Overview of a Trust in Malta

What is a Malta Trust?

Maltese law defines the concept of a trust as a “legal institute” where the settlor places the ownership of their assets to the trustee for the benefit of the beneficiaries. Trusts have become common practice for families looking to preserve and manage their wealth for future generations. The creation of a trust was first legalised in Malta in 1988 however, the Trusts & Trustees Act (TTA), came into force in 2005 which has streamlined and simplified the trust regime making Malta an attractive jurisdiction for international clients.

The Legal Concept of a Malta Trust

In Malta, a trust is not a legal entity, but a form of legal relationship. The settlor, this being an individual or corporate entity will use the trust to either distribute funds, shares or property to another individual or corporate entity known as the trustee. The trustee will then either distribute funds, shares or property to another individual or corporate entity, referred to as the beneficiary. In most cases, the trustee is a corporate entity in order to ensure continuity.

For a trust to be effective three key elements must be in place:

  1. The intention of the settlor to create a trust;
  2. The trust asset(s);
  3. A beneficiary or beneficiaries.

The absence of any of the three can result in the termination of the trust or hinder its formation.

Taxation on Maltese Trusts

In regards to Maltese tax law, a trust is brought within the Malta tax net and all income attributable to a trust is taxed in Malta where at least one of the trustees is a Malta tax resident. The income attributable to a trust comprises all income or gains chargeable to tax under Maltese law derived by the trustees from the property that has been settled in trust or property acquired in the course of the administration of the trust throughout such trust’s lifetime.

In Malta, a licensed trustee has the option to elect for the trust to be treated as a company that is ordinarily resident and domiciled in Malta for tax purposes. This is made possible when:

  • The trustee is an authorised trustee;
  • The trust has been established by an instrument in writing;
  • The election is made within 30 days from constitution of trust or appointment of Malta resident trustees;
  • Income attributable to the trust consists only of dividends, interest, royalties, capital gains and income from investments.

Why Malta?

The settlor of the trust can have peace of mind when establishing a trust in Malta, Malta is known for being a highly regulated EU Member State with an up-to-date legislative system in place. Malta also boasts an array of highly skilled accountants, bankers, lawyers and investment advisors holding overseas qualifications while having local and international experience.

For more information on how Zeta can assist you please contact our Business Development team on bd@zeta-financial.com.