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How to Open a Trust in Malta

This post will talk about how to open a trust in Malta and closely connected topics like how it works and what’s the tax implication.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

The Trusts and Trustees Act in Malta is responsible for the regulation of Maltese trusts.

How Trusts Work

A trust is a commitment where individuals, known as trustees, are obligated to manage a property under their control, referred to as trust property.

This responsibility is undertaken for the well-being of individuals, known as beneficiaries, or for charitable purposes, following the specified conditions outlined in the trust.

How to Open a Trust in Malta

How to Open a Trust

The Trust and Trustees Act of Malta outlines three key elements for how to start a trust:

The Settlor

The individual creating the trust, providing trust property, or making a disposition on trust.

The settlor must be of legal age and possess the freedom to dispose of the stated property.

The Trusts and Trustees Act, along with the trust deed, may grant certain rights to the settlor, such as seeking court directives on trust validity, obtaining information from the trustee, and having revocable trusts.

The Trustee

The person, either legal or natural, who holds or is bestowed with the trust property. Trustees in Malta are regulated and supervised by the MFSA.

The MFSA regulations specify that a trustee set up as a company must follow the given prerequisites:

  • It should not act publicly as a trustee
  • It should not handle property for more than five settlors simultaneously
  • It should not be licensed only to act as a trustee to specific settlors

The Beneficiary

The person benefiting from the trust or to whom the trust property is distributed. Beneficiaries must be named or identified by relationship or class in the trust deed.

Beneficiaries have rights, such as:

  • Soliciting information from the trustee
  • Seeking court directives on trust validity
  • Disclaiming their interest in writing
  • Requesting trust termination or property distribution

Additional Components on How to Open a Trust

Opening a Trust
  • The Protector. An additional party designated by the settlor to hold a trustworthy position, like a family associate or lawyer.
  • The File Note of Wishes. A non-binding document offering guidance to the trustee(s) for opening a trust
  • The Trust Instrument. A legally binding document sets boundaries between legal and beneficial ownership when establishing a trust.

How to Open a Trust: The Process

Opening a trust in Malta necessitates a trust deed that must explicitly list all individuals involved.

This legal document outlines the roles of the trustee and beneficiary, as well as details regarding the trust fund or settlement representing the property held by the trustee.

The property itself can be represented by various assets, whether movable or immovable.

Are Trusts Taxable in Malta?

Taxation of Settlements

Non-Malta domiciled settlors or those with property outside Malta face no tax on trust settlements.

Assets in the trust must be free from charges under Maltese taxation on immovable property.

Taxation of Trustees

Trustees may face Maltese taxation if beneficiaries are not resident in Malta, or if income sources include specific categories like royalties or foreign-sourced gains.

Taxation on Beneficial Interest Transfers

No tax on transfers if the trust property lacks chargeable assets and the transferring beneficiary is not a resident of Malta.

VAT Considerations on Trusts in Malta

Trusts, being non-economic instruments, are beyond the scope of VAT.

Trustees should avoid luxury expenses from trust remuneration to sidestep potential VAT obligations.

Trustee remuneration outside the scope of the company’s services is exempt from VAT.

Engaging in taxable activities, like using trust assets for accommodation, requires VAT registration and compliance.

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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.



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