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  • Service: Tax, International Corporate Tax, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 6/12/2012

Malta - Changes to participation rules, de-grouping provisions, individual taxation 

June 12:  A new law in Malta, implementing the 2012 budget measures, includes amendments to the definition of a “participation holding” and changes to extend the application of a tax exemption for royalties and similar income derived from from copyrights.

Under the new measures, a participation exemption is available with respect to income or gains derived from a participating holding or the transfer of a holding.


The new law (Budget Measures Implementation Act, 2012, published 14 May 2012) also contains amendments that are intended to limit the application of “de-grouping provisions” (i.e., concerning tax that is imposed on the transfer of immovable property / shares in a property company between group companies if any company ceases to be part of the group). Under the new provision, the de-grouping provisions do not apply when the transferor ceases to be a member of a group simply due to a change in the direct / indirect individual shareholders of the company.


A new provision also amends an existing tax and duty exemption on the transfer of immovable property by a company to its individual shareholders (or related persons) on the winding up of the company or in the course of distribution of company assets. The new measure eases application of the exemption, so that it applies when the individual shareholder holds not less than 95% of the share capital and voting rights.


With respect to individual income tax measures, the law includes new “parental” income tax rates and a reduced rate of tax for highly qualified returning migrants.


To read a May 2012 report [PDF 378 KB], prepared by the KPMG member firm in Malta: Income Tax Updates




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