Set Up a Maltese Trust

Malta allows for the incorporation of both trusts and foundations. Our trust experts in Malta are well-versed in the country’s legal and regulatory framework regarding trusts. They can provide a comprehensive understanding of the relevant laws, regulations, and requirements that need to be met when establishing a trust. If you are planning to set up a trust in Malta, the services of our agents are at your disposal. 

Quick Facts
Legal framework	Governed by the Trusts and Trustees Act in Malta.
Types of trusts	– Discretionary trusts; – Charitable trusts; – Fixed interest trusts; – Unit trusts;  – Spendthrift trusts; – Accumulation and maintenance trusts.
Trustee requirements	Can be an individual or a corporate entity to set up a trust in Malta.
Registration	With the Malta Financial Services Centre.
Duration of trusts	According to the Maltese Trusts and Trustees Act, it can stay in effect for a maximum of 125 years from its creation date.
Trust property	Assets can include: real estate, investments, and more. If you are interested in setting up a trust in Malta, the services of our agents are at your disposal.
Protector role	Optional role to oversee trustee actions.
Tax incentive	The money a trust must pay as income tax is a set amount of Lm200 (about US$600) each year.
Tax returns	Trusts are not required to file tax returns.
Succession planning	Trusts commonly used for wealth transfer and protection.
Anti-Money Laundering Compliance	Trustees must adhere to AML regulations.
Family trusts	Common for preserving family wealth and assets.
Residence of trusts	Trusts can be established for residents or non-residents.
Professional advice	We offer proper trust establishment and management. If you are interested in setting up a trust in Malta, please get in touch with us.
Benefits of Maltese trusts	– Asset protection; – Tax efficiency; – Estate planning.

Trust legislation in Malta

Malta follows the rules of the Hague Convention on the Law Applicable to Trust and their Recognition from 1984. Initially, Malta only allowed trusts for non-residents in offshore situations. However, in 1994, the Recognition of Trusts Act expanded this, making Malta a full-fledged trust jurisdiction. In 2014, Malta updated its trust laws to align with global changes. If you have questions about trust legislation in Malta, please get in touch with our company incorporation specialists in Malta. 

Trust instrument 

A trust instrument, also known as a trust deed or trust agreement, is a legal document that establishes the terms and conditions of a trust. It is a crucial component of creating a trust, as it sets out the rules and guidelines that govern how the trust will operate and how its assets will be managed and distributed.

The trust instrument typically includes the following key elements: identification of parties, trust property, purpose, trust terms and conditions, duration of the trust, revocability or irrevocability, trustee’s powers and duties, etc.

The trust instrument is a legally binding document and serves as the foundation for the entire trust arrangement. It provides clarity and certainty, guiding the trustees in fulfilling their obligations and ensuring that the trust operates following the settlor’s intentions and the best interests of the beneficiaries. If you are interested in registering a trust in Malta, please consult with our agents. They will not only guide but also practically assist you throughout the process.

Below is a video presentation about trusts in Malta:

Composition of trusts in Malta

Under Maltese law, a trust is essentially a binding agreement where one or more individuals or entities, known as trustees, commit to managing and overseeing a specific property, asset, or funds for the benefit of third parties, referred to as beneficiaries. This agreement outlines the terms and conditions governing the trust, specifying that the legal ownership of the property is transferred from the settlor to the trustees for the advantage of the beneficiaries.

In simpler terms, a trust exists when a person – the trustee – holds property either as an owner or with vested rights, with the obligation to handle it for the benefit of other individuals, known as beneficiaries. These beneficiaries may be identified or not yet determined, and the trust is not created solely for the trustee’s benefit or charitable purposes. It’s important to note that a trust is not a distinct entity, it represents a legal relationship without an independent legal personality. The assets within the trust, distinct from those of the settlor, trustee, and beneficiaries, ensure enhanced protection.

Setting up a trust in Malta requires a trust deed that must mention all persons. It also stipulates who the trustee is and who the beneficiary is and the trust fund or trust settlement that represents the property to be held by the trustee. The property can be represented by any assets, movable or immovable.

