What is Fiscal Unit?
A Maltese parent may form a fiscal unit with subsidiaries in which it holds at least 95%. The unit files one consolidated return and achieves the shareholder-refund benefit at source.
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Current Rate (From year of assessment 2020)
Threshold of 95% in any two of voting rights, profit entitlement and assets on winding up
Example
A Maltese holding company owns 100% of two trading subsidiaries and forms a fiscal unit. One consolidated return is filed and intra-group transactions are ignored.
How Fiscal Unit works in Malta
The rules are the Consolidated Group (Income Tax) Rules, S.L. 123.189. The principal taxpayer files the consolidated return.
The benefit is avoiding the round trip of paying 35% and reclaiming refunds later. The rules and eligibility conditions are detailed, so route any proposal through a practitioner.
Finn flags fiscal unit eligibility as a planning conversation when a company has qualifying subsidiaries.
Related terms
Maltese corporate income tax is 35% on the worldwide income and capital gains of Maltese companies. Under the full imputation system, shareholders can reclaim part of it on distribution, so the effective rate is often far lower.
Under full imputation, shareholders receiving a dividend can claim a refund of part of the Malta tax paid by the company. The refund is 6/7ths on trading profits, 5/7ths on passive interest or royalties, 2/3rds on foreign-income-account profits and 100% on participating holding profits.
From year of assessment 2025, a Maltese company may elect the Final Income Tax Without Imputation, a flat 15% final tax on chargeable income instead of the 35% tax and shareholder refunds.
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