Malta is positioned as an innovative, reliable and flexible EU financial services centre, hosting and attracting a variety of financial services businesses and structures. Over the last two decades, Malta’s fund industry has undergone significant growth, which has in turn led to the development of highly specialized custody and depository services.
The industry in Malta has bloomed, and the number of licensed custodians with the Malta FSA is on the increase with applications from both local and international
custodians. Whilst custodians established outside Malta, may easily re-domicile to Malta, custodians in Malta are able to delegate functions to custodians established outside of Malta. Malta custodians benefit from Malta’s full imputation system, resulting in a 5% net effective tax rate as well as highly competitive set-up, and operations costs; resulting in 20 to 30% less than in other European business hubs.
The Investment Services Act, 1994 is the main legislative framework for the regulation and supervision of custodians and depositaries providing custody services to collective investment schemes. The law and regulations provide for two types of licences covering fully-fledged custodians and depositary services. Custodians servicing any type of collective investment scheme shall require a Category 4a Investment Services Licence whilst depositaries (depositary lite) require a Category 4b Investment Services Licence - the latter are able to act as depositaries of Alternative Investment Funds (AIF) under the conditions set out in Article 21(3) last paragraph of the AIFMD (Directive 2011/61/EU) or which are subject to the so called ‘depositary lite’ regime under Article 36 of the AIFMD.