Griscti
& Chetcuti Advocates - Malta is proud to announce that its corporate
subsidiary International Beneficiary Services Ltd is amongst the first
companies to have been licensed by the Malta Financial Services
Authority to act as Professional Trustees in terms of the new Trusts and
Trustees Act 2004.
International
Beneficiary Services Ltd, a wholly owned subsidiary of our law firm has
been licensed since 2002 to provide nominee services to clients.
The new licence goes further and now grants Professional Trustee Status
to our company allowing us to be amongst the first Maltese organizations
to be authorized to act as Trustees in Malta
Click
here to view our licence.
Click
here to view our listing as a licensed trustee entity with the Malta
Financial Services Authority. On the MFSA website click on Company Compliance and then on
Licence Holders.
Malta
has just amended the Trusts and Trustees Act (Chapter 331 of the Laws of
Malta) to allow for the creation of trusts in Malta.
This brief introduction to trusts in Malta tackles situations
where the settlor and beneficiaries of the trust are all non-resident in
Malta or hold Permanent Residence Permits in Malta and the tax
implications of trusts as set out hereunder are limited to these
situations. Where the
settlor and/or beneficiaries are resident in Malta, the tax situation is
completely different.
The
MFSA (The Malta Financial Services Authority) is the Regulator for
financial services in Malta and is the Authority responsible for the
regulation, supervision and authorization of trustees in Malta.
A
trust can come into existence by an instrument in writing, or by a will,
or by a unilateral declaration of trust by the trustee.
A trust can be set up in such a way whereby the settlor is the
sole beneficiary and even a company (whether registered in Malta or not)
can be the sole beneficiary of a trust.
Trusts can be fixed, discretionary or charitable in the usual
recognized way.
On
a yearly basis, the Trustees must prepare and file audited accounts of
the trust for tax purposes.
Taxation
Income attributable to a trust is not charged to tax in the hands of the
trustee if it is distributed to a beneficiary. Therefore on distribution
of income to a beneficiary, tax is charged directly to the beneficiary.
As a consequence, when all the beneficiaries of a trust are not
resident in Malta and when all the income attributable to a trust
does not arise in Malta, there is no tax due by the beneficiary, since
non-residents are not subject to tax in Malta. Therefore in effect, where the beneficiaries under a trust
are non-resident and the income of the trust does not arise in
Malta, there is no taxation in Malta.
A
trust with non-resident beneficiaries can have a mixed income, partly
arising in Malta and partly arising abroad.
In such a case, the non-Maltese income is not taxed whereas the
Maltese income of the
trust is taxed in the normal way as for residents.
Income arising in Malta would usually either be investment income
or rental income from real estate owned by the trust
Income
attributable to a trust that is not distributed to beneficiaries is
charged to tax in the hands of the trustee at the rate of 35% tax law.
It is therefore always advisable to distribute trust income to
the non-resident beneficiaries.
Where
the beneficiary of a trust is a Permanent Residence Permit holder under
Maltese law, the non-Maltese income of the trust distributed to the
Permanent Resident is taxed at 15% if such income is paid in Malta to
the Permanent Resident; non-Maltese
trust income which is distributed by the trust to the Permanent Resident
but which is not remitted to Malta remains untaxed.
We
would wish to point out that we have meticulously checked each and every
other website on the internet that purports to deal with the creation of
trusts in Malta. We are sorry to note that each and every one of them is
outdated and refers to legislation enacted in Malta in 1998 and which
has now been repealed by the 2004 legislation.
Residence