Malta Holding Structures for Private Equity Acquisitions and Exits

Malta operates a full imputation system of corporate taxation, under which company profits are taxed at a statutory rate of 35%, but shareholders may be entitled to tax refunds upon distribution. In holding and private equity structures, this system often results in significantly reduced effective tax leakage, provided the structure is correctly designed and commercially justified.

For private equity investors, the relevance of Malta lies not in headline rates but in the interaction between participation exemption, refunds, and treaty access, which together allow Malta entities to function as efficient intermediate holding companies within international groups.

Importantly, Malta’s tax system is embedded within EU law, subject to anti-abuse rules, substance requirements, and transparency standards, making it suitable for institutional investors and regulated structures.

Malta holding companies are frequently used as acquisition vehicles in cross-border transactions. In this role, the Maltese entity typically sits above one or more operating subsidiaries and serves as the shareholder through which the acquisition is executed.

Key structuring considerations at acquisition stage include:

• Equity versus debt funding of the acquisition vehicle
• Treatment of interest and financing costs
• Alignment of acquisition structure with future exit strategy
• Avoidance of unnecessary withholding taxes on intra-group flows

Early-stage structuring is critical. Decisions taken at acquisition often determine whether participation exemption or refund mechanisms can later be accessed on exit.

During the holding period, Malta entities are commonly used to receive dividends, manage shareholder funding, and act as a platform for add-on acquisitions.

Malta offers:

• No withholding tax on outbound dividends under domestic law
• Access to the EU Parent–Subsidiary Directive, subject to conditions
• A broad double tax treaty network, reducing foreign withholding taxes

Where participation exemption applies, dividend income may be fully exempt from Maltese tax. Where it does not, Malta’s refund system may still produce a competitive effective outcome.

Substance, board decision-making, and alignment between risk and reward are central to sustaining these outcomes over time.

Exit planning is often the decisive factor in selecting a holding jurisdiction. Malta provides clear and predictable capital gains rules for disposals of qualifying shareholdings.

Under Maltese tax law, capital gains derived from the disposal of shares may benefit from the participation exemption, provided statutory conditions are met. Where exemption does not apply, alternative tax outcomes may still be available through the refund mechanism.

Malta holding companies are therefore used in:

• Trade sales to strategic buyers
• Secondary buyouts
• Group reorganisations ahead of liquidity events

Effective exit planning typically begins well before the disposal, with attention paid to holding periods, asset composition, and governance.

Beyond exits, Malta holding companies are also used in growth capital raises and reinvestment cycles. These structures support:

• Issuance of new equity or preference instruments
• Entry of new investors at holding level
• Recycling of capital into subsequent investments

For private equity sponsors and founder-led investment platforms, Malta can operate as a repeatable holding jurisdiction, rather than a single-deal solution.

While private equity structures are typically corporate-led, trusts or foundations may sometimes sit above holding companies, particularly in family-owned investment platforms or succession-driven structures.

Their role is generally:

• Ownership consolidation
• Succession and continuity planning
• Alignment of family governance with investment activity

However, for most private equity transactions, the corporate holding company remains the primary structuring vehicle, with trusts used selectively and for clearly defined purposes.

Malta holding structures operate within a robust EU legal framework. Key considerations include:

• General Anti-Abuse Rule (GAAR)
• Principal Purpose Test under tax treaties
• Economic substance and governance expectations

Malta does not function as a low-substance jurisdiction. Structures must demonstrate commercial rationale, decision-making capacity, and proportional substance aligned with the scale of activity.

This approach supports long-term sustainability and investor confidence.

Strategic Implications for Private Equity and Investors

Malta’s role in private equity structuring is best understood as lifecycle-based. Its value lies in consistency across acquisition, holding, and exit phases rather than isolated tax outcomes.

Early structuring decisions materially affect:

• Exit optionality
• Investor returns
• Regulatory and reputational risk

For sophisticated investors, Malta offers predictability rather than novelty.

Our lawyers advise on:

• Structuring private equity acquisitions and holding platforms
• Designing exit-efficient holding structures
• Participation exemption and refund eligibility analysis
• Cross-border coordination with fund, tax, and regulatory advisers
• Governance, substance, and EU compliance reviews

‍