The registration cost for a Maltese trust is Lm200 (approx. € 550), and subsequently, a fixed sum of Lm200 per annum is due as tax. Otherwise, there is no further liability on any income, capital gains, inheritance, gift, wealth, withholding or other taxes. Moreover there is no liability for the payment of duties on transfers of any documents concerning a Maltese trust, except personal income tax due by the beneficiary in his/her country (destination tax) on receipt of trust income. It is therefore recommended that the client and beneficiaries first obtain tax and legal advice from local expert regarding repatriation of funds, before embarking on the use of an international business or private banking vehicle. The annual procedure for maintaining the trust’s tax status is for a declaration to be submitted to the Inland Revenue Authority by the nominee company acting as trustee confirming that (1) the Settlor and beneficiaries are still qualified (non-resident & due diligence passed) to hold their respective roles in a Maltese trust; and (2) that the trust property does not contain any immovable property in Malta, thereby ensuring that the trust maintains all its rights, exemptions and privileges under the law. The Exchange Control Act does not apply to any transaction or operation concerning or relating to Maltese trusts or any property held thereunder, and hence trusts are free from any exchange control restrictions.

Confidentiality
From the onset, attention must be drawn to the burdens of personal liability assigned to each director of a trustee company, by Maltese legal and banking authorities, in view of our status as trustees being legally determined as one of a fiduciary nature beyond that of ordinary administration. We are therefore obliged to carry out a due diligence assessment of prospective clients (all of whom must be recommended to us by an existing client or associate). Our acceptance of a client is based upon a clear understanding of the clients’ history, present and proposed business / private operations. Such analysis necessitates the client’s full co-operation and input. In view of the sensitivity of such essential information, the highest level of confidentiality is maintained throughout all our operations, as attested to by the following sections from the Malta Trusts Act.

Section 20 (1) of the Trust Act states that subject to the terms of the trust, and to any order of the Court given for special reasons (such as Police evidence of alleged illegal activity, or alleged misconduct by one of the trustees) a trustee shall not be required to disclose any information or trust documents unless such request is made by a beneficiary. Section 20 (2) (a) states that every trustee and every other person shall at all times regard and deal with all documents and information relating to a trust as secret and confidential. To protect the client’s confidentiality, all Court proceedings (including those of trustee misconduct) are held behind close doors, and violation of confidentiality rules or breach of trust is liable to fines and imprisonment.

Guaranteed tax status
Changes are focused upon opening Malta trusts to Maltese residents, whilst leaving the current rules and benefits to NON-RESIDENTS fully intact. Further comfort is offered by the following section from our Trust Act stating clearly the unique ‘PROTECTED’ nature of the trust vis-a-vis the Malta Government. Moreover, as proven by the gradual phasing out of Offshore companies, when the Malta Government has changed policy in such ‘international services’, this did not come into effect in a traumatic fashion, but was structured so as to give ample time and space for advisors and clients to re-structure. Malta’s legislative strategy is to change laws by involving the practitioners to ensure viable and marketable alternatives do in fact replace any regime being phased out.

Although Malta will join the European Union in 2004, as participants in the practitioner working group on Trust Law amendments, we can confirm, that the current Rules & Benefits to NON-RESIDENTS shall remain fully intact. Further comfort is offered by the following section from our Trust Act stating clearly the unique ‘PROTECTED’ nature of the trust vis-a-vis the Malta Government.

S. 50 – (1) The registration of a trust under this Act, shall constitute a contract between the Government Of Malta and the Trust guaranteeing the rights and exemptions and other privileges due as provided by this Act, subject only to the due observance of all the provisions of this Act.

(2) The Guarantee shall apply also against retrospective action, by legislation or otherwise, as would nullify any rights, exemptions or privileges so guaranteed.

(3) The guarantee shall be for a period of 10 years from the registration of trust.