A shareholding in a non-resident company qualifies as a participating holding if the Maltese company holds equity shares in a non-resident company or a qualifying body of persons and it:
- holds directly at least 5% of the equity shares of the non-resident company; or
- is an equity shareholder in the non-resident company and is entitled at its option to purchase the balance of the equity shares of the non-resident company or has the right of first refusal to purchase such shares; or
- is an equity shareholder in the non-resident company and entitled to be represented on the Board of directors; or
- is an equity shareholder which invests a minimum of €1,164,000 in a company not resident in Malta and such investment is held for a minimum uninterrupted period of 183 days; or
- holds the shares in the non-resident company for the furtherance of its own business of the Malta company but not held as trading stock for the purpose of trade.
A shareholder of a Maltese company may claim a full refund of the tax paid on the dividends and capital gains received from a participating holding if the holding in the non-resident company satisfies at least one of the following anti-abuse provisions:
- it must be resident or incorporated in the EU;
- it must be subject to foreign tax of a minimum of 15%;
- it must not derive more than 50% of its income from passive interest or royalties.