Malta Fiscal Units: 2025 Setup Guide

Malta has become a highly attractive jurisdiction for corporate tax planning in Europe, offering companies the opportunity to plan taxation through the creation of a Fiscal Unit. This structure allows groups of companies to submit a single consolidated corporate tax return and pay a flat5% corporate tax on the group’s profits, bypassing the traditional 35% corporate tax and the need to wait for refunds. This simplifies cash flow, reduces administrative burden, and provides greater certainty for international businesses.

There are requirements that must be met to be eligible for a Fiscal Unit in Malta. The Fiscal Unit must be officially registered with the Malta tax authorities, the group must consist of at least one Maltese firm, and the parent company must possess at least 95% of the subsidiary.

Three Workable Ways to Establish a Fiscal Unit in Malta

1. Two Maltese Businesses

This is the clearest scenario. The parent directly owns at least 95% of the subsidiary, with both businesses incorporated in Malta.

Example:

Malta Inc. A is the sole owner of Malta Inc. B. While one business engages in trading, the other acts as the holding company. They are both enrolled in a fiscal unit.

Benefits

• Since both businesses were registered locally from the beginning, the group’s combined tax return was clear-cut and uncomplicated.
• Profits are subject to a flat 5% corporate tax with no need for refunds.
• Very few cross-border issues

2. Maltese subsidiary plus foreign parent

   In this case, a Maltese firm functions as the trading subsidiary that is part of the Fiscal Unit, and a foreign corporation operates as the parent.

   Example:

Malta Sub Ltd is entirely owned by ForeignCo Ltd (UK). The foreign parent and the Maltese subsidiary join the Fiscal Unit.

Benefits

• Obtain Maltese tax advantages for locally produced earnings
• Avoid the 35% upfront tax and return procedure by applying a flat 5% corporate tax to the group’s profits.
• Group-wide consolidated reporting
• Cost-effective: If your foreign holding is already established, there is no need to register the parent company in Malta.

Important Note: 

It must act as a holding company in order to possess shares of the Maltese subsidiary if you already run a business overseas and plan to utilise it as the parent of a fiscal unit. All of the group’s taxable income must come from the Maltese company’s active trade. Both businesses’ reporting periods ought to coincide. 

3. Maltese Company + Private Foundation

A Maltese limited corporation is fully owned by a Maltese private foundation, creating a Fiscal Unit.

Example:

Malta Tech Ltd. is the parent business of Malta Foundation.

Benefits

• Safeguards resources and intellectual property (IP)
• Adaptable succession planning and governance
• Fiscal Unit profits are subject to a flat 5% corporate tax with no need for refunds.

Families, investment groups, and entrepreneurs looking for a combination of tax efficiency, asset protection, and operational flexibility will find this structure suitable.

The Practical Operation of a Fiscal Unit

1.Evaluate the Group Organization

Determine which foundations or businesses will be included and confirm that the ownership requirement of 95% or more is satisfied. Make sure the Malta Foundation is taxed “as a company” if your Private Foundation serves as a group’s parent company. 

2.Register Maltese Organizations

Verify the correct incorporation of all Maltese subsidiaries or organizations.

3.Fiscal Unit Registration

Through a local representative, submit the Fiscal Unit registration to the Malta tax authorities.

4.Send in Consolidated Reports

Apply the 5% flat corporate tax to all profits when filing tax returns collectively.

5.Continue to Comply

Assure continued compliance with local compliance, reporting, and registration requirements.

Examples of Fiscal Units in Malta in Real Life

• A German businessman establishes Malta Ltd. to provide software services to clients throughout the EU. The group avoids the 35% standard tax and time-consuming return processes by establishing a Fiscal Unit that connects his German holding company with the Maltese trade subsidiary, resulting in a 5% corporate tax rate.
• A BVI family holding creates a corporation in Malta to oversee its subsidiaries and investments in Europe. The group may benefit from Malta’s vast network of double taxation treaties, improve tax efficiency, and consolidate dividends thanks to the Malta structure. The Malta firm maximizes returns for foreign shareholders while streamlining administration with clear reporting and a flat 5% tax on revenues through a Fiscal Unit or strategic dividend planning.
• A Maltese foundation and operational company are established by a financial startup. The Fiscal Unit guarantees consolidated compliance, asset protection, and minimal tax.

How GERAI LTD Helps Malta Create Fiscal Units

It can be difficult to form a fiscal unit, especially when there are conflicting international organizations. GERAI LTD offers comprehensive advice that maximizes tax efficiency and guarantees compliance:

• Professional guidance on the best way to structure fiscal units
• Maltese businesses and private foundations incorporating
• Managing all filings and registrations with Maltese tax authorities
• Creating internal documents and shareholder agreements
• Creating unified reporting guidelines and templates
• Continuous assistance with group modifications, updates, and compliance

Businesses can effectively create Fiscal Units, lessen administrative responsibilities, and enhance cash flow and tax planning throughout their corporate groups with GERAI LTD.