The difference between usual Maltese companies and trusts is that the trust makes a separate distinction between the legal and the beneficial owner of a property. If you have any additional questions in this regard, please consult with our company formation specialists in Malta.

The establishment and taxation of trust in Malta

Trusts can be established in Malta under the Maltese statutory regulations and Trust and Trustees Act in Malta. 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 apply with the MFSA requesting authorization to perform corporate professional trustees’ duties.

The money a trust must pay as income tax is a set amount of Lm200 (about US$600) each year. However, Malta also has double tax treaties with other countries that can influence the tax rates for Maltese trusts. 

Financial Services Authority and Auditors in Malta

The Malta Financial Services Authority (MFSA) can step in to protect the public’s interests by making sure trusts follow the local rules. MFSA can tell trustees what to do, get experts to help trustees, and even manage a trustee’s things if needed, all for the good of the public. Auditors checking trusts must tell the MFSA if they find anything not right, especially if trustees are not following the laws and rules they’re supposed to. If you have additional questions in this regard, we can assist you. Furthermore, if you are interested in opening a company in Malta, our company formation agents are here to assist you. 

Types of trusts

1. Charitable trusts: Charitable trusts are created to advance charitable causes and benefit the public. The assets or funds placed into the trust are used to support various charitable activities, such as education, poverty alleviation, medical research, or any other charitable endeavors. The beneficiaries of charitable trusts are typically charitable organizations or the public at large;
2. Spendthrift trusts: Spendthrift trusts are designed to protect beneficiaries from their financial mismanagement or creditors. In this type of trust, the trustee has the authority to control the distribution of trust assets to the beneficiaries. Creditors generally cannot access the trust’s assets to satisfy the beneficiaries’ debts, providing a level of financial security for the beneficiaries;
3. Discretionary trusts: In discretionary trusts, the trustee has significant discretion in determining how and when to distribute the trust’s income or assets among the beneficiaries. The beneficiaries do not have an absolute entitlement to receive trust benefits but are dependent on the trustee’s decisions. This flexibility allows the trustee to consider individual circumstances and needs when making distributions;
4. Fixed interest trusts: Fixed interest trusts, provide a beneficiary with a fixed income or interest from the trust assets for a specified period, usually their lifetime. After the beneficiary’s death or the specified period, the remaining assets typically pass to another designated beneficiary, known as the remainderman;
5. Unit trusts: A unit trust is a collective investment vehicle where investors pool their money to form a trust. The trust’s assets are divided into units, and investors receive a proportional number of units based on their contribution. The value of the units fluctuates with the trust’s performance, and investors can buy or sell units to enter or exit the trust;
6. Accumulation and maintenance trusts: Accumulation and maintenance trusts are typically set up to benefit minors, usually grandchildren. The trust’s income is accumulated or reinvested until the beneficiaries reach a specified age or certain conditions are met, such as completing education. Afterward, the trust income or assets are distributed to the beneficiaries. The purpose of this trust is often to provide for the beneficiaries’ future needs while safeguarding the trust assets during their young or vulnerable years.

The changes made in 2014 to the Trusts and Trustees Act brought in the concept of an enforcer specifically for charitable trusts. For non-charitable trusts, the responsibilities of an enforcer can be taken on by the beneficiaries. The enforcer plays a crucial role in ensuring that the trustee follows the instructions laid out in the trust deed and actively works in the best interests of the trust. If you are planning to open a trust, you are welcome to get in touch with our company incorporation agents in Malta. They can also answer if you have any additional questions about the types of trusts. 

Are private trusts recognized in Malta?

Yes, private trusts are recognized in Malta and can be established with the help of a notary deed. Small-scale trusts are usually interested in this type of trust, especially if the parties involved have a collaboration or relationship of at least 10 years.

Privacy of Maltese trusts

Trusts in Malta are not required to register with the government, complete privacy is maintained, and their records remain inaccessible to the public. If you are planning to set up a company in Malta, the services of our agents are at your disposal.

