estate investment, licences, trading. Less suitable: Manufacturing with lots of staff. What does a Malta holding really cost per year? Realistic costs: €20,000–35,000 per year for all services (CSP, accounting, advisory, bank account). Cheaper is usually not compliance-proof. Can a Malta holding also buy real estate? Yes, Malta holdings can easily buy EU real estate. For non-EU property there can be restrictions depending on the country. What about Brexit and UK business? Malta has signed a new DTA with the UK. Brexit has even increased Malta’s attractiveness for UK business, since the UK no longer follows EU rules. How do I sell my Malta holding? A share deal (selling the shares) is usually the most tax-efficient. An asset deal (selling the company’s assets) may sometimes be better depending on structure. Count on 6–12 months for a clean exit.
