Malta Trust

Dr. Priscilla Mifsud Parker | 25 May 2017

Ccmalta Default

The use of trusts by both legal as well as natural persons has gained popularity particularly in Malta, regardless of whether the trust is employed for commercial or private purposes. The Maltese Trust may be used indiscriminately for international or local trusts due to the fact that the Trusts and Trustees Act makes no distinction between the two types of trusts.

Potential Uses of the Malta Trust

A Maltese Trust may be established for a wide range of motives, such as the institution of a trust with the purpose of providing a form of guarantee. The debtor, acting in the office of settlor to the trust may place any asset which is to be held under the trust for the benefit of his creditor, who would be acting as a beneficiary. This mechanism provides a more efficient, effective and non-time consuming form of guarantee than others such as pledge.

Malta Trusts for Property Ownership

A Malta Trust may also be used as a vehicle in relation to real estate and the management of property. In this type of trust the settlor would be the owner of property together with the investor who would generally be the bank, where assets such as monies may be placed under the hands of the trustee with the purpose of administration or management of the property. This trust instrument is extremely useful when the property in question is still under construction or in the event that alterations are being made to it, since the trustee will be managing the cash flow in relation to the works taking place.

Malta Trusts in Securitisations

Securitisation of funds may also occur through a trust since monies may be allocated to the trust in order to invest such monies so as any creditor would have a guarantee of payment. The securitisation trust possesses similarities to an investment trust where the trustee places monies under investment as instructed by the settlor; this is usually done through a letter of wishes.

Amongst the above possibilities, a trust may be used as an instrument for the benefit of either the settlor himself or any other third party beneficiaries such as descendants, spouses, other relatives or any other person the settlor desires.

The notion of a Maltese Trust is relatively new to the legislative realm however prior to its introduction, Maltese legislation catered for the regulation of offshore trusts with particular tax benefits to these types of trusts. Upon the introduction of the Trusts and Trustees Act, the legislator drafted and implemented the law with the intent of providing the advantageous tax implications applicable to offshore trusts to both residents and non-residents.

Tax Planning Using Malta Trusts

Malta’s popularity is increasing with a steady rate as a result of its purely territorial system when dealing with taxation schemes. This means that it is only the income derived or generated in Malta which is taxable under Maltese legislation. The Maltese Trust is set at an advantage to other foreign trusts particularly on the occurrence of certain criteria. Certain exemptions fall into play when the settlor is the sole beneficiary; in specific instances, when property has been donated to the beneficiary and when there has been no gain or loss from the transfer under the conditions laid down by law. Moreover, the exemptions apply to both commercial and private trusts. The above gives a general yet persuasive idea as to why Malta is at the forefront of the trust industry with lenient and unaggressive tax systems to trusts.

Furthermore, a trustee is deemed to be the owner of the property held under trust for all intents and purposes and in addition tax is only imposed on the beneficiary if it is imposed under his hands. In fact, no tax is imposed upon distribution of income to the beneficiaries.

Exemptions as to transfers or settlement of trust property are not unique exemptions since others could also be found under the Duty on Documents and Transfers Act as well as the Value Added Tax Act in relation to a trust dealing with trade.

Apart from the above listed advantages Malta has an outstanding number of Double Taxation Treaties concluded with countries all over the globe such as the UK and Korea with an ever more increasing quantity of treaties making it further far reaching. Moreover, Malta’s membership to the EU and participation in the euro zone makes the package all the more attractive.

Our Malta Trust Services

As a result, it is naturally evident that the Malta Trust is increasing in popularity. The industry in relation to professional trustees is consequently expanding, where Claris Trustees and Fiduciaries are one of the leading players and offer professional trustee services to local and international persons, whether legal or natural for commercial as well as private trusts.


Request More Information