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Setting up a trust fund in Malta

Trust funds in Malta are becoming a more popular way to manage property or funds for third party beneficiaries.

Malta introduced the Trust and Trustees Act in 2014, although they have been recognised by the legal system since 1984, when the notion was introduced under the Jersey Trust Law.

Under Maltese law, a trust is defined as a commitment by one or more individuals or entities (trustees) to manage and control a property or funds for third parties (beneficiaries) as agreed in the terms and conditions of the said trust.

Trust Funds in Malta

Trusts in Malta are formed by the settlor (the person offering the trust property or funds), the trustees who manage the trust and the beneficiaries who benefit therefrom.

In order to set up a trust in Malta, a trust deed needs to be drawn up to identify all persons and assign them to the various roles as mentioned above – the settlor, trustee(s) and beneficiaries.

The object of the trust is referred to as property which can be any type of asset – movable or immovable.
One of the main identifiers of a trust is that it makes a distinction between the legal ownership of the trust and the ultimate beneficiary. There are three types of trust – express trusts, implied trusts and constructive trusts.

Malta Financial Services Authority Regulation of Trusts Funds

Trusts can be set up in Malta under the country’s statutory regulations and are monitored and regulated by the Malta Financial Services Authority (MFSA).

The MFSA also regulates the authority of trusts by trustees. Most legal firms in Malta have a trust arm that is authorised by the MFSA. If legal firms or companies want to offer trust services, they must apply to the MFSA requesting authorisation to carry out trustee services.

Trusts from overseas can also be redomiciled in Malta, if trustees migrate to Malta from an approved jurisdiction, without having to liquidate the trust and reform it.

Taxation on Trusts Funds

Trusts in Malta are subject to a corporate tax rate of 35% under the national Tax Act. Malta is also a signatory to numerous double taxation agreements that can change the tax rates of Maltese trusts.

Malta is known to be a stable and adaptable financial jurisdiction with expertise in the trusts sector.
Maltese trust laws allow for swift and efficient dispensation of assets on the settlor’s death – subject to specific terms and conditions.

Assets in trusts are also protected in the event of any claims made. The law also allows for the possibility to nominate a successor trustee if the settlor passes away.

If you are interested in setting up a trust fund in Malta, you can contact our company formation specialist.