Ready to form a fiscal unit in Malta?

Eligibility is the first step. The parent company must hold at least a 95% qualifying shareholding at the end of the year preceding the year of assessment in which an election to form such fiscal unit is made in each subsidiary joining the fiscal unit. If the principal taxpayer holds less than 100% qualifying shareholding in a subsidiary, approval from the minority shareholders is required for the subsidiary to join. All fiscal unit members must have the same accounting period, and none can be part of more than one fiscal unit at the same time. 

Before being eligible to apply, any overdue balances or outstanding filing requirements in terms of the Income Tax Act, the Value Added Tax Act and the Final Settlement System (FSS) Rules must be addressed. Non-Maltese entities may join a fiscal unit subject to certain conditions being satisfied. 

An application must be submitted electronically through the tax portal of the principal taxpayer on the website of the Malta Tax and Customs Administration. All fiscal unit members must use the same registered tax representative. Practically, this means appointing a tax representative, confirming the group’s tax status, and mapping the ownership chain before starting the online process.

The principal taxpayer assumes the rights, duties and obligations under the Maltese Income Tax Act of the fiscal unit. Most transactions taking place between members of the fiscal unit are ignored for Maltese income tax purposes. One notable carve-out remains: transfers of immovable property situated in Malta or transfers of shares in property companies.

The principal taxpayer is required to file a single consolidated income tax return prepared on the basis of the consolidated audited financial statements of the fiscal unit on an annual basis. Each company continues to manage its own VAT and FSS obligations outside the fiscal unit. 

Key deadlines