Issuu on Google+

Effective

investor guide series

I

Secure

I

Skilled

wealth management

I N A S S O C I AT I O N W I T H


the key to Efficient Wealth Management Malta has become a natural hub for wealth management and family offices in the Mediterranean region. Attracting high net worth individuals with favourable residency and tax planning solutions in full compliance with EU legislation, Malta offers the ideal environment for successful wealth management. The jurisdiction offers an excellent physical and legal infrastructure bolstered by top-class professionals experienced in structuring customised solutions with innovative approaches. All this governed by a world-class regulatory regime, served by skilled multilingual professionals and located in a politically stable, low-risk EU member environment that offers an attractive lifestyle within easy access of European and Mediterranean capitals.

more information on:

www.financemalta.org

Scan QR Code with your smartphone

Effective

|

Secure

|

Skilled

FinanceMalta - Garrison Chapel, Castille Place, Valletta VLT1063 - Malta | info@financemalta.org | tel. +356 2122 4525 | fax. +356 2144 9212 FinanceMalta is the public-private initiative set up to promote Malta’s International Financial Centre


1

FinanceMalta investor guide series

wealth management

Finance Industry Representative FinanceMalta FinanceMalta, a non-profit public private initiative, was formally set up on the 21st May 2007 with the scope of promoting Malta’s international financial centre, both within, as well as outside, its shores. It brings together, and harnesses, the resources of the industry and government, to ensure that Malta maintains a modern and effective legal, regulatory and fiscal framework in which the financial services sector can continue to grow and prosper. The founding associations are: the Malta Funds Industry Association, the College of Stockbrokers, the Malta Bankers’ Association, the Malta Insurance Association, the Association of Insurance Brokers, and the Institute of Financial Services Practitioners. These associations, together with the Malta Insurance Management Association which is also affiliated with FinanceMalta, represent the financial services industry in Malta.

Effective

I

Secure

I

Skilled

FinanceMalta, Garrison Chapel, Castille Place, Valletta VLT1063 - Malta Tel: +356 2122 4525 • Fax: +356 2144 9212 General Mail: info@financemalta.org • Website: www.financemalta.org Find us on: FinanceMalta

@FinanceMalta

FinanceMalta

FinanceMaltaYT

Finance Industry Regulator Malta Financial Services Authority (MFSA) The Malta Financial Services Authority (MFSA) is the single licensing and supervisory authority for all financial services activity. The Authority is an autonomous public institution set up by law. The sector overseen by the MFSA includes banks, investment firms, insurance companies and financial intermediaries who provide a wide range of products and services on the domestic and international markets. The regulation of the Malta Stock Exchange also falls under the responsibility of the MFSA. The MFSA is further responsible for consumer education and consumer protection in the financial services sector. It also manages Malta’s Registry of Companies.

Notabile Road, Attard BKR 3000 - Malta Tel: (+356) 2144 1155 • Fax: (+356) 2144 1188 Email: communications@mfsa.com.mt • Website: www.mfsa.com.mt


FinanceMalta investor guide series

wealth management

Effective

investor guide series

I

Secure

I

2

Skilled

wealth management Publication Date January 2012 Publisher’s Information CountryProfiler Ltd is a specialist publisher of country information that assists corporations managing operations across national borders with trade, investment and relocation decisions. CountryProfiler is recognised by senior business executives, government representatives, institutions and global organisations as a leading provider of informative, insightful and actionable country intelligence. I N A S S O C I AT I O N W I T H

The information included in this publication is for information purposes only and is subject to change. With regard to the licensing of a

Europe 5 Ivo Muscat Azzopardi, St Julians, STJ 1904, Malta Tel: +356 20 601 060 Fax: +356 20 601 059 North America First Canadian Place, 100 King Street West, 56th Floor, Toronto, Ontario, M5X 1C9, Canada T: +1 416 304 3956 F: +1 416 352 7826

business, income generation or any other legal or accounting matters, the Publisher strongly recommends that the reader seeks the advice

E: info@countryprofiler.com W: www.countryprofiler.com

of an appropriately licensed professional. All rights reserved. Reproduction in whole or part is

Editor Sonja Lindenberg / CountryProfiler - lindenberg@countryprofiler.com

strictly prohibited without the written permission of the publisher. Opinions expressed in this publication are not necessarily those of the editor or publisher. All reasonable care is taken to ensure truth and

Regional Directors Kristina Ernst / CountryProfiler - ernst@countryprofiler.com Garvan Keating / CountryProfiler - keating@countryprofiler.com

accuracy, but the editor and publishers cannot be held responsible for errors or omissions in articles, advertising, photographs, or illustrations. CountryProfiler would like to thank the Office of the Prime Minister, Ministry of Finance, the

Administrative Director Rick Martin / CountryProfiler - martin@countryprofiler.com Research Victoria Vasiliou / CountryProfiler - vasiliou@countryprofiler.com

Economy and Investment, FinanceMalta, Malta Financial Services Authority, the Association of Insurance Brokers, the Malta Bankers’ Association,

Administration Melissa Puglisevich / CountryProfiler - puglisevich@countryprofiler.com

the Malta Funds Industry Association, the Malta Insurance Association, the Malta Insurance Management Association, the Institute of

Art Director Ramon Micallef / Box Design - ram@box-design.net

Financial Services Practitioners, the Society of Trust and Estate Practitioners and in particular Mr James Bonello, Mr Kenneth Farrugia,

Advertising Sales sales@countryprofiler.com

Dr Marina Grech, Dr Priscilla Mifsud Parker, Mr Malcolm Becker, Dr Rosanne Bonnici and Dr Chris Cachia for their support and assistance.

