On 31 May 2019, the Government introduced a new tax unit regime to make the parent company or holding company of a group the main reference for dealing with the tax authorities, including on behalf of its direct and indirect subsidiaries.
A corporate group, through its main company, can also file a single tax return in 2021 for the year 2020.
Once the consolidated financial statements and tax returns have been filed by the parent company, therefore, separate tax returns will no longer be required for the other companies in the group.
Consequently, any tax refunds will also be credited to the reporting parent company.
In order to benefit from this facilitation, a procedure has to be initiated to form a so-called Fiscal Unity, a centre of fiscal unity, in order to converge all tax relations by a branched group into one entity.
In order to form a Fiscal Unity, the parent company must hold at least 95% of the votes in a subsidiary, be entitled to at least 95% of the profits available for redistribution and have at least 95% control over the activities of the subsidiary.
This also applies if the subsidiary is itself a holding company, as long as the parent company holds at least 95% of the rights to the profits.
The new Fiscal Unity therefore opens up a new range of opportunities for corporate groups considering investing in Malta from abroad.
It should be noted that even companies not registered in Malta can be covered by the Fiscal Unity of a group, provided of course that the parent company or the main taxpayer is a company registered in Malta.
The Commission for Revenue confirmed on 20 April 2021 that the procedures for the online filing of the tax return for the assessment year 2020 by the relevant taxpayer for the Fiscal Unit are open (see the Guidelines document).
For further information and advice on the Maltese tax system and the new opportunities offered by the Fiscal Unity please contact the Malta Business team by filling in the following form.