Malta: Types of Company
The Offshore Trusts Act 1988 was amended by The Trusts and Trustees Act 2004, which became effective in January 2005, and allows Maltese residents and firms to use local trusts, while also furthering Malta's international obligations on non-discrimination, transparency and the prevention of money laundering.
The government believes that the legislation, which creates a more streamlined and simplified trust regime, will make Malta much more attractive to both international and domestic clients, by offering greater flexibility and certainty. The new Act eliminates the nominee company regime, and introduces a licensing regime for professional trustees.
Until 2005, trusts in Malta were based on the Offshore Trusts Act 1988, which was largely based on Jermal trust law, itself a common law implant stemming from English trust law. Trusts under this Act must have non-resident settlor and beneficiaries, and trust assets must not include Maltese real estate (permitted under the new Act).
The Recognition of Trusts Act 1994 gave effect to the Hague Convention, and results in a division of trusts into:
- Maltese trusts, where the proper law of the trust is Maltese, and the governing legislation is The Trusts and Trustees Act 2004; and
- Foreign trusts, governed by whatever law the settlor has nominated..
All trusts, including foreign ones, must register with the Maltese Financial Services Centre (MFSC), which costs EUR250 for application and processing and EUR100 upon approval. A further EUR2,500 is payable upon the issuance of approval and annually thereafter. Foreign trusts which do not register with the MFSC will not benefit from the tax advantages of registered foreign trusts (they are tax-exempt). Under the 2004 Act, transfers of assets into a trust or a change of beneficiaries may give rise to a charge to tax.
Under the 2004 Act, a registered trust must have a Maltese Professional Trustee as one of its trustees, which files an annual declaration of conformity with the law.
It is likely that a Malta-registered trust will often be a more effective holding vehicle than the International Holding Company (see above, and see Offshore Legal and Tax Regimes). Trusts are able to use the extensive network of Maltese Double Taxation Treaties.
There are no special provision in Maltese law covering Unit Trusts, which are therefore treated in the same way as ordinary Maltese trusts, and have the same tax regime.