Photography Alan Carville / Malta Tourism Authority / Chris Sant Fournier


3

FinanceMalta investor guide series

wealth management

contents Finance Industry Associations

4

Wealth Management Domicile at a Glance

6

International Finance Centre

8

A Growing Wealth Management Centre: Key Reasons for Malta’s Success

14

Trusts in Malta

16

Foundations in Malta

18

Investment Funds in Malta

20

Professional Investor Funds

22

UCITS Schemes

24

Malta Companies

26

Retirement Schemes in Malta

28

Banking

29

Real Estate

30

Yacht & Aircraft Registration

32

Professional Services

34

Travel & Living

35

Company Profiles: Who’s Who

41


FinanceMalta investor guide series

wealth management

4

Finance Industry Associations

Malta Bankers’ Association (MBA) Chairman: Joaquim F. Silva Pinto 48/2 Birkirkara Road, Attard ATD 1210 Tel: (356) 2141 2210 / 2141 0572 Fax: (356) 2142 4580 E-mail: info@maltabankers.org Website: www.maltabankers.org

Malta Funds Industry Association (MFIA) Chairman: Kenneth Farrugia 116 Archbishop Street, Valletta VLT 1444 Tel: (356) 2597 5100 Fax: (356) 2597 5190 E-mail: kfarrugia.vfs@bov.com Website: www.mfia.org.mt

Malta Insurance Association (MIA) President: Matthew von Brockdorff 43A/2 St. Paul’s Buildings, West Street, Valletta VLT 1532 Tel: (356) 2123 2640 Fax: (356) 2124 8388 E-mail: mia@maltainsurance.org Website: www.maltainsurance.org


5

FinanceMalta investor guide series

wealth management

Malta Insurance Management Association (MIMA) Chairman: John Tortell c/o 171, Old Bakery Street, Valletta VLT 1455 Tel: (356) 2123 5406 Fax: (356) 2123 5407 E-mail: mbianchi@jmganado.com Website: www.mima-malta.com

The Institute of Financial Services Practitioners (IFSP) President: Andrew Manduca P.O Box 37, Valletta VLT 1000 Tel: (356) 2569 6352 Fax: (356) 2144 9212 E-mail: info@ifsp.org.mt Website: www.ifsp.org.mt

Association of Insurance Brokers (AIB) Chairman: Sean Agius c/o 171/176 Old Bakery Street, Valletta VLT 1455 E-mail: info@aibmalta.com Website: www.aibmalta.com

Society of Trust and Estate Practitioners (STEP) Malta Branch Chairman: Malcolm Becker P.O. Box 68, Birkirkara BKR 01 Tel: (356) 21 378 828 Fax: (356) 21 378 383 E-mail: malcolm.becker@bentleyreid.com.mt Website: www.step.org/branches/europe/malta.aspx


FinanceMalta investor guide series

wealth management

6

Wealth Management Domicile at a Glance

Country Official Name: Republic of Malta Capital: Valletta Location: Southern Europe Population: 416,046 (2010) Time: 1 hour ahead of GMT Languages: English (official), Maltese (official)

All figures are quoted as at 30th June 2011 unless otherwise indicated.

Population: 416,046 (2010)

Time: 1 hour ahead of GMT

Currency: Euro

Banks: 25


7

FinanceMalta investor guide series

wealth management

Economy

Finance Centre

Total GDP (EUR) 2010: 6.2 billion

Contribution to GDP: 12%

Fund Managers: Approximately 70

GDP per Capita (EUR) 2010: 14,982

Employs: 8,900 people directly

Recognised Fund Administrators: 24 (as at 30th November 2011)

GDP Growth in real terms 2010: 3.7% GDP Composition by sector: Agriculture 2%, Industry 23%, Services 75%

Corporate Tax: 35%. However, through Malta’s full imputation system, shareholders can claim a tax credit for the tax paid by the company.

Unemployment: 6.6% (September 2011)

Double Taxation Treaties: 60

Inflation rate: 2.7% (September 2011)

Banks: 25

Sovereign Rating: A/A -1 (Standard & Poor’s 2010), A+ (Fitch, 2011)

Bank Assets: 50 billion euro Investment Funds: 519

Insurance Managers: 15 (as at 30th November 2011) Insurance Vehicles: 52 (as at 30th November 2011) Trust and Fiduciary Companies: 121 (as at 30th September 2011) Foundation Administrators: 13 (as at 30th September 2011)

Accounting Standard: IFRS Net Asset Value of Funds: 7.8 billion euro

Regulator: Malta Financial Services Authority www.mfsa.com.mt

12% Funds: 519 (including subfunds)

60 Double Taxation Treaties

Contribution to GDP: 12 per cent


FinanceMalta investor guide series

wealth management

8

International Finance Centre Malta, a small island state at the heart of the Mediterranean, has quietly emerged as one of Europe’s most stable and innovative finance domiciles. Just a decade ago, the country was best known as a holiday destination. Malta’s decisions to join the European Union in 2004 and the eurozone in 2008 have proved pivotal to its development as a major finance and business centre. Today, Malta has strong banking, insurance, fund and wealth management sectors that have attracted investment from the world’s leading financial institutions, blue-chip multinationals and high-net-worth individuals.

12 1 1 3 TH

ST

ST

12th soundest banking system and 15th position in Financial Market Development

1st in both Online Sophistication and Full Online Availability

1st in the timely implementation of EU Internal Market rules into national law

(World Economic Forum’s

(eGovernment Benchmarking

(Internal Market Scoreboard, European

Global Competitiveness

Report, European Commission,

Commission, December 2010)

Report 2011 – 2012, 142

December 2010)

countries reviewed)

RD

3rd place for overall quality of life and 1st place for best climate (International Living 2011, 192 countries reviewed)


9

FinanceMalta investor guide series

wealth management

Country

An English-speaking nation With a history stretching back thousands of years, Malta is the European Union’s smallest member state. However, the country’s size is no barrier and Malta has positioned itself as a hub for international business. ➜

Depth and breath. As a small nation, flexibility, innovation, competitiveness and adaptability have been elements of Malta’s development since the country began to fend for itself after independence from Britain in 1964. In the past years, Malta has attracted record volumes of new business to its shores. Financial services have been identified as a key priority area for economic growth.

Easy communication. Inherited from the British, English is to this day joint official language with Maltese, and is universally spoken and written. It is the language of legislation, education and business.

Central base. Malta’s capital city, Valletta, built by the Knights of St John in the 1500s, is the main business centre and the administrative heart of the country.

Full parliamentary support. Malta’s government has a probusiness attitude and is committed to further assist the finance sector to grow and encourage foreign investors to establish operations in Malta.

International Rankings

Knowledge Economy

One of Europe’s top performers In recent years, Malta has been ranked among the strongest EU economies in terms of GDP growth. Services underpin the Maltese economy, accounting for 75 per cent of GDP, while industry accounts for 23 per cent and agriculture for just 2 per cent. ➜

A holistic vision. Malta is establishing itself as the number one knowledge-based economy in the Mediterranean region. ICT, life sciences, education and financial services are only some of the areas the country’s government is targeting and which have successfully reshaped the country’s economic landscape in recent years.

Last in, first out. The country’s economy was one of the least affected by the recent financial crisis and experienced one of the shortest recession periods in the EU.

Recording growth. After the economy contracted in 2009, Malta was able to post GDP growth of 3.7 per cent in 2010 and the country registered the fourth lowest unemployment rate at 6.3 per cent in the EU as well as the fastest increase in employment growth in 2010.

