Trust & Foundation services
Malta has trust and foundation legislation that allows for more efficient tax planning in a variety of situations.
Malta has enacted the Trusts and Trustees Act (Chapter 331 of the Laws of Malta) to allow for the creation of trusts in Malta. The legislation regulates situations where the settlor and beneficiaries of the trust are all non-resident in Malta or hold Permanent Residence Permits in Malta and the tax implications of trusts are limited to these situations. Where the settlor and/or beneficiaries are resident in Malta, the tax situation is completely different.
The MFSA (The Malta Financial Services Authority) is the Regulator for financial services in Malta and is the Authority responsible for the regulation, supervision and authorization of trustees in Malta.
A trust can come into existence by an instrument in writing, or by a will, or by a unilateral declaration of trust by the trustee. A trust can be set up in such a way whereby the settlor is the sole beneficiary and even a company (whether registered in Malta or not) can be the sole beneficiary of a trust. Trusts can be fixed, discretionary or charitable in the usual recognized way.
Legislation in Malta allows the founder to set up a ‘private’ or a ‘purpose’ foundation. A foundation is defined as:
“An organisation consisting of a universality of things constituted in writing, including by means of a will, by a founder or founders whereby assets are destined either (a) for the fulfillment of a specified purpose or (b) for the benefit of a named person or class of persons, and are entrusted to the administration of a designated person or persons. The patrimony, namely assets and liabilities, of the foundation is kept distinct from that of its founder, administrators or any beneficiaries.”
A private foundation is set up by the founder for the private benefit of one or more persons, or a defined class of persons in which the beneficiaries must be identified. Unlike a charitable foundation, a private foundation does not solicit funds from the public. On the other hand, a public foundation may be set up for a particular lawful purpose.
Our law provides that a foundation must be constituted in writing, via a public deed inter vivos or a public or secret will. The deed of the foundation must also be registered with the Office of the Registrar of Legal Persons, which is an office set up for the specific purpose of undertaking the registration of legal persons in general.
The general rule is that the term of a Foundation’s life cannot exceed 100 years and where no term is specified, a Foundation shall last for 100 years from its establishment. Exceptions exist in certain cases.
We will be happy to provide you more information about Trusts, Foundations and their tax implications based on your situation. Click here to contact us.