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Set Up a Maltese Trust

Updated on Sunday 03rd April 2022

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According to the Trust and Trustees Act in Malta, a trust is a commitment that ties one or more persons. These are called trustees and together they can manage a property for the benefit of third parties, called beneficiaries. Control of properties for humanitarian purposes is also valid, if they agree upon the terms and conditions of the trust.
 

Composition and types of trusts in Malta

 

A trust in Malta is mainly formed of a settlor, a trustee or more trustees and a beneficiary, as it follows:
 
  1. the settlor is the person making the trust and offering the trust property;
  2. the trustee is the person controlling the property according to the terms of the trust;
  3. the beneficiary is the person who gains from the trust or benefits from the distribution of the property held in trust.
 
Setting up a trust in Malta requires a trust deed that must  mention all persons. It also stipulates who the trustee is and who the beneficiary is and the trust fund or trust settlement that represent the property to be hold by the trustee. The property can be represented by any assets, movable or immovable.
 
The difference between usual Maltese companies and trusts is that the trust makes separate distinction between legal and the beneficial owner of a property.
 
There are three types of trusts in Malta: express trusts, implied trusts and constructive trusts. The express trust is openly claimed by the settlor; the implied trust derives from the undeclared but supposed intention of the settlor and the constructive trust derives from the operation of law and is not conditioned by the settlor.
 

The establishment and taxation of a trust in Malta

 

Trusts can be established in Malta in accordance to the Maltese statutory regulations and Trust and Trustees Act in Malta. Maltese companies usually offer administrative support to trusts. The Malta Financial Services Authority (MFSA) is the main regulatory body that authorizes and supervises trustees.
 
The MFSA also decides the services Maltese companies can provide to trusts and the terms they will be provided under. If companies want to provide trustee services, they must submit an application with the MFSA requesting authorization to perform corporate professional trustees duties.
 
According to the Maltese taxation system, trusts are subject to the corporate tax rate of 35% according to the Income Tax Act.  However, Malta also has double tax treaties with other countries that can influence the tax rates for Maltese trusts.
 

Types of trusts available in Malta

 
Fixed interest trusts and discretionary trusts are the most important types of trusts in Malta. The first option does not involve the control of trustees for the interest offered to the beneficiaries. Regarding the second category, the trustee identifies the interest distributed to the beneficiaries.
 
Malta is recognized as the sole jurisdiction because the trust in Malta remains active for 125 years. This is mentioned in the Trust and Trustees Act in Malta.
 

Are private trusts recognized in Malta?

 
Yes, private trusts are recognized in Malta and can be established with the help of a notary deed. Small scale trusts are usually interested in this type of trust, especially if the parties involved have a collaboration or relationship of at least 10 years.
 

Reasons why you could set up a trust in Malta

 
In principle, those interested in trusts in Malta are thinking about the beneficial tax system. In addition to these issues, domestic and practical issues are also discussed. Here are some details:
 
  1. Assets can be kept until the minors listed in that document reach the optimal age to benefit from that trust.
  2. There is some protection offered to creditors. They are not legally accessible by private trusts in Malta.
  3. Disposition of the goods to the heirs of the settlor without the goods being transferred immediately after his/her death. A will can also mention such aspects.
  4. With the help of a trust in Malta estate taxes can be minimized.
  5. Also, a trust can be set up when two people want to make investments together but based on specialized help.
 
So, there are plenty of reasons why trusts in Malta can be registered. As soon as you decide on the goal for the Maltese trust, we invite you to talk to our local agents and find out all the formalities. Ask us about fiduciary services in Malta.
 

Attributes of a settlor in Malta

 
A settlor is a person who can set up a trust in Malta and has various obligations. Among them, we mention the following:
 
  • He/she has the right to ask the court for guidance on establishing the validity of a trust.
  • He/she can change the terms and conditions if the situation requires it.
  • He/she has the ability to appoint an investment manager or  advisor.
  • The trustee is obliged to own a settlement property in case of loss of interest, termination of the trust, or lack of an existing or possible beneficiary.
  • He/she can seek information from the administrator, according to the terms of the Trust Deed, concluded at the notary.
  • He/she has the right to grant any beneficial interest in the fiduciary property.
  • It may reserve any power to appoint, remove or add beneficiaries, agents or protectors, as Trust and Trustees Act in Malta mentions.
 

The advantages of a Maltese trust

 
Setting up trust in Malta has gained popularity in the last years because it comes with some advantages:

 

  • Malta offers adaptability in drawing the trust deed;
  • distributions of the assets upon the settlor’s death is efficient and requires the fulfillment of certain conditions;
  • the assets are protected in case of any claims;
  • the possibility to nominate a successor trustee, if the settlor passes away.

 

Why invest in Malta

 
Malta continues to be on the list of those looking for stable financial markets. Business is accepted in any field of interest, as well as investments. Foreigners benefit from an experienced and multilingual workforce, but also an optimal business climate. Here are some aspects of Malta's economy:
 
  1. More than USD 240 billion was the total FDI for Malta in 2020.
  2. Malta ranked 88th out of 190 world economies in terms of business conditions in 2020.
  3. There has been economic growth of about 4.8% in 2021.
  4. Financial and insurance services is the sector that attracts the most foreign investment.
  5. Malta is the point of contact for over 115 ports worldwide.

 

If you want fiduciary services in Malta and you need details about how to set up a trust in Malta, you can contact our company formation agents. We can tell you more about trusts in Malta.

 

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