Aiming for more. The development of the finance sector is part of long-term economic plans to increase its contribution to GDP from the current 12 per cent to 25 per cent by 2015.


FinanceMalta investor guide series

wealth management

10

Finance Centre

A fully-fledged domicile Malta’s resilience in the face of financial turmoil, economic recession and debt crisis has strengthened its position as a global financial services centre. Former niche industries have become pillars of the country’s economy. ➜

Growing wealth management location. The availability of a wide range of investment vehicles, among them also trusts and foundations, has made Malta a natural hub for wealth management and family offices in the region.

Setting an example. The country’s banking system now consists of Maltese and international banks and is one of the soundest in the world, with Bank of Valletta featuring among the top 15 most resilient banks in the 2011 EU stress test.

Prepared for cross-border interaction. The country’s fund industry is booming as more and more fund managers recognise the island’s potential to serve as a springboard into Europe. The Net Asset Value of funds administered in Malta has increased by 700 per cent from 2004.

International expansion. From 2004, the insurance sector grew from 8 insurance companies servicing the local market to more than 50 insurance companies with business in other countries.

GOZO

Competitiveness

A credible challenger Malta regularly receives high rankings in benchmarking reports. In 2011, the European Commission viewed the competitiveness of Malta’s economy in terms of labour productivity as above average in an EUwide comparison, while the country has retained its ranking in the Global Competitiveness Report 2011-2012, placing 51st of 142 countries. ➜

Tier 1 reputation. As an EU and eurozone member, Malta offers a regulatory framework that is fully harmonised with EU and OECD rules, yet offers a sophisticated and flexible platform for the financial services industry.

High performance. While global finance centres around the world struggled, Malta’s finance sector not only withstood the effects of the recent economic and financial downturn but posted year-on-year growth. In 2010 alone, the financial services industry expanded by 30 per cent. Financial intermediation contributed 7.5 per cent to the total gross value added in 2010, up from 4.2 per cent in 2007.

Low risk environment. Malta is a European Union member and has a long-established and strong democratic tradition. Economic policies are liberal and the country is committed to an open business environment.

Quick start up time. A company can be incorporated in a couple of days, while Malta’s regulator, the MFSA, has set timeframes for the approval of licence applications for financial services such as for investment funds or insurance vehicles, with the options of fasttrack applications for certain vehicles and service providers.

MALTA


11

FinanceMalta investor guide series

wealth management

A region of opportunities

Malta offers a highly efficient fiscal regime which avoids the double taxation of companies and their shareholders. Maltese companies are taxed at a rate of 35 per cent, but a full imputation system applies to the taxation of dividends. This entitles shareholders to a tax refund of 6/7ths on trading income and 5/7ths in the case of passive interest and royalties. The refund is reduced to 2/3rds where the distributing company claims double taxation relief. With respect to a participating holding (where a company holds directly at least 10 per cent of the equity shares of a non-resident company, or meets certain other criteria) a full refund applies. Malta’s tax system has been deemed by the European Commission to be compliant with EU non-discrimination principles and has also gained approval from the OECD.

Situated within two to three hours direct flight time from Europe’s major cities, EU membership and with it, the subsequent introduction of passporting rights, has accelerated growth in all sectors of Malta’s finance centre.

Market Access

Malta Tax System

Wide range of market places. Malta offers instant access to an internal market of over 500 million people encompassing the 27 EU economies.

Good relationships. Malta has excellent relationships with its neighbouring Mediterranean countries and due to its geographic location, Malta is also an ideal stepping stone to the emerging markets of North Africa and the Middle East.

Post-crisis order. In a changing regulatory landscape with tighter requirements, Malta offers a safe EU location with a firm but flexible regulatory framework.

Follow the sun. Malta lies in a convenient time zone for doing business across the world: one hour ahead of GMT, meaning office hours coincide with Asia in the morning, Europe throughout the day and the US in the afternoon.

Infrastructure

A platform for business Substantial investments in infrastructure and telecoms networks have created a highly sophisticated business environment. ➜

Cutting-edge systems. Malta has overcome its geographical limitations by building up a state-of-the-art telecoms infrastructure. International connectivity is ensured by two satellite stations and four submarine fibre-optic links to mainland Europe.

Growing industry cluster. Malta’s finance industry is today made up of about 600 regulated entities, up from 180 at the end of 2004. In addition, around 11,500 other non-regulated entities operate in Malta and service international clients, offering legal and other support services.

Connected Marketplace. Malta’s excellent air and sea infrastructure and long-standing trade links with major ports in Europe, North Africa and Asia provide for a network of worldwide connections.

Located in the centre of the Mediterranean, two to three hours flight time from most European centres, the Maltese government and the industry are committed to putting Malta on the map as the foremost centre for international financial services in the Euro-Med region.

Affordable office space. Office space can be found all over Malta and rents are reasonable.


FinanceMalta investor guide series

Regulation & Legislation

wealth management

12

Flexible regulatory framework and regulator The country’s legislation is in line with EU law and built on best practices from other finance centres. It caters for the regulation of investment funds, banking and insurance business, as well as investment service providers and trustees. ➜

Efficient regulator. All financial services fall under one regulator, the Malta Financial Services Authority (MFSA). Companies benefit from streamlined procedures, reduced bureaucracy and lower regulatory fees.

Working in partnership. The regulatory framework is recognised as serious, while one of Malta’s most appreciated advantages is the flexibility and accessibility of the MFSA, which establishes constructive working relationships with companies investing in Malta.

Tailored approach. The level of regulation depends in many areas on the experience and knowledge of the market player and the specific set-up.

The right tools. The possibility of re-domiciling companies into and out of Malta provides the option of preserving the continuity of a company’s legacy, reputation and financial track-record.

Lifestyle

The highest standards of living at the heart of the Mediterranean Lying at the centre of the Mediterranean Sea, between Europe and North Africa, Malta offers a refreshing change from other chaotic and high-cost finance centres. ➜

Sun and sea. As a small Mediterranean island, Malta offers unrivalled, easy access to beautiful beaches where the sea and the sun can be enjoyed in equal measure.

So much more. The island boasts a diverse range of shopping, cultural and leisure activities in addition to well-equipped public and private hospitals and clinics. Malta’s educational system is excellent, and all personal needs – from private banking to tax planning - are catered for.

Relaxed atmosphere. Malta is renowned for its well-balanced work life rhythm. The country’s small size – it takes just 45 minutes to cross Malta – reduces commuting time and increases leisure time. With a very low crime rate, the country is also a safe place to live for families.

