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Malta: Tax consolidation rules, formation of tax groups

Malta: Tax consolidation rules, formation of tax groups

Fiscal unity rules allow related Maltese and foreign companies to form a tax consolidated group for Maltese income tax purposes.

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Members of the tax group may be Maltese companies or foreign entities, provided that the parent company (principal taxpayer) has an ownership interest equal to at least 95% of two of the following:

  • Voting rights
  • Profits available for distribution
  • Assets available for distribution upon the winding up of business in the subsidiaries (i.e., transparent subsidiaries)

The tax consolidated group rules require that all members of the group have the same accounting period. Formation of the group is subject to the consent of minority shareholders (if any). Once an election to form a tax group is made, any qualifying subsidiaries will join the fiscal unit automatically. The fiscal group may be unwound by the parent company, and any subsidiary member may leave the tax group.

Tax consolidation may provide for a full integration of the tax position of the tax group members. As a result, intragroup transactions (excluding transfers related to immovable property located in Malta) are disregarded for tax purposes. The tax consolidation rules may allow for the same effective tax rate for the group members as well as possible cash-flow advantages. Tax is payable by the parent company on behalf of all members of the group, and only one tax return is filed. The parent company is responsible for preparing a consolidated balance sheet and consolidated profit and loss account covering all the companies in the group.


Read a June 2019 report prepared by the KPMG member firm in Malta

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