The Trust and Trustees Act 2004
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 services.
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