Exclusive living. The property market features a variety of top-of-the-range homes, including apartments, town houses and villas, as well as excellent office space at reasonable rents.


wealth management

Cost-competitive environment

➜ Banking

Costs and tax are two of the key drivers behind today’s business decisions. When compared to mainland Europe, Malta offers significant cost-advantages as a finance centre, making it a competitive alternative.

➜ Trusts ➜ Foundations ➜ Investment Funds ➜ International Pensions

Taxation & Fees

➜ Insurance

➜ Asset Management

Efficient tax planning. Investors have the possibility to benefit from one of the lowest effective tax rates in Europe. While companies pay 35 per cent tax, a refund payable to shareholders reduces the effective tax rate significantly under certain conditions. This tax system has been approved by the OECD and the EU.

Facilitating business. Companies in Malta can also benefit from the country’s extensive network of double taxation treaties as well as from a number of business promotional incentives.

➜ Wealth Management ➜ Family Offices

Incentives for highly-qualified professionals. Malta has introduced a special 15 per cent tax rate for highly-qualified employees who fulfil certain criteria.

➜ Holding & Trading Companies

➜ Financial institutions ➜ Maritime & Aviation

The bottom line. Legal and accounting fees are lower than in most other European jurisdictions, as are other operational costs and salaries which are about 50 per cent of those prevailing in the more established centres.

➜ Capital Markets ➜ Expat Residency ➜ Islamic Finance

Pool of support

Advice & Assistance

Diversified International Finance Centre

13

FinanceMalta investor guide series

Malta’s workforce is multilingual and highly educated. Employment in the financial intermediation sector has increased by more than 60 per cent during the period 2004 to 2009. 8,900 people are now employed by the sector. ➜

Established service providers. Malta’s professional services’ firms have been at the forefront of the finance centre’s growth. At the same time many consultants and advisors have also gained experience overseas.

International excellence. Employees and service companies are quick, efficient and have developed expertise in niche areas such as captive insurance, funds, trusts and wealth management. 60 per cent of Maltese students continue to third-level education.

Part of global networks. Most of the country’s law firms are affiliated to international networks and many lawyers have post-graduate degrees in finance, and together with the big four accountancy firms, as well as many other accountancy and auditing practices, service international clients.

Multilingual services. Ingrained with a British influenced work ethic, most Maltese speak at least three languages - Maltese, English and Italian. Many also have knowledge of another language, usually French or German.


FinanceMalta investor guide series

wealth management

14

A growing wealth management

key reasons for Resilient industry Throughout the financial crisis, Malta has emerged as a key hub for wealth management and family offices, as well as for wealthy individuals, expats and pensioners seeking an advantageous residency location. Having won international respect for the excellence of its financial services industry and established itself as one of the safest and best run financial centres in Europe, high-net-worth individuals, globetrotting professionals and retirees from Europe and beyond are attracted by Malta’s favourable tax planning and asset management solutions.

Tailor-made structures

Hedge funds, private equity and real estate - Malta offers all the favourite investment vehicles of highnet-worth individuals and families, while the EU member state allows investors to protect their assets through the establishment of trusts or foundations.

Malta’s strengths as a wealth management centre lie in its solid fundamentals: the finance centre offers a wide range of investment vehicles including investment funds, trust companies, and an attractive tax regime. In addition, the country has an excellent physical and legal infrastructure which is bolstered by tried and tested professionals with a track record in structuring customised solutions and offering innovative approaches. The regulatory regime is widely respected, and as an EU member state with a politically stable, low-risk environment, Malta offers a very attractive international lifestyle - within easy access of most European and Mediterranean capitals.


15

FinanceMalta investor guide series

wealth management

centre

Malta’s success Reputable banking centre

Tax advantages in the sun

Why Malta: Wealth Management ➜ EU and eurozone location

Rated as the 12th soundest banking system by the World Economic Forum’s Global Competitiveness Report 20112012, Malta’s strong banking infrastructure caters for all levels of wealth from the mass affluent to the ultra-high-net-worth individual requiring the more personalised services of a private banker. Malta has been experiencing a steady increase of banks specifically established to offer investment banking, private banking and wealth management services to their wealthiest clients. In times of increased regulatory oversight, Malta’s financial advisors assist clients in safeguarding and expanding their wealth in a reputable EU location.

Alternative investment tools Shipping has been an essential part of Malta’s economy for millennia. In more recent years, Malta has also aimed to position itself in niche areas and has introduced extensive VAT incentives for the registration of yachts under the country’s flag. In addition to its maritime heritage, Malta has developed a strong legislative framework for the registration of aircraft. Private jets can now be registered under Malta’s law, which also allows the jet to be owned by a trust. In addition to providing high-net-worth families with a diversified investment portfolio and a place to live or holiday, purchasing real estate in Malta traditionally generates high returns due to the limited land mass of the island if one opts for re-sale.

Malta’s corporate tax regime offers the possibility of having one of the lowest effective tax rates in the European Union, while trusts and investment funds are totally tax exempt in Malta under certain conditions. Malta has recently introduced a new scheme for high-networth individuals. Upon the fulfilment of a number of conditions, they can benefit from a flat tax rate of 15 per cent on foreign income remitted to Malta.

Service providers of high standard Maltese professionals such as tax advisors, lawyers and accountants are recognised to be among the best in the world, and this excellent reputation is helping to expand the Maltese product offering as a wealth management centre. A number of family offices have already chosen to locate their operations or certain functions to Malta. The country’s prudential regulatory and supervisory system, under which trustees and other investment services providers have to be licensed, gives comfort to the families by ensuring certain standards are met. With its excellent reputation for high standards of regulation and supervision, competitive costs and a highly-educated workforce, Malta is prepared to satisfy the most diverse and sophisticated customer requirements.

➜ Multi-disciplined advisors that are able to adapt to the changing needs of high-net-worth individuals and their families ➜ Sound and sophisticated banking system ➜ Through Malta’s full imputation system, shareholders can claim a tax credit for the tax paid by the company ➜ Fast-track authorisation for Professional Investor Funds ➜ Flexible investment structures (SICAVs, trusts, partnerships etc.) ➜ One of the few civil law jurisdictions that have developed a trust concept by integrating it with Roman law sources ➜ A reputable stock exchange ➜ Recognition of foreign trusts ➜ Offering the set-up of both trusts and foundations ➜ Legislation published in English ➜ A stable macroeconomic environment


FinanceMalta investor guide series

wealth management

16

Trusts in Malta Malta is one of the few jurisdictions that cater for both trusts and foundations. While trusts are peculiar to systems of law based on common law and are not generally found in civil law countries, Malta, a civil law country, is an exception to this rule. Built on the key concepts of certainty, security and confidentiality, Malta’s EU membership makes the country an attractive location for the establishment of trusts. It gives high-net-worth individuals the peace of mind that comes with a highly regulated environment, which, at the same time, remains faithful to the original concept of a trust.