Reasons why you could set up a trust in Malta

In comparison to other countries, the administration and setup costs for establishing a trust in Malta are significantly lower. Audit fees, legal fees, and trust management fees are considerably less in Malta. A fully-fledged Maltese trust is less expensive to establish than a similar trust in any other country. While the country’s startup costs remain significantly lower, Maltese professional institutions have maintained an unrivaled global reputation. In principle, those interested in trusts in Malta are thinking about the beneficial tax system. In addition to these issues, domestic and practical issues are also discussed. Here are some details:

1. Assets can be kept until the minors listed in that document reach the optimal age to benefit from that trust.
2. There is some protection offered to creditors. They are not legally accessible by private trusts in Malta.
3. Disposition of the goods to the heirs of the settlor without the goods being transferred immediately after his/her death. A will can also mention such aspects.
4. With the help of a trust in Malta estate taxes can be minimized.
5. Also, a trust can be set up when two people want to make investments together but based on specialized help.

So, there are plenty of reasons why trusts in Malta can be registered. As soon as you decide on the goal for the Maltese trust, we invite you to talk to our local agents and find out all the formalities. Ask us about fiduciary services in Malta.

Attributes of a settlor in Malta

A settlor is a person who can create a trust in Malta and has various obligations. Among them, we mention the following:

• He/she has the right to ask the court for guidance on establishing the validity of a trust;
• He/she can change the terms and conditions if the situation requires it;
• He/she can appoint an investment manager or advisor;
• The trustee is obliged to own a settlement property in case of loss of interest, termination of the trust, or lack of an existing or possible beneficiary;
• He/she can seek information from the administrator, according to the terms of the Trust Deed, concluded at the notary;
• He/she has the right to grant any beneficial interest in the fiduciary property;
• It may reserve any power to appoint, remove, or add beneficiaries, agents, or protectors, as the Trust and Trustees Act in Malta mentions.

The advantages of a Maltese trust

Setting up a trust in Malta has gained popularity in recent years because it comes with some advantages:

• Malta offers adaptability in drawing the trust deed;
• distributions of the assets upon the settlor’s death are efficient and require 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.

Benefits of establishing a trust in Malta 

Establishing a trust in Malta proves to be advantageous for a myriad of reasons. On the domestic front, it provides a strategic means to circumvent the delays and expenses associated with Malta probate proceedings. Additionally, trust serves as a secure mechanism for preserving assets until minors attain legal age, and it acts as a protective shield for assets in the event of the settlor’s or beneficiaries’ incapacity. Moreover, a trust in Malta enables a systematic distribution of assets to the settlor’s heirs without the immediate transfer of assets upon the settlor’s passing away, ensuring a thoughtful and gradual transition. Addressing taxation concerns, the trust in Malta offers a legal avenue to evade inheritance and estate taxes, safeguarding assets from potential claims by third-party creditors. 

Furthermore, it facilitates the shifting of substantial tax burdens from the settlor to the beneficiaries, who benefit from more favorable tax conditions. In terms of investments, establishing a trust in Malta proves instruments in consolidating global investments, and entrusting their administration and management to seasoned professionals. This centralized approach enhances efficiency and strategic oversight of the trust’s investment portfolio. Establishing a trust in Malta provides a multifaceted advantage. Domestically, it offers a solution to sidestep probate delays, safeguard assets until minors reach maturity, and protect against incapacity. Overall, it serves as a comprehensive strategy for seamless wealth management, asset protection, and strategic tax planning. If you are interested in setting up a Maltese trust, our agents can help you. You can consult our company formation agents in Malta for customized assistance.

Why invest in Malta?

Malta continues to be on the list of those looking for stable financial markets. Business is accepted in any field of interest, as well as investments. Foreigners benefit from an experienced and multilingual workforce, but also an optimal business climate. Here are some aspects of Malta’s economy:

• More than 4 USD billion was the FDI inflow for Malta in 2022;
• There has been economic growth of about 3.1% in the first half of 2023;
• Financial and insurance services were the sector that attracted the most foreign investment in 2021;
• Malta is the point of contact for over 115 ports worldwide.

If you want fiduciary services in Malta and you need details about how to set up a trust in Malta, you can contact our company formation agents. We can tell you more about trusts in Malta.