Setting up a trust in Malta is straightforward and we can help with all aspects, from drawing up the trust, working out customized solutions to your needs and making sure that you and your beneficiaries have peace of mind.
Malta has had in place the Trust and Trustees Act since 2004 but trusts have been operational since 1984. They are considered a useful extra in the way of financial options. A trust is an obligation that connects one or more persons, known as trustees, to manage a property they control. This is called a trust property and it is held for the benefit of third parties, called beneficiaries, or for benevolent purposes and are agreed in the terms and conditions of the trust.
Why use Malta as a location for settling your assets under a Trust?
Malta is a member of the EU and is an established and reliable country with a top location in the heart of the Mediterranean. It has an open law system and highly advanced legislation. Private international law and the Hague Convention is recognised in the applicable law. Combined with a highly regulated financial services system overseen by the Malta Financial Services Authority, they are an attractive option for non-residents from a tax perspective. The set-up and cost of running a trust in Malta is significantly lower than most other foreign jurisdictions.
Different types of trust in Malta
The three main elements are a settlor, a trustee and a beneficiary.
- A settlor makes the trust and offers the property
- A trustee controls the property
- A beneficiary is the person who gains from it or who benefits from any distribution of the property.
The three types of trust
The three types are constructive, express and implied. The constructive derives from the operation of the law and is not conditioned by the settlor. The express is claimed openly by the settlor and the implied stems from the undeclared but supposed intention of the settlor.
How to set up a trust in Malta
You must set up a trust deed that specifies who the trustee is, who the beneficiary is and the trust fund or settlement which represents the property held by the trustee. It must also mention all persons affected by the trust. The main difference between a Maltese company and a trust is that the trust makes a legal distinction between the beneficial and the legal owner of the property.
What are the main benefits of setting up a Trust?
There are various good reasons to set up a trust and we will list the following as among the most important. First it is confidential and is not required to be registered with a public authority. Second is asset protection. Your assets settled in trust do not form part of your estate but you can still enjoy the benefits of them. Also they are protected against any future creditors or lawsuit liabilities. Third, family members are protected as the trust can be used to hold property for those too young or otherwise incapable of managing it themselves. A trust can provide an impartial administration of your estate if you opt for an outside agency to be the trustee. Fourth, estate planning, you can decide how and when family members inherit your assets and thus you avoid any costly complications arising from death. Fifth, succession tax planning: any permanent property which is settled in trust, does not form part of your Estate any longer and will therefore not be subject to any succession tax upon your death. The property may be held in Trust primarily for yourself (the Settlor) throughout your lifetime and thereafter for your children and grandchildren. Also, on the death of your children, no succession tax is charged when the same property passes on to their heirs – that is, in effect, your grandchildren. A Trust in Malta has great flexibility. It may last for a maximum of one hundred years, as such it is highly versatile and can be organized to meet your specific needs.
Can I move a trust from my home country?
Redomiciliation is possible for trusts and foreign trustees can migrate to Malta from an approved jurisdiction and it is not necessary to liquidate the trust in the country it was made. Trusts are subject to a corporate tax rate of 35% but double tax treaties can influence the tax rates depending on the country involved.
We are available to advise on a range of services regarding trusts and upon contact can set up and administer a trust to your complete satisfaction.
If you are interested in setting up a Foundation, click here