Setting Up a Holding Company in Malta for Managing Intellectual Property in 2025

Setting Up a Holding Company in Malta for Managing Intellectual Property in 2025
27.01.2025

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Malta is becoming an increasingly popular destination for entrepreneurs looking for a smart, efficient way to manage intellectual property (IP). With a reliable legal system, attractive tax benefits, and access to the European Union, Malta is the perfect place to establish a business structure for managing intellectual assets.

Why Register a Holding Company in Malta for IP Management?

Malta’s tax system offers incredible benefits for companies holding IP:

  • Income from royalties and IP licensing can qualify for significant tax refunds under Malta’s full imputation tax system.
  • No withholding tax on dividends, royalties, or interest paid to non-residents.
  • Access to double taxation treaties with over 70 countries, reducing taxes on income from international operations.

As a member of the European Union, Malta offers direct access to the EU’s single market. This is a major advantage for protecting intellectual property under European regulations, such as through the EUIPO (European Union Intellectual Property Office) for trademarks and designs.

Malta’s legal system ensures top-tier protection for your intellectual property. The country adheres to key international treaties, including the Paris and Berne Conventions and the TRIPS Agreement. This means your trademarks, patents, copyrights, and other IP assets are in safe hands.

Low Operational Costs

Setting up and maintaining a holding company in Malta is much more affordable compared to many other European countries. This includes lower registration fees and annual administrative expenses.

Intellectual Property Registration

If your holding company will manage IP assets directly, registering those rights in Malta or through EU mechanisms is essential. For example:

  • Trademarks can be registered via Malta’s Commerce Department or the EUIPO.
  • Patents can be filed through Malta’s Intellectual Property Office or the European Patent Office (EPO).

We shall handle both for you.

Taxation Benefits for IP Holding Companies

Malta’s tax regime is tailored to support businesses holding intellectual property:

  • 5% Tax Rate Through Refunds

Shareholders can receive a refund of up to 6/7ths of the corporate tax paid by the company, reducing the effective tax rate to just 5%. This makes Malta one of the most tax-efficient jurisdictions for holding IP.

  • No Withholding Taxes

Dividends, royalties, and interest payments to non-residents are tax-free. This ensures smooth international transactions and easier profit repatriation.

  • Deductible IP-Related Expenses

Costs related to acquiring, developing, and maintaining intellectual property—such as R&D expenses or registration fees—can be deducted from taxable income.

  • Exemption from Capital Gains Tax

Profits from the sale of IP assets can be exempt from tax if structured through a holding company.

  • Patent Box Regime

Malta offers access to a Patent Box Regime, providing tax incentives for income derived from qualifying intellectual property. Hey there! Thinking about using Malta for intellectual property (IP) purposes? Great choice! Malta’s tax system is super IP-friendly, especially when it comes to handling royalties. Let’s break it down in a way that’s easy to digest and understand.

Types & Taxation of Royalties

Why Malta for Royalties?

Malta has this cool setup where you can route royalties through Intellectual Property (IP) Holding Companies. Now, here’s the interesting part: the way royalties are taxed in Malta depends on whether they’re considered active or passive income. Let’s unpack that, shall we?

Active Royalties: What Are They?

Active royalties are those you earn from doing business, like licensing patents or trademarks as part of your trade. These are treated as business income, and Malta taxes them at a standard rate of 35%.

But here’s the awesome twist: when that income is distributed as a dividend to shareholders, Malta offers a 6/7ths tax refund. This refund brings the effective tax rate down to just 5%.

Example time:
Let’s say a Malta IP Holding Company owns the rights to a popular software application and licenses it to various tech companies around the world. These companies pay royalties to the Malta IP Holding Company for the right to use the software.

Because these royalties are earned as part of the company’s licensing business activities, the income is classified as active income. It is taxed at Malta’s standard corporate tax rate of 35%.

Now here’s the good part: When the Malta IP Holding Company distributes the remaining income to its shareholders as dividends, those shareholders can claim a 6/7ths tax refund. This reduces the effective tax rate to just 5%—making Malta a very tax-efficient place for handling IP income! Pretty cool, right?

This structure is ideal for businesses heavily involved in monetizing intellectual property through licensing deals. 

Passive Royalties: A Different Tax Path

Passive royalties are those that aren’t tied to a trade or business. If these royalties have suffered less than 5% foreign tax before reaching Malta, they’re considered passive income.

Here’s how they’re taxed:

  • 35% tax on the company’s income.
  • Shareholders can claim a 5/7ths refund, reducing the effective tax rate to 10%.
  • But wait, there’s more! By using the Flat-Rate Foreign Tax Credit, the rate can drop even further to just 6.25%.

Special Tax Perks for Qualifying Royalties

Malta offers a complete tax exemption on certain types of royalties. If your royalties come from patents or copyrights, they might qualify for this exemption. It doesn’t matter whether the IP was developed in Malta or abroad—it’s all good!

Even better? Any profits from these exempt royalties can be distributed as tax-free dividends to shareholders. This exemption applies all the way up the chain, no matter how many times the profits are distributed.

No Withholding Taxes on Royalties

Here’s another reason why Malta rocks for royalties:

  • No withholding tax on outbound royalties or dividends.
  • Malta has signed about 70 double tax treaties, which usually cap withholding taxes on royalties paid to a Maltese company at 10% or lower. Some treaties even set the rate at zero.

On top of that, as an EU member, Malta benefits from the Interest and Royalties Directive, which means royalties flowing from EU-associated companies can avoid withholding taxes altogether if certain conditions are met.

Why IP owners love Malta

  • Reduced taxes significantly on income from IP.
  • Np withholding taxes.
  • Increased profits through efficient IP management.
  • Strong network of double tax treaties.
  • Protected intellectual property internationally under robust legal systems.
  • Long-term stability and reliability for your business operations.

So, if you’re looking to make your intellectual property work smarter (not harder), Malta might just be your perfect match!

Feel free to ask if you have questions or need help setting up a company in Malta! 

Contact Us Today!


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