Malta tax on Retirement Schemes held through Trust

Trudy Marie Attard | Published on 08 Aug 2012

Ccmalta Default

Registration of Trusts for Tax purposes

Where at least one trustee is resident in Malta, that trustee has the obligation to ensure that the trust is registered for tax purposes within thirty days from the date of appointment of the first Maltese resident trustee. Registration for tax purposes is irrevocable until the trust is terminated or until such time where the trust has no trustees that are resident in Malta.

Trusts that have made an election to be treated as companies for tax purposes have the obligation to meet the corporate tax compliance requirements.

Where a retirement fund or scheme is constituted as a trust that is registered by the Malta Financial Services Authority under the provisions of the Special Funds (Regulation) Act and the fund or scheme is considered to derive trading income, the trustee cannot elect for the trust to be taxed as a company.

Distributions made to Beneficiaries from a Retirement Fund or Scheme

The income of a retirement fund or scheme that is authorised by the Malta Financial Services Authority under the Special Funds (Regulation) Act is typically deemed to constitute trading income. This characterisation also applies to retirement funds or schemes that are constituted as trusts.

Distributions of Retirement Benefits arising from Retirement Funds or Schemes to individuals that are beneficiaries of a trust are to be characterised as pensions for tax purposes.

Distributions made to beneficiaries may constitute income that is taxable in Malta even where the distributions are considered to be a pension arising in Malta. In these cases the beneficiaries of such trusts are required to register for income tax purposes and to submit an income tax return annually. Beneficiaries may authorise the trustee to register them and complete any required income tax returns on their behalf.

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