Groups & Fiscal Units

In Malta, the concepts of groups and fiscal units are important for corporate tax planning, allowing companies within the same group to optimise their tax liabilities.

Companies in the same group can benefit from group relief, where one company’s tax losses can be surrendered to another company within the same group to offset taxable profits. This is particularly beneficial for reducing the overall tax liability of the group.

Consolidated Group Taxation (Fiscal Unit): Introduced in 2019, this regime allows companies to form a fiscal unit, where the parent company (referred to as the principal taxpayer) files a single consolidated tax return on behalf of the entire group. This effectively treats the group as one entity for tax purposes.

To form a fiscal unit, the parent company must hold at least 95% of the subsidiary’s voting rights. Both the parent and subsidiary must be tax residents of Malta.  The benefits:

• Administrative Efficiency: The regime simplifies tax compliance by reducing the number of tax returns that need to be filed, thus lowering administrative costs.
• Tax Optimisation: By consolidating profits and losses, groups can optimise their overall tax liability, taking advantage of Malta’s favourable tax rates and refund system.
• Simplified Intra-Group Transactions: Disregarding intra-group transactions for tax purposes within the fiscal unit reduces the complexity and potential tax consequences of these transactions.