Trusts in Malta for foreigners

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In order to prevent criminal activities the Maltese government has recently modified the laws governing trusts in Malta for foreigners. The Offshore Trusts Act of 1988 was amended by the Trusts and Trustees Act of 2004, which came into force in January 2005. This law allows Maltese residents and companies to use the Maltese national trusts, while promoting the international obligation, Malta's non-discrimination, transparency and the prevention of money laundering.

The government believes that the legislation that creates a simplified and reliable regime will make Malta much more attractive for both domestic and international customers, by providing them security and flexibility. The new law eliminates the nominee company and introduces a licensing regime for professional administrators. Until 2005, trusts in Malta were based on the Offshore Trusts Act of 1988, which in turn was based on the Jermal Trust Law, derived from the English Trust Law. Under this law, the trustees and beneficiaries of trust should be non-residents and their assets must not include Maltese property.

Maltese foreign trusts 

Any law that the trustee has appointed governs Maltese foreign trusts. All trusts, including the foreign ones must be registered at the Financial Services Centre of Malta (MFSC). This procedure costs 250 Euros per application and 100 Euros per approval. The foreign trusts that are no registered in the MFSC will not benefit from the tax advantages of the foreign registered trusts (they are tax free). Under the 2004 law, the transfers of assets to a trust or a change of beneficiaries can lead to a tax payment. Under the 2004 law, a registered trust must have a Maltese professional administrator as one of its trustees and must submit an annual declaration in accordance with the law. There is no need to submit accounts or tax returns annually.

Here some of the main characteristics of the Maltese fiduciary law:

  • The period of perpetuity of the Maltese trusts is 100 years.
  • The trustier may also be a beneficiary of the trust.
  • The trustee`s authorities are broad and flexible.
  • The office of the protector of the trust is allowed.
  • Forced inheritance provisions are excluded.

There is no a special provision in the Maltese law that covers investment funds. Therefore, these are treated in the same way, as the ordinary Maltese trusts, sharing the same fiscal system.

The Maltese trust law fixes the aspects of confidentiality of the documents, agreements and shares of trusts. The Professional Secrecy Act of 1994 imposes strict confidentiality regulations on all the professionals, officers, and other individuals who receive privileged information in the exercise of their functions.  The penalties are stiff fines and prison.