Flexible trust law Trusts have been around in Malta since 1988; however, the law governing trusts has in recent years undergone major changes. The Maltese trust laws were originally adapted from the 1984 Jersey Trust laws but were updated in 2004 under the new Trusts and Trustees Act. This law makes Malta one of the only countries that has successfully managed to incorporate the Anglo Saxon Trust concept with its Roman law based legal system. This new system has helped accelerate the process of setting up a trust by allowing the creation of customised solutions for each individual trust set up, making trusts an attractive solution to personal and business needs. The type of trust one should use depends on many factors, such as type of asset or business, financing, income type, susceptibility to being sued and marital status. Maltese law caters for all the main types of trust one would normally find in traditional common law jurisdictions such as: • Discretionary trusts; • Accumulation and maintenance trusts; • Fixed interest trusts; • Spendthrift trusts; • Charitable trusts; • Unit trusts.

Recognition of foreign trust law Malta’s trust law also allows settlors to establish trusts governed by a foreign law, and foreign trusts are fully recognised in Malta. The country not only recognises trusts created voluntarily and evidenced in writing, as required under the Hague Convention, but also recognises any other trust of property arising under the law of another country, meaning that even constructive or resulting trusts arising under foreign law will be recognised and enforced in Malta. However, if a foreigner chooses a trust under Maltese law, the Maltese rules of reserved portion and ‘forced heirship’, whereby the assets of a deceased person must be divided as prescribed by law, will only apply if the settlor was domiciled in Malta at the time of his/her death. If a Maltese law trust is set up but has no connection to Malta because of the domicile of the settlor at the time of setting up the trust, or the location of any immovable property, the trust will be governed exclusively by the Trusts and Trustees Act.

Exempt from taxation Malta’s advantageous taxation regime also enhances the attractiveness of this legal arrangement. Although the actual impact of taxation on trusts depends on a number of issues, including the type of assets and the status of residence of the beneficiaries, 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. Under Maltese law, trusts may also, in certain circumstances, opt to be taxed as Maltese resident companies.

Reliable service providers In Malta, a trustee and a foundation administrator have to be licensed by the Malta Financial Services Authority (MFSA). This system ensures that certain standards are met and provides settlors with a higher degree of assurance. The MFSA has already licensed 121 Maltese and international fiduciary companies to offer trust and trustee services in the country. Among the companies that have set up operations in Malta are internationally operating firms such as Bentley Trust and Maitland Group, but also a large number of smaller firms, local and foreign, that assist with the setting up and administration of trusts and foundations in Malta.

Lower set-up costs Malta offers another key attraction to people choosing where to set up a trust: significantly lower set up and administrative costs. On average, setting up a trust in Switzerland will cost a minimum of 5,000 euro; in Malta the cost of setting up a fully-fledged trust is around 1,500 euro. Professional fees in Malta, including trust management fees, legal fees and audit fees, are also significantly lower than in other jurisdictions, while the country’s professional classes enjoy an excellent international reputation.


17

FinanceMalta investor guide series

wealth management

Key Features of a Trust

Means of establishment: A trust may be created unilaterally or bilaterally, by oral declaration or in writing. A unit trust must always be created in writing. The Settlor: The settlor is the person who sets up the trust. The settlor must be of age, have full capacity to contract and a free disposition of the assets settled on trust. While imposing fiduciary obligations upon the trustee in favour of the beneficiaries, trusts do not leave the settlor with any rights in relation to the trust property - except as specifically provided for in the Trusts and Trustees Act. The Trusts and Trustees Act lists the settlor’s rights (which may be supplemented by the trust deed) as follows: ➜ The settlor has the power to seek court directives as to trust validity; ➜ The settlor has the right to a variation of terms and revocable trusts where the trust deed so provides; ➜ In cases of trust termination, interest lapses or no existing or possible beneficiary, the trustee holds the trust property for the settlor (or his or her heirs) absolutely; ➜ It is the trustee’s duty to provide the settlor with information, subject to the terms of the trust deed. The Protector: The protector is typically a person who enjoys the settlor’s trust (e.g. the family lawyer). The protector may also act as investment advisor. Subject to the trust terms, the protector typically has the power to: ➜ Appoint new and/or additional trustees; ➜ Remove trustees; ➜ Require trustees to obtain the protector’s discretion (including approval) in relation to particular matters e.g. purchase / sale of trust property. The Beneficiary:

The beneficiary is the person who is legally entitled to the benefits of the trust. All beneficiaries have to be mentioned by name or are ascertainable by class or by relationship to a person alive or dead. For instance, children not yet born or conceived may be beneficiaries. The rights of the beneficiary are personal and are regarded as movable property. Subject to the trust deed, the beneficiary may sell, charge or deal with his or her interest in any manner, provided that this is done in writing.

The beneficiary has the right to information from the trustee and may seek court directives regarding the validity of the trust. The beneficiary may also disclaim his or her interest or part thereof.

Trust Deed:

The trust deed is the instrument whereby the trust is created and includes the terms of the trust and may also be in the form of a unilateral declaration of trust. For example, a trust deed may provide for the addition of new beneficiaries (e.g., for unborn children) or the exclusion of a specific benefit to certain beneficiaries under conditions clearly stated in the trust deed.

Letter of Wishes:

The settlor can guide the trustee in a separate letter of wishes on how the trustee should exercise his discretion. Depending on the relationship between the settlor and the beneficiaries, the settlor can inform the beneficiaries of this letter, however, he/she may also choose not to disclose this letter to the beneficiaries.

Legal Form:

A trust is a form of legal institute which does not have its own legal personality. Trusts are not registered anywhere and there are no formalities for the annual maintenance of trusts other than statutory obligations that are imposed on trustees in the administration of trusts (e.g. for example the duty to prepare accounts).

Set-up time:

There are no statutory restrictions that could delay the setting up of a trust in Malta. Therefore, the time required depends on the particular circumstances and mainly relates to the drafting of the trust deed

Termination:

A Malta trust is subject to a maximum duration of 99 years, however, it can be terminated earlier if all beneficiaries acting in unison demand termination, which the trustees must accept.


