Malta: Trusts

Last Updated: 18 March 1997

Trusts were introduced in 1988 as 'offshore trusts' intended solely for:

(i) settlors and beneficiaries who are non-residents, defined (i) in the case of individuals, as persons who are neither ordinarily resident nor domiciled in Malta, with an exception being made for persons ordinarily residing in Malta by virtue of a permanent residence permit (ii) A body of persons, on the other hand, would be considered resident in Malta if it were to be formed and registered in Malta or if it were to have its principal place of Business in Malta or be controlled, directly or indirectly, by a person/s resident in Malta - non-residence is defined 'a contrario sensu' and

(ii) any form of trust property whatsoever, excluding (i) shares, stock or debentures in or of a company whose assets include immovable property situated in Malta; (ii) shares, stock or debentures in or of a Maltese-registered company (sole exception - offshore companies); and (iii) immovable property situated in Malta.

Offshore trusts benefited from a beneficial tax regime guaranteed against claw-back for a period of 10 years from the date of the trust's registration with the MFSC, the most salient features of which are the following:

(i) Total income tax payable on the income of a trust and on any income distributed to any of its beneficiaries in any year of assessment is a flat rate of Lm200 (c.US$575). The nominee company, acting as trustee, may opt to submit a short declaration to the local Revenue rather than a tax return - in such cases, neither the trust, nor the trustee, nor any other person having an interest therein would be required to file an income tax return

(ii) Exemption from duty payable, including duty upon 'inter vivos' transfers, in respect of any document concerning a trust. Exemption from duty payable upon transfers on the death of a person, relative to the transfer of an asset held under a trust, or otherwise payable by any person relative to his interest as a beneficiary under a trust.

(iii) Exemption from customs duty relative to any property held under a trust.

(iv) Exemption from Exchange Control regulations relative to any transaction or operation concerning or relating to trusts or any property held thereunder.


The 1994 "Recognition of Trusts Act" had a twofold objective:

(1) It reviewed the Offshore Trusts Act, 1988 so as to convert it into a Trusts Act, that is to say a general trust law rather than a law restricted to regulating a particular form of trust, the offshore trust. The amending act, besides introducing this general concept of trusts, also provided for a more streamlined classification of trusts; clear rules for the determination of the proper law of any trust, which would henceforth be determined with reference to the Hague Convention; several new and important concepts e.g. the protector; the principle of tracing; and so forth.

(2) It gave the force of law to the Hague Convention on the Law Applicable to Trusts and on their Recognition. In so doing, Maltese trust law was thus enriched with a comprehensive body of international conflicts-of-law rules regulating some of the most important aspects of trusts, namely (i) the proper law of the trust, being basically the trust law which is to regulate the trust and the legal relationships between the trustees and the settlor, beneficiaries, and third parties; (ii) recognition of trusts and its effects, (iii) enforceability of trusts. This 'measure' provides users of Maltese and foreign trusts in a Maltese context with a significant amount of reassurance as to the manner in which important aspects of trusts will be considered by Maltese courts.


Following such amendments, the Trusts Act now makes provision 'inter alia' for the following different types of trusts:

1. Maltese trusts

A Maltese trust is quite clearly a trust with the Trusts Act, 1988 as its proper law. A Maltese trust must (i) still satisfy the two conditions relative to settlors/beneficiaries and trust property referred to above, (ii) have a nominee company, issued with a warrant to so act by the MFSC, as one of its trustees, (iii) be registered with the MFSC. A Maltese trust automatically benefits from the abovementioned beneficial tax regime.

2. Foreign trusts

A foreign trust has a foreign proper law, determined with reference to the proper law of the trust indicated by the settlor in the trust document itself, in conjunction, if need be, with the Hague Convention. The users of a foreign trust in a Maltese context are thus afforded the comfort of 'using' a trust law with which they are familiar, supplemented, as a result of the Hague Convention having been given the force of law, by the equally important assurance as to the fact that the foreign trust would be recognised and enforced as such by the Maltese Courts.

Foreign trusts may opt to be registered with the MFSC in order to benefit from the abovementioned beneficial tax regime. Such registration is conditional upon the following (i) the two restrictions relative to settlors/beneficiaries and trust property referred to above must be satisfied, and (ii) a licensed nominee company must be appointed to act as one of its trustees. Foreign trusts opting not to be registered with the MFSC would be subject to standard Maltese tax law provisions.


1. Maltese trusts

(i) Maltese trusts may be used for the ownership, management or administration of a variety of assets, including works of art; intellectual property; immovable property situated abroad; shares in foreign-registered companies (which do not in turn own Maltese immovable property) e.g. IHCs, etc.

(ii) Maltese trusts may also hold shares, stocks or debentures in Maltese offshore companies, non-trading and trading offshore companies alike, and may in fact prove to be a useful tax-efficient dividend-receiver vehicle at the end of a more complex structure, than would perhaps a non-trading offshore company.

2. Foreign registered trusts

(i) Foreign registered trusts may obviously be used for any purpose whatsoever permitted by the relative foreign proper law. The beneficial tax regime which may be availed of by foreign registered trusts and the parties concerned (as well as the restrictions imposed as a condition for such MFSC registration) is to be noted.

(ii) Opting for a foreign registered trust may prove to be a more tax efficient alternative to a company which operates a Foreign Income Account (vide "Malta - An International Financial Services Centre", s.11.2, for more details):

3. Foreign non-registered trusts

The decision to opt for a foreign non-registered trust in a Maltese context may be based on one of the following considerations:

(1) A foreign non-registered trust may be used to own immovable property situated in Malta and shares in foreign companies owning immovable property situated in Malta (subject to certain restrictions), and shares in Maltese companies.

(2) Both the settlor, the trustee/s and the beneficiary/ies of a foreign non-registered trust may be domiciled and/or resident in Malta.

Accordingly, a foreign non-registered trust may 'inter alia' be used:

(i) To acquire and hold Maltese immovable property (subject to the necessary permits being issued);

(ii) To hold shares in a 'qualifying company' under the Industrial Development Act;

(iii) To hold shares in International Trading Companies and claim the relative tax refunds available to non-resident shareholders, (vide "Malta - An International Financial Services Centre, s.11.5).

There are potentially some problems in practice as a result of the fact that Maltese tax law does not provide clear indications as to whose non-resident status must be established in such a context. Indeed, whilst the trustee would in fact be the legal owner of the shares and his non-residence should suffice, Maltese tax law seems to imply that a 'look through' attitude is to be adopted so as to consider the residence status of the beneficiaries (which is hardly possible especially in view of the trustee's duty of confidentiality). These factors notwithstanding one may however venture to say that it should be possible for a foreign non-registered trust to benefit from the tax refund regime applicable to non-resident shareholders in ITCs (and IHCs too) if a number of conditions (which seek to ensure the non-resident status of trustees and beneficiary/ies) are satisfied.


A short comment refers to the possibility of setting up collective investment schemes as unit trusts, having either a Maltese or a foreign proper law.

Unit trusts which are issued a CIS licence by the MFSC benefit from a blanket tax exemption:

(i) The CIS's income and capital gains are both exempt from Malta tax - these CISs may not however benefit from Malta's double taxation agreements;

(ii) Distributions to unit holders are exempt from tax in the hands of non-resident shareholders. Non-resident unit holders are also exempt from the payment of tax on capital gains realised on the disposal of units in the trust.


To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions