Irrespective of whether a person is a foreigner or Maltese national, they have the right to establish a Maltese foundation. They must comply with the approved regulations in order to do so. Our dedicated team of specialists can guide you through the process to make it as straightforward as possible but the following are the main points you need to bear in mind.
Range of operations
Foundations may embark on any legal enterprise which is not profit-making in nature. They can however, have commercial property such as shares, intellectual property, real estate or vessels as long as they take no active role in their process. Active trading is not permitted and if that is the case then a private limited company is likely to be the best option.
Different types of foundations
1. Private or purpose
Foundations can be either private or purpose. Private foundations are set up for the advantage of a beneficiary or a group of beneficiaries and do not need to be benevolent in nature. There are a number of tax benefits to having a private foundation and as such, they are the most attractive option. Purpose foundations are usually philanthropic and can subsequently be registered as charities and receive tax exempt status provided this is agreed by the local tax authorities. We can advise you in greater detail of the various tax benefits but also see our section on taxation of a foundation.
2. Public deed or will
A foundation can be set up via a public deed or a last will which must be published in Malta. This is similar to the articles of association and memorandum of understanding of setting up a private company. It must have a name in conformity with the law and pay in a minimum initial capital or asset of one hundred and sixty-four euro and sixty-nine cents (EUR 1,164.69). It also must have an address in Malta where communications can be received and where information can be requested about its activities. If the administrators are outside Malta then a local administrator must be appointed. If the means to establish a foundation is a public deed then it would have to be published by a public notary and then registered in the Public Registry.
3. Endowment
In order to set up the foundation, the founders must make the above mentioned endowment unless it is for a social purpose or as a non-profit making entity in which case the amount is a minimum of two hundred and thirty-two euro and ninety-four cents (EUR 232.94). If the property is not cash or any other quantifiable assets then the founders have to make a statement that the property is indeed of such value as required by law. These assets may be then used by the foundation or in fact they do not need to be maintained by the foundation as a minimum asset. We have a section on setting up trusts in Malta which you can access here. It also explains the difference between trusts and foundations. Our dedicated specialists are on hand to guide you through the process of setting up a foundation whichever option you choose.