Trust in Malta
Trust in Malta
The Maltese law may be considered favorable for the development of trust relationships. The small-sized island is a state to have a perfectly healthy social and economic climate. In addition, Malta is known for high standards of financial affairs. These reasons and others attract businessmen and owners of big capital increases to the Maltese trusts. In terms of structure, it is the standard and reliable scheme where any owner segregates its right to assets and transfers them in trust. Further, a standard deed appointing the beneficiary is executed along specific conditions of the transaction.
All activities to form and manage trusts in Malta fall under the legislation of 2007. They were created in view of the Hague Convention so that to facilitate financial arrangements of this type. The trusts format as that may be regulated by both local and foreign legal field, but they are controlled only by the Maltese state structure as the Financial Service Department. The primary purpose of trusts is to transfer its assets and management to the third party. Relatives, employees of companies and even charities may act as trustees.
KEY OBJECTIVES AND BENEFITS OF TRUST IN MALTA
There are some concerns about complexity of the procedure among potential owners of trusts in Malta. However, this area may offer the most convenient and transparent mechanism for different intentions.
Malta is the best to choose as the primary beneficiary of the trust for a number of reasons:
— Favorable tax climate with wide range of financial planning. For example, in Malta, any income from assets obtained by inheritance is not taxed.
1) Absolute privacy and complete independence from political stability and social sphere in the country.
2) Confidentiality of accounts and operations.
3) No foreign control and restrictions on currency exchange.
4) Full guarantee of asset preservation even after the death of the trust founder.
5) Unhindered import of any amount of assets without imposition of duties and taxes.
The above advantages greatly increase the interest of those who are concerned in asset preservation and wealth increase. At the same time, trusts may be formed for purposes as follow:
- To maintain the family property and its transfer to specific heirs so that no third party claims for that. Thus, it is possible to plan the heritage distribution and protection of assets after the divorce.
- Structuring of the large capital and full control over it in cases where the company is owned by several parties.
- Beneficial tax planning.
- Creation of social and cultural and charitable foundations.
- Employee incentives or pension security without tax liabilities.
- Full confidentiality of information on profits received from assets.
In addition, trusts are convenient to all owners of substantial capital who seek to protect them against any invasion, or quickly transfer assets to other beneficiaries.
PROCESS OF TRUST FORMATION AND TYPES OF TRUSTS
Trust formation may take a couple of days only. In Malta, this process is very quick and simplified. A special deed, a will is required, or even their wish voiced orally. This method of trust formation is suitable only if the owner of asset capital does not intend to invest in large projects.
The trust organization takes place unilaterally. First, the trustee appoints himself as the manager, and then he specifies beneficiaries.
In fact, Maltese trusts, like many others, allow the waiver of the owner of rights to their property. This privilege is given to the trust management structure, though at the same time, the trustee may dispose of their assets. In fact, this scheme is quite simple and transparent.
If the founder has the Maltese identity, a legal entity is established. In this case, beneficiaries are not required. But such trust cannot own property on the island or shares of local companies. It also has other features:
1) No compulsory registration for foreign institutions. In this case, tax benefits are not provided.
2) During the registration a professional manager is assigned.
3) Validity of the registered structures is up to 100 years without securing rights to inheritance.
According to the Maltese law, the trusts are classified as local and foreign. Any potential trust founder may choose the type of legislation on their own that will regulate their asset portfolio.
All Maltese trusts are classified by type of organization and distribution of authorities of the managing structure as follow:
1) Discretionary where the founder decides on their own on management, investment and distribution of benefits gained from property.
2) Cumulative trusts to raise funds for the benefit of future beneficiaries.
3) With fixed income when the amount of profit and its beneficiary is specified in the agreement.
4) Trusts with the unilateral deed when the manager submits an application but the names of founders do not appear in documents.