Malta allows you to set up foundations instead
of trusts. Foundations have the benefit of being both a legal entity and a
well-understood and recognized idea in nations with a Roman legal system. EMD
Advocates offers comprehensive Legal and
Compliance Malta assistance,
ensuring seamless foundation establishment. They specialize in navigating the
legal intricacies, ensuring compliance with local regulations for a robust
foundation.
Advantages of establishing a foundation in Malta
Here are the top advantages of registering a
foundation in Malta:
Asset Management and Distribution Flexibility
Foundations can be used for a variety of
purposes, including financial structuring and planning, as well as estate
planning. In a word, a foundation allows a person more control over their
assets and how they are allocated.
Administrative Management
A foundation can choose an administrator to
handle its finances and distribute them to its beneficiaries. Although a
purpose foundation must designate at least three administrators—or at least one
legal person serving as administrator—as long as the business has at least
three directors, every private foundation is required to have at least one
administrator. The founder might be both an administrator and a beneficiary.
Legal autonomy and fiduciary responsibility
It is vital to emphasize that a foundation's
assets and liabilities are independent of those of its founders, managers, and
beneficiaries. In reality, administrators have fiduciary responsibilities.
How to Establish a Foundation in Malta?
Foundations are established by one or more
founders through a written document, including a will, in accordance with the
stipulations of the Malta
Trusts and Trustees Act, in which given assets of a value equal to or greater
than € 1,164.69 are trusted to the administration of one or more administrators
for a specific legal purpose, such as charity or philanthropy (Public
Foundations) or for the benefit of a person or a class of persons (Private
Foundations).
Tax Framework
Malta introduced foundation-specific laws for
the Taxation of Foundations in 2010. In general, foundations can choose to be taxed
as a corporation (by default) or as a trust (by irrevocable choice).
Foundations taxed as corporations are handled
the same as firms with resident and domicile in Malta, and are subject to 35%
tax, the complete imputation system, and the tax refund regime. Profit
distribution to beneficiaries equals dividend payout to company shareholders.
Because they may apply the participation
exemption to dividends and capital gains from participating interests,
foundations are frequently employed as holding corporations.
If the foundation is treated as a Trust and
meets specific standards, it might be deemed transparent for tax reasons, which
means that there are no taxes in Malta in circumstances when the founders,
beneficiaries, and assets are not residents of Malta.
According to the provisions set forth in
the Malta Trusts and Trustees
Act, Maltese law permits
the conversion of a Foundation into a Trust and vice versa.
Conclusion
In conclusion, the Legal and Compliance Malta framework for foundations offers a powerful amalgamation of asset management control, administrative flexibility, legal autonomy, and tax advantages. Establishing a foundation in Malta empowers individuals with unparalleled control over asset distribution and allocation, providing avenues for diverse financial structuring and estate planning. The tax flexibility, offering options to be taxed as corporations or trusts, coupled with the ability to convert between foundations and trusts, solidifies Malta's position as an attractive destination for those seeking to optimize wealth management strategies while ensuring legal compliance and asset protection.
