A trust represents a legal relationship created by a person, named a settlor, who places various assets under the control of a “trustee”. The trustee has the obligation to administer the property he or she has received for the advantage of a “beneficiary”. If you are interested in creating a trust, our company formation agents can present to you the legal requirements that validates the trust.
The Maltese Trust Law
Maltese law states that a trust can be created in an oral or written form and that the lifetime of the trust can reach 100 years, but this limit is not imposed to trusts that were created for charity purposes. A trust can also be created if it has been mentioned as such in a will.
The beneficiary of the trust must be recognized by name and, in various cases, the settlor can have the status of a beneficiary. If he or she is not an identifiable person, the trust shall fail, according to the Maltese law.
A trustee can also be a corporate entity, defined as any legal person wherever incorporated.
The Trust law functions under The Trusts and Trustees Act 2004, effective from January 2015. The Maltese government issues this new law so that residents and companies could use local trusts; also, the government wanted that this law to attract more domestic clients, but also international investors.
Legal Features of a Maltese Trust
The Maltese law recognized the following types of trusts:
• Maltese trusts
• Foreign trusts
Regardless of their origin, all trusts have to register at the Maltese Financial Services Centre (MFSC). Under The Trusts and Trustees Act 2004, all registered trusts must have a Maltese professional trustee. If you opened a company in Malta and you also own a trust, please note that you have to register it at the MFSC in order to receive tax exemptions, that otherwise wouldn’t be offered. To file for an application you have to pay EUR 250, while the approval of the documents costs EUR 100.
The taxation of the trusts is regulated by the Income Tax Act. Beneficiaries receiving assets can be charged on income distributed by the trustee, but in the case in which the income of the trust is not received by the beneficiary, the tax applied will be at the rate of 25%, paid by the trustee.
If you need further information on the Maltese trusts legislation, you may contact our company formation agents, who can offer consultation on the matter.