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Trusts & Foundations

The Trusts and Trustees Act of 2004, of Malta is modelled upon the UK law of trusts (Jersey) – providing assurance and peace of mind for international settlors and beneficiaries.

Trusts in Malta provide a flexible estate and commercial planning method for both private individuals and commercial applications. Further, with the advent ofMalta joining the EU, Malta is now seen as a secure, accessible and regulated region for trusts and their administration.

Any trust – no matter of what jurisdiction – should only be considered and set up after considering the overall estate and tax plan of the individual settlor and proposed beneficiaries.

A Malta private trust is a flexible method of:

Avoiding lengthy probate processes and associated expenses Minimising estate taxes – shifting taxes to beneficiaries who enjoy more favourable tax rates
Preserving assets from creditors Protecting assets for a child beneficiary
Setting up a charitable instrument Upon settlor’s death or insolvency -accounts not frozen
Not part of matrimonial property upon death

 

A Malta commercial trust

Unit Trusts Allows the holding of any property for any person irrespective of nationality or residence
Collective investments schemes The holding or real estate (especially during construction) securitisation
As a form of guarantee

 

Some Advantages of a Malta Trust:

  • For private individual use or as a commercial application
  • Allows the holding of any property for any person irrespective of nationality or residence
  • If desired and stated, the laws of a jurisdiction other than Malta may govern the trust
  • Trustees are highly regulated by the Malta Financial Services Authority (‘MFSA), where they must undergo and meet ‘fit and proper’ investigations – unlike some other jurisdictions

Foundations

Malta foundations can be set up in two ways – a trust deed or via a last will and testament. There are minimum capital requirements, namely an endowment of money or property in the sum of EUR 165.00 must be settled, or if the foundation is of a purely social or charitable objectives a sum of EUR 232; although there is no requirement to maintain the capital minimums.

Taxation of Trusts

No tax levied upon trust income received by beneficiary, No capital gains tax levied on non – residents on transfer of assets located outside of Malta.

Trusts treated as Companies

A trustee may elect that the trust be treated as if it were a company ordinarily resident and domiciled in Malta. Any distribution of profits will be taxed at the prevailing corporation rate, currently 35%.

The distribution of profits will be treated as if it were a dividend and non – resident beneficiaries can claim a tax refund.