FinanceMalta investor guide series

wealth management

18

Foundations in Malta Previously regulated by customary law, a special law on foundations was introduced in 2008. While a foundation adopts corporate principles, the law is mainly based on Italian and French civil code provisions. Attractive foundation law While foundations have been recognised and regulated in Malta for almost 200 years through Maltese case law and doctrinal writings, in 2007 Malta enacted specific legislation to clearly define their legal framework. Maltese foundations are today regulated by the Second Schedule of the Civil Code (Chapter 16 of the Laws of Malta), which dedicates an entire sub-title to foundations. The legislation allows for the set-up of two types of foundations: private and purpose foundations, which have particular uses and benefits for certain clients.

Private Foundations: These are set up for the benefit of a named person or class of persons called beneficiaries. The foundation’s patrimony is owned by the foundation itself (due to its separate legal personality) and is administered by designated persons (known as ‘administrators’) for the benefit of such beneficiaries.

Purpose Foundations: Such foundations have no ascertained or ascertainable beneficiaries but are established exclusively: • For any charitable, philanthropic or other social purpose; • As a non-profit making organisation; • For any other lawful purpose (not necessarily a social purpose and can be a private purpose).

Separate legal identity Unlike trusts, foundations have a legal personality and the foundation itself becomes the legal owner of the foundation property. Based on Maltese company law principles and Italian and French civil law provisions, Maltese foundations require the appointment of administrators who are responsible for the administration of the foundation’s property, and these are regulated under the Trusts and Trustees Act. The public deed creating a foundation must be registered. However, only a minimum of information is available to the public and confidentiality is retained.

Beneficial tax refunds A foundation is treated as a company for tax purposes and subject to the normal corporate rate of tax and can benefit from the full imputation system, whereby the foundation would pay tax at the normal corporate rate of 35 per cent. Distributions to the beneficiaries of a foundation are treated as dividends, on which they can claim a 6/7ths refund of the corporate tax already paid, subject to certain conditions. Foundations may also opt to be taxed in the same manner as a trust, in which case the relevant provisions governing the taxation of trusts will apply.


19

FinanceMalta investor guide series

wealth management

Key Features of Foundations Means of Establishment: A foundation can only be constituted in writing, either by a public deed or by a will. The foundation deed must be registered with the Office of the Registrar of Legal Persons. Assets:

The assets of a foundation may originate from any lawful business or activity and may consist of present or future assets of any nature. The minimum endowment of money or property to set up a foundation must be worth at least 1,165 euro (and 233 euro for a foundation established exclusively for a social purpose or as non-profit making).

Foundation deed: The foundation deed must contain the following information: ➜ The name of the foundation, which name must include in it the word ‘foundation’; ➜ The registered address in Malta; ➜ The purposes or objects of the foundations; ➜ The constitutive assets with which the foundation is formed; ➜ The composition of the board of administrators, and if not yet appointed, the method of their appointment; ➜ The legal representation (a local representative is necessary, if the administrators of the foundation are non-Maltese resident); and ➜ The term for which it is established. ➜

In the case of a private foundation, the deed of foundation must contain the names of the beneficiaries, or in the absence of such indication, a declaration that the foundation is constituted for the benefit of the beneficiaries. In the latter case, the beneficiaries must be indicated in a separate written instrument, which must be signed by the founder and addressed to the administrators. In order to protect confidentiality, the beneficiary statement need not be filed, in its stead a note of reference referring only to the founder is filed with the Registrar of legal person.

Legal Form:

Once the foundation is established and the deed is filed, a new legal person is created and the foundation itself becomes the owner of the foundation property.

Termination:

Except when foundations are used as collective investment vehicles or in securitisation transactions or in the case of purpose foundations (which may be established for an unlimited term), foundations are valid for a maximum term of 100 years from their establishment.

Founder: Rights of the founder: ➜ The founder may exercise supervision over administration of the foundation, obtain copy of accounts, inventory and descriptive notes of property; ➜ He/she may intervene in court proceedings concerning the appointment of administrators or the disposal of assets.

Conditions for the founder: ➜ The founder may also be an administrator; ➜ The founder may be a beneficiary during his lifetime, but cannot then act as sole administrator of the foundation.

Administrator: Duties of the administrator: ➜ The administrators (whether natural or legal persons) are responsible for maintaining possession and control of the property of the foundation, safeguarding such property and ensuring compliance with the statute of the foundation and the law; ➜ They are bound by fiduciary obligations stipulated in the Civil Code. Any fiduciary who breaches such obligations shall be bound to return any property, together with all other benefits derived by him, whether directly or indirectly, to the person to whom the duty is owed. Conditions for the administrator: ➜ The administrator can be based outside Malta. However, a person resident in Malta must be appointed to act as the local representative of the foundation in this case; ➜ The administrator may be the founder; however, in such situation, the founder cannot be the sole administrator. Supervisory Protector:

The deed can provide for a supervisory council, or the office of protector. They usually exercise supervision over the acts of the administrators, and may be vested with powers of appointment or removal of administrators.


FinanceMalta investor guide series

wealth management

20

Investment Funds in Malta Regulation, transparency and good governance: Malta offers the key advantages that today’s investors are looking for. At the same time, the country provides a less costly domicile for the establishment of funds investing in emerging and established markets, for fund administration and for global custody services provided to these funds. The funds sector is the fastest growing financial sector in Malta. While in 1995 there were only five collective investment schemes (CIS) licensed, the number increased to more than 500 today. EU membership in 2004 and the subsequent adoption of the euro in January 2008 provided the crucial catalyst for the development of Malta’s fund industry in the first place. The finance centre’s regulatory framework was approved by the EU and passporting rights for funds introduced.

Choice of fund structures Malta’s legislation, the Investment Services Act and subsidiary legislation, provides for the setting up of UCITS and non-UCITS retail funds as well as Professional Investor Funds (PIFs). However, most funds are either set up as UCITS or as PIFs. Maltese UCITS schemes are retail funds marketed to the general public. They must comply with obligations relating to the diversity of investments and the liquidity of the scheme and are also subject to restrictions on eligibility of assets. PIFs are non-retail funds for financially literate, high-net-worth investors. They are not regulated as tightly as UCITS. Hedge funds, private equity funds and property funds usually take the form of PIFs. The PIF regime caters for three classes of funds targeting experienced investors, qualifying investors and extraordinary investors.

Innovative vehicles Maltese registered funds can be formed in a number of possible vehicles, including open-ended and closed-ended corporate entities, contractual funds and limited partnerships. The investment company with variable share capital (SICAV) is to date the most widely used vehicle, particularly in the non-retail sector, and it can be structured to include master feeder funds and umbrella funds with segregated sub-funds. Earlier in 2011, Malta also enacted new regulations which make it possible for a fund to be constituted as an Incorporated Cell Company (ICC). Asset management companies in Malta have already launched fund platforms exclusively open to family offices and third-party managers to provide them with an efficient and cost-effective solution to enter the market. The platforms are usually registered as PIFs, while clients can choose their own service provider for the management of their segregated sub-funds.


