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Offshore Trusts Report: Malta

Legal Framework and Formation Rules and Fees

Trusts in Malta were based on the Offshore Trusts Act 1988 which was largely based on Jersey trust law, itself a common law implant stemming from English trust law. Trusts under this Act had to have non-resident settlor and beneficiaries, and trust assets could not include Maltese real estate. This legislation was amended by The Trusts and Trustees Act 2004, which became effective in January 2005.

Maltese trust law establishes the confidentiality of trust documents and dealings and the actions of the trustee. The Professional Secrecy Act 1994 imposes strict confidentiality rules on all professionals, officials and other individuals who receive privileged information in the course of their duties; the sanctions are heavy fines and imprisonment.

The Malta Financial Services Authority (MFSA) is responsible for the authorisation and supervision of trustees and the regulation of trusts. Its regulatory responsibilities also include the licencing and supervision of insurance companies, collective investment schemes and providers of investment services, banking and financial institutions.

Some of the main features of Maltese trust law are as follows:

  • The perpetuity period for Maltese trusts is 100 years;

  • The settlor may be a beneficiary under the trust;

  • Powers of the trustee are wide and flexible;

  • The office of Protector is allowed for;

  • Forced heirship provisions are excluded.

The Recognition of Trusts Act 1994 gave effect to the Hague Convention, and resulted in a division of trusts into:

  • Maltese trusts, where the proper law of the trust is Maltese, and the governing legislation is the 1988 Act (now called the Trusts Act 1988); and

  • Foreign trusts, governed by whatever law the settlor has nominated.

All trusts, including foreign ones, must register with the MFSA, for which a fee is imposed on registration and annually thereafter. Foreign trusts which do not register with the MFSC will not benefit from the tax advantages of registered trusts. A registered trust must have a Maltese nominee company as one of its trustees, which files an annual declaration of conformity with the law; no accounts or tax returns need be filed. (A nominee company is a Maltese company which has been authorised by the MFSC to provide services to trusts, and carries the supervisory responsibility on behalf of the MFSC.)

Both Maltese trusts and foreign trusts registered in Malta have by definition non-resident settlors and beneficiaries, and are exempt from income tax, except that they pay an annual fee to the Government.

Trusts do not have to file tax returns; the nominee company which is acting as their trustee makes an annual declaration of conformity with the law. No stamp duty or other taxes are payable in respect of trust transactions or documents. Trust property may be imported free of customs duty. A trust is not subject to exchange control unless a transaction is carried out with a Maltese resident.

Under the 2004 Act, transfers of assets into a trust or a change of beneficiaries may give rise to a charge to tax.

There are no special provisions in Maltese law covering Unit Trusts, which are therefore treated in the same way as ordinary Maltese trusts, and have the same tax regime.

It is likely that a Malta-registered trust will often be a more effective holding vehicle than the International Holding Company. On the other hand, when the assets to be held are Maltese real estate, it may be better to use an unregistered foreign trust. Trusts are able to use the extensive network of Maltese Double Taxation Treaties.

   

The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

New Zealand

New Zealand: Legal Framework and Formation Rules and Fees
New Zealand: Review of the Law of Trusts
New Zealand: Taxation of Trusts

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees

 


Malta News

International Support For Beneficial Ownership Info Exchange Wednesday 27/4/2016 More than 20 jurisdictions have signed up to a pilot project to exchange data held on beneficial ownership registers and registers of trusts, according to UK Chancellor George Osborne.

Barclays Warns Expats Of Possible Account Closures Thursday 23/7/2015 Barclays Bank has disclosed that it may close expat's accounts in Cyprus if they do not maintain a minimum balance of GPB100,000 (USD156,000).

DeMontford Bell Expands Malta Operations Wednesday 15/7/2015 DeMontford Bell, the UK-headquartered financial introducer, has announced that it is to expand its permanent operations in Malta to support the high volume of business migrating there.

Guernsey Named Europe's Top Captive Domicile Wednesday 28/1/2015 Guernsey has been named European territory of the year for captive insurance business for the third year running at the UK Captive Services Awards.

Malta Financial Services Sector Reports Strong Growth Tuesday 8/7/2014

The Malta Financial Services Authority has reported that 2013 has been another successful year for the financial services industry, with strong growth in the number of registered funds and retirement schemes.



Malta Increases Oversight Of Corporate Service Providers Wednesday 9/4/2014 The Malta Financial Services Authority has announced that it has received an overwhelming response to the introduction this year of licenses for Corporate Service Providers.

Malta Adapting Trusts Legislation, Regulations Monday 10/3/2014 Maltese Minister for Finance Professor Edward Scicluna has outlined a raft of legislation to support the development of the island's trust sector.

Liechtenstein, Malta Sign DTA Friday 4/10/2013 Liechtenstein's Foreign Minister Aurelia Frick and her Maltese counterpart George Vella have recently signed in New York a bilateral double taxation agreement between the two countries in respect of taxes on income and on wealth.

Malta Signs Tax Treaty With Macau Thursday 18/7/2013 The governments of Malta and Macau recently signed an agreement to work together to prevent tax evasion and tax avoidance.

Malta To Increase Oversight Of Trusts Sector Friday 22/3/2013 Malta's Financial Services Authority has launched a consultation on new reporting requirements that it proposes should soon be applicable to persons authorized to provide trustee and other fiduciary services under the Trusts and Trustees Act.