The Guidelines in Relation to the Consolidated Group (Income Tax) Rules

Malta recently published on 31 May 2019 the Consolidated Group Income Tax Rules through Legal Notice 110 of 2019. The Rules include that a parent company may make an election in order for itself and its ninety-five percent (95%) subsidiary(s) to form a fiscal unit.

For a subsidiary to qualify, at least two of the following conditions below must be met:

• The parent company holds at least 95% of the voting rights in the subsidiary company;
• The parent company is beneficially entitled to at least 95% of any profits available for distribution to the ordinary shareholders of the subsidiary company; and
• The parent company would be beneficially entitled to at least 95% of any assets of the subsidiary company available for distribution to its ordinary shareholders on a winding up.

Apart from the above conditions, the 95% subsidiary must have its accounting period beginning and ending on the same dates as the accounting period of the parent company in all the years in which it forms part of the fiscal unit.

Where a parent company elects to form a fiscal unit with its 95% subsidiary(s), it is then effective from the year of assessment in which the election is made, unless the due date for the subsidiary’s tax return has already passed, in such cases the election is effective from the following year. To read the full guidelines in relation to the consolidated group (income tax) rules Click Here.

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