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International Holding Companies

Definition

An International Holding Company (IHC) is a company resident in Malta formed with the objective of holding overseas investments benefiting from the effects of the network of double taxation treaties. Non-resident shareholders qualify for refunds of the Maltese tax paid by the company on profits and gains arising outside Malta when such profits are distributed.

Taxation

Foreign income received by the IHC is taxed at the normal company rate of 35%.
Basing the calculations on the full imputation system, income distributed by way of dividends to a shareholder (or to a Maltese company which is 100%), a refund of the tax paid by IHC becomes due as follows:

100% refund of tax paid by IHC where the overseas investment is considered as a qualifying participation;
2/3 refund of the tax paid by the IHC where the overseas investment is not a qualifying participation.

Qualifying Participation

A qualifying participation means a holding of 10% or more of the shares in an overseas company. If the IHC owns less than 10% of the shares in an overseas company, its shareholding may still fall under the definition of a qualifying participation provided it satisfies one of a list of conditions.