Many high-net-worth are choosing Malta as a place to invest due to the favourable tax regime in place for companies, a booming economy, access to the European Union’s markets and strategic geographic position.
Malta is also renowned for its excellent wealth management schemes, estate planning and corporate finance offerings. Malta has also regulated cryptocurrency.
One of the options available to investors in Malta is the setting up of a special purpose vehicle. A special purpose vehicle is defined as a subsidiary of a company which is protected from the parent company’s financial risk.
In the eyes of the law it is recognised as a legal entity which is created for a limited businesses acquisition or transactions.
It can also be used as a funding structure which can be called a special purpose entity. Under Maltese law, SPVs can take the form of limited liability companies or a trust.
Special Purpose Vehicle tax considerations
The Corporate Tax Rate in Mata is charged at a rate of 35 percent, however, companies canbenefit from the full imputation system to deliver an effective tax rate of between 0 to 5 percent.
An SPV in Malta can reduce its costs further in relation to interests, premiums, issuance of securities; administration charges related to day to day running of the SPV and transfer of securities.
Malta’s tax regime also allows for residual of the amount equal to remaining income.
How to register an SPV in Malta
Registering and setting up an SPV in Malta falls under the remit of the Malta Financial Services Centre and more specifically, the Securitization Act, Chapter 484 of the Laws of Malta.
According to the Act, SPVs can take the form of trusts, investment companies and commercial partnerships. Other forms, as mentioned earlier, include limited liability companies and public companies.
There are differences in the way SPVs are set up in Malta, depending on whether it is in the form of a trust or a commercial entity.
In the case of a trust, it is set up through a written legal agreement. Types of trusts include discretionary, accumulation and maintenance, fixed interest, spendthrift or charitable trusts.
The commercial entity form of SPV must be incorporated through the Companies Registry.
The services offered by the Registry of Companies has an arm to assist foreign investors in creating SPVS. In accordance with European Union Directive 1075/2013, all SPVs must appoint a service agent.