In September, 2004, a bill to update Maltese legislation
on trusts and trustees was published in the Government Gazette.
Under the new Act, Maltese residents and companies were, for the
first time, permitted to use local trusts. The Trusts and Trustees
Act 2004 became effective in January 2005.
"The purpose of this new law is to continue the process
started in 1994 where the offshore laws are eliminated and Malta
re-directed to the development of an onshore financial centre,"
said MFSC chairman Joe Bannister at the time.
Mr Bannister added that the bill eliminated the
nominee company regime, and furthered Malta's international obligations
on non-discrimination, transparency and prevention of money laundering.
According to Bannister, the bill aimed to make
Malta an attractive jurisdiction for trust administration. Another
purpose of the legislation is to ensure that trusts will not create
any anomalies in the taxation of income.
“The tax implications have been worded in such
as a way that the new law may be used as a tax planning tool but
not for tax avoidance. Any transfer of assets into a trust or
any change of beneficiaries within the trust will be treated as
taxable," stated Kevin Valenzia, chairman of the Financial Services
Consultative Council and partner at PricewaterhouseCoopers.
In April, 2005, the Maltese government said it expected
the new trust laws to bring about an increase in employment and
foreign earnings and make Malta more competitive as an international
financial services jurisdiction.
In May 2007, the Bank of Valletta announced that
it had launched a new account based on the concept of a trust
which, the bank said, would not only provide customers with discretion
and confidentiality, but also a flexible and useful estate and
inheritance planning vehicle.
"By opening a BOV Trust Account, customers would not only
be ensuring that their money is in safe hands but will also be
benefiting from the most exacting standards in terms of discretion
and confidentiality,” said Paul Gauci, Head of BOV’s
Trustee Services Unit.
“Discretion and confidentiality are key features that result
from having the account opened in the name of the Bank that acts
as Trustee and that is responsible to hold the funds for the benefit
of the named beneficiaries selected by the depositor (the Settlor),”
explained Dr. Andrew Chetcuti Ganado, Legal Advisor at BOV’s
Trustee Services Unit.
“Unlike any other bank account, upon the Settlor’s
death, the designated beneficiary/beneficiaries of the BOV Trust
Account will have immediate access to the funds in the account.
As a result, this account is ideal to avoid any formal, lengthy
and cumbersome succession procedures,” he added.
Dr. Chetcuti Ganado explained further that, unlike a will which
is, effectively, a public document, the BOV Trust Account ensures
that upon the Settlor’s death nobody needs to know who the
designated beneficiaries are and how much each beneficiary is
entitled to. He concluded that Malta is rapidly establishing itself
as a centre of Trust Administration.
Indeed, in 2008, the Malta Financial Services Authority reported
that there had been steady growth in the number of licences it
had issued in the first seven months of that year, including in
the trust sector. Five trustee services companies were registered
during the period, with two of these companies offering fiduciary