21 High-profile service providers Funds registered in Malta, while requiring at least one resident director, are not required to appoint a local administrator. In general, Maltese regulation allows service providers to be based anywhere in the world as long as it is in a jurisdiction recognised by the Maltese financial authorities. The existence of locally-based administrators such as Valletta Fund Services, HSBC, Apex, Custom House, Praxis and TMF all offering fund administration services could be seen as a more convenient option; however, the regulation ensures flexibility and choice. Along the strong network of fund administrators, a number of other prominent service providers have moved to the island and together with local players they have built up a comprehensive industry cluster. Around 70 fund management companies have set up in Malta, most of them are foreign owned. Global custody service providers, among them HSBC and Deutsche Bank, as well as the big four accounting firms have a presence in Malta. They add extra weight to the industry of small and medium-sized accountancy firms that have flourished in

FinanceMalta investor guide series

wealth management

tandem with the growth of the fund sector. Most of the country’s legal firms are part of international networks such as Lex Mundi and Lexis Nexis, and are regularly ranked on Chambers or MartindaleHubbell or similar. They are well-versed in setting up the necessary corporate vehicles, preparation of offering documents and the regulatory procedures for licensing.

Tax-efficient environment Funds set up in Malta that have more than 15 per cent of their assets invested abroad are not subject to tax on income and capital gains in Malta. Fund managers and administrators, like any other company, can benefit from Malta’s full imputation system. While they will have to pay tax at the normal rate of 35 per cent, shareholders are entitled to a tax refund when the company distributes a dividend which reduces the effective tax rate significantly. This makes Malta one of the most attractive jurisdictions for retail and non-retail investment funds and their promoters.

FUNDS

Professional Investor Funds

Retail Funds

UCITS

Non-UCITS

Experienced Investor

Qualifying Investor

Extraordinary Investor


FinanceMalta investor guide series

wealth management

22

Professional Investor Funds There are three different types of PIFs: ➜

PIFs promoted to experienced investors

PIFs promoted to qualifying investors

PIFs promoted to extraordinary investors

Key Features of PIFs Condition Service provider Fund manager

Fund administrator Custodian/prime broker

Investment advisor Compliance officer

Benefits of PIFs in Malta ➜ Greater flexibility. Since PIFs are not intended for the general public but for professional or wealthy investors, they are not burdened with the restrictions usually imposed on retail funds, therefore offering greater flexibility. ➜ No investment restrictions. PIFs benefit from not being subject to investment restrictions (apart from PIFs sold to experienced investors, which have certain investment restrictions). ➜ Number of tax planning opportunities. The fund can invest in the underlying assets itself or through special purpose vehicles (SPVs). The use of SPVs may be particularly useful for tax planning, enabling the PIF to reap the full benefit of Malta’s extensive network of around 60 double tax treaties. ➜ Fast-track licensing process. Provided all documents are submitted to the MFSA, the authority shall issue an ‘in principle’ approval to the proposed promoters of the fund within a reasonable time period, usually between two to three months, depending on the complexity of the structure. ➜ Possibility of self-management. PIFs may be self-managed without the need to appoint a third-party manager. This means promoters have

Money Laundering Reporting Officer

the option to use a self-managed fund without the need to have a presence in Malta. The management of the fund would be undertaken by an investment committee. Self-managed funds are subject to particular rules regarding the composition of the board members and the investment committee, as well as share capital requirements. ➜ Free choice of service providers. Contrary to other fund jurisdictions, PIFs do not need to appoint a manager, custodian (except for PIFs targeting experienced investors), administrator or any other service provider who is licensed in or who has otherwise exercised passport rights into Malta. The MFSA also accepts any service provider licensed in a recognised jurisdiction (EU, EEA and OECD members as well as some other countries that are considered as having EU equivalent rules). This allows clients to continue using the services of any external service provider with whom they might already have a professional history. ➜ Low qualification entry levels. 10,000 euro for experienced investors. ➜ Shariah-compliant funds. Malta offers PIFs compatible with Islamic funding structures and financing vehicles, e.g. Ijarah and Murabahah funds.

Local Representative

Auditor Net worth of investors Offering and marketing documents

Listing Borrowing limits

Diversification

Minimum entry level Annual report Setup time

Other features applicable to all PIFs:


23

FinanceMalta investor guide series

wealth management

Structures: Mostly open- or closed-ended investment companies, but unit trusts, contractual funds and limited partnerships can also be used Regulated by: Investment Services Act

Experienced

Qualifying

Extraordinary

Must be based in Malta or in a recognised jurisdiction.

Must be based in Malta or in a recognised jurisdiction.

Must be based in Malta or in a recognised jurisdiction.

Optional. Self-managed PIFs allowed. Manager may also act as administrator.

Optional. Self-managed PIFs allowed. Manager may also act as administrator.

Optional. Self-managed PIFs allowed. Manager may also act as administrator.

Optional.

Optional.

Optional.

Required. Must be independent from fund manager.

Optional. Provided there are adequate safekeeping arrangements. Where appointed, custodian does not need to be based in Malta.

Optional. Provided there are adequate safekeeping arrangements. Where appointed, custodian does not need to be based in Malta.

Optional.

Optional.

Optional.

Required. May also act as money laundering reporting officer (MLRO).

Required. May also act as MLRO.

Required. May also act as MLRO.

Required - Not required if fund does not promote and market its own units/shares.

Required - Not required if fund does not promote and market its own units/shares.

Required - Not required if fund does not promote and market its own units/shares.

Required if all officials and service providers are established abroad.

Required if all officials and service providers are established abroad.

Required if all officials and service providers are established abroad.

Required.

Required.

Required.

-

€ 750,000 (or other conditions)

€ 7.5 million (or other conditions)

Must prepare an offering document.

Must prepare an offering document.

Must prepare either a brief offering document or a brief marketing document.

Optional.

Optional.

Optional.

100% of NAV in respect of borrowing used for investment purposes and leverage through derivatives. Unlimited borrowing for temporary liquidity.

-

-

Fund of hedge funds must invest in at least five hedge funds.

-

-

€ / US$ / £ 10,000

€ / US$ / £ 75,000

€ / US$ / £ 750,000

Must be submitted with a Custodian’s report.

Must be submitted. Custodian’s report is not required.

Must be submitted. Custodian’s report is not required.

Approximately two to three months.

Approximately two to three months.

Approximately two to three months.

