Malta’s Trusts law was revamped in 2004 removing previous restrictions that precluded trusts from being used by residents. The new law was accompanied by specific fiscal provisions making the trust a tax efficient estate planning avenue if done properly. Subject to certain conditions a trust may be deemed to be transparent for tax purposes in terms of Maltese law. Alternatively, it is possible for the trustees to opt for the trust to be taxed in the same manner as a company – including the refund system mentioned above.
Foundations in Malta are generally not able to carry out business and are therefore more geared towards estate planning rather than the carrying on of business activities, although they may serve the purpose of holding of assets from which passive income is derived – such as shares in companies and intellectual property. Foundations are taxed in the same manner as trusts and can therefore be transparent on non transparent and be taxed in the same manner as companies.
The presence of both foundations and trusts in the Maltese system provides additional flexibility for tax and estate planning with many jurisdictions of either a civil law or common law tradition. Furthermore, Maltese law provide the possibility to convert one type of an entity to another – where for instance a foundation may be converted to a company or a trust – thereby ensuring long term tax and estate planning opportunities and versatility.
Our tax specialists are able to assist you in selecting, setting up and running the solution that best meets your needs and would work best with the jurisdictions that matter to you.