In 2004, Malta enforced the Trust and Trustees Act that allowed trusts to be set up in this country. However, the notion of “trust” was present in the Maltese law system since the Jersey Trust Law in 1984. The Maltese government allowed trusts to be settled because they are considered an important agent that influences financial enhancement. According to the Maltese Trust and Trustees Law, a trust is a commitment that ties one or more persons, called trustees, in order to manage a property that they control, called trust property, for the benefit of third parties, called beneficiaries, or for humanitarian purposes, as agreed upon the terms and conditions of the trust.
Maltese trusts are mainly formed of a settlor, a trustee or more trustees and a beneficiary, as it follows:
- the settlor is the person making the trust and offering the trust property;
- the trustee is the person controlling the property according to the terms of the trust;
- the beneficiary is the person who gains from the trust or benefits from the distribution of the property held in trust.
Setting up a trust in Malta requires a trust deed that mentions all persons, stipulates who the trustee is and who the beneficiary is and the trust fund or trust settlement that represent the property to be hold by the trustee. The property can be represented by any assets, movable or immovable.
There are three types of trusts in Malta: express trusts, implied trusts and constructive trusts. The express trust is openly claimed by the settlor; the implied trust derives from the undeclared but supposed intention of the settlor and the constructive trust derives from the operation of law and is not conditioned by the settlor.
Trusts can be established in Malta in accordance to the Maltese statutory regulations. Maltese companies usually offer administrative support to trusts. The Malta Financial Services Authority (MFSA) is the main regulatory body that authorizes and supervises trustees. The MFSA also decides the services Maltese companies can provide to trusts and the terms they will be provided under. If companies want to provide trustee services, they must submit an application with the MFSA requesting authorization to perform corporate professional trustees duties.
Redomiciliation is also possible for trusts according to the continuation of companies’ rules stating that foreign trustees can migrate to Malta (if they come from an approved jurisdiction) without the necessity of liquidating the trust in the country it was founded
According to the Maltese taxation system, trusts will be subject to the corporate tax rate of 35% according to the Income Tax Act. However, Malta has also double tax treaties with other countries that can influence the tax rates for Maltese trusts.
Setting up trust in Malta has gained popularity in the last years because it comes with some advantages:
- Malta offers adaptability in drawing the trust deed;
- distributions of the assets upon the settlor’s death is efficient and requires the fulfillment of certain conditions;
- the assets are protected in case of any claims;
- the possibility to nominate a successor trustee, if the settlor passes away.