Reporting Requirements

Application for a licence of a PIF

Taxation

➜ Half-yearly Report ➜ Annual Report ➜ Compliance Report

➜ € 1,500 per scheme ➜ € 1,000 per sub-fund ➜ € 1,500 per incorporated cell

Exempt from income and capital gains tax as long as they do not invest in immovable property situated in Malta.

Supervisory Fee

VAT

➜ € 1,500 per scheme ➜ € 500 per sub-fund ➜ € 1,500 per incorporated cell

Exempt without credit

Application fees and expenses Application fee for a preliminary indication of acceptability ➜ € 600


FinanceMalta investor guide series

wealth management

UCITS Schemes UCITS (Undertakings for Collective Investment in Transferable Securities) are a harmonised European retail fund product that can operate throughout the EU on the basis of a single authorisation from one member state provided that it follows certain notification procedures. UCITS offer a high degree of investor protection and are recognised by regulators worldwide. They can be marketed to both retail and institutional investors. UCITS usually invest in transferable securities such as: ➜ Shares in companies and other securities equivalent to shares in companies. ➜ Bonds and other forms of debt securities. ➜ Any other negotiable securities which carry the right to acquire any such transferable securities by subscription or exchange.

24 Key Features of UCITS based in Malta Structures:

Mostly open-ended investment companies, but unit trusts, contractual funds and limited partnerships can also be used.

Regulated by:

Investment Services Act

Permitted business: Schemes may offer units to the general public in Malta and in any other EU or EEA state. Fund Promoter:

The promoter (generally the Investment Manager) is responsible for the fund’s structure, set up, strategy and distribution. There are no eligibility requirements on the promoter of a Malta UCITS.

Corporate • Requirements: • •

The scheme’s head office and registered office shall both be established in Malta; The board of directors must be composed of a minimum two directors, at least one independent from the manager and the custodian. Self-managed schemes shall have at least one Maltese resident director; There is a requirement for local substance depending on the fund structure.

Custodian: Required. • Must be a licensed institution or such other body or association acceptable to the MFSA with an established place of business in Malta. Administrator: Optional. • Where an administrator is not appointed, the manager is responsible for the administration of the scheme; • Where appointed, the administrator must be a recognised administrator; • May be different from the custodian; • Services can include valuation, transfer agency and registrar, corporate secretariat and listing agent. Fund Manager:

Optional. • Fund may be self-managed or may appoint a management company approved by the MFSA; • Must have sufficient financial resources and liquidity at its disposal; • Must demonstrate sufficient and relevant experience; • Roles, responsibilities and experience must be described in the fund prospectus. Investment Advisor: Optional. • Must have sufficient financial resources and liquidity at its disposal; • Must demonstrate sufficient and relevant experience. Compliance Officer: Required


25 Money Laundering Reporting Officer:

FinanceMalta investor guide series

wealth management

Required.

Auditor: Required. • Must be approved by the MFSA; • Responsible for certifying the fund’s annual report and accounts, which should include an audit report. Licence application: Documents required, amongst others: • Constitutional documents; • Prospectus and marketing documents to be provided to investors. From July 2012 Maltese UCITS will be required to draw up a Key Investor Information Document (KIID) in accordance with UCITS IV rules; • Details on all service providers involved; • Agreements with the fund’s service providers; • Personal Questionnaire and curriculum vitae of the directors; • Business plan covering 3 years; • Marketing plan; • Other documents affecting rights of members. Approval time:

Exact approval time depends on a number of factors such as the complexity of the fund and the submission of complete applications. However, the MFSA will review the draft application and the supporting documentation and provide feedback within three weeks from submission of the application.

Listing:

Licensed schemes may apply for a listing on the Malta Stock Exchange.

Capital Requirement: Third-party managed: € 125,000 (if formed as a company) Self-managed: not less than € 300,000

Benefits of Maltabased UCITS ➜ EU passporting rights: UCITS established in Malta can be marketed in all EU/EEA member states. ➜ Up-to-date regulatory framework: Malta is ranked first for transposing EU directives into national law. ➜ Economies of scale: Larger distribution network that can be achieved through a UCITS scheme results in a reduction in costs for investment. ➜ Structuring opportunities: Possibility to set up umbrella funds, allowing different sub-funds and share classes.

Reporting Requirements:

• Monthly statistical return to the MFSA; • Half-yearly compliance reports; • Annual reports.

Regulatory Fees:

Application for a licence • € 2,000 per scheme • € 450 per sub-fund up to 15 sub-funds • € 250 per sub-fund for 16 sub-funds or more • € 2,000 sub-fund in the form of an IC

➜ Competitive fiscal structure: No tax on a UCITS income or capital gains, unless invested in immovable property situated in Malta. Investors are not taxed, unless they are resident in Malta (in which case there is a 15 per cent tax on income and realised capital gains).

Supervisory Fees:

• • • •

➜ Lower costs: Cheaper setup and running costs.

Taxation:

Exempt from income and capital gains tax as long as they do not invest in immovable property situated in Malta.

VAT:

Exempt without credit.

€ 2,500 per scheme € 400 per sub-fund up to 15 sub-funds € 150 per sub-fund for 16 sub-funds or more €2,500 sub-fund in the form of an IC

➜ Flexible regulator: The MFSA combines a high standard of regulation with an efficient response to industry needs. Every licence is subject to standard conditions. These standard conditions can be adapted to suit specific circumstances as long as standards are not compromised.


FinanceMalta investor guide series

wealth management

26

Malta Companies Since joining the EU in 2004, Malta has become an attractive jurisdiction for tax planning and corporate structuring. With its constantly updated regulatory framework and continuously expanding network of double taxation treaties, Malta is ensuring that it retains its position as an attractive domicile for international companies. A low tax burden for the owners of a company, familiar and recognised corporate standards and an easy incorporation procedure – a Malta company is the ideal vehicle for a wide range of activities. While Malta has been included in the list of countries which adhere to international tax standards – the so-called white-list – set out by the Organisation for Economic Cooperation and Development (OECD), an agreement with the EU preserves the competitive Maltese full imputation tax system which has been deemed by the European Commission to be compliant with EU non-discrimination principles.

Tax refund system Under Malta’s full imputation system the shareholder will, upon a distribution of dividends, be entitled to a refund in part or in full of any advance corporation tax levied on the distributing company. Corporate tax for companies established in Malta is taxed is a flat rate of 35 per cent on profit. However, shareholders of Malta-registered companies are entitled to benefit from a tax refund when the profits are distributed by way of dividend amounting to 6/7ths of the tax paid by the company. The amount of the tax refund is set at 5/7ths in the case of passive interest and royalties. The refund is reduced to 2/3rds where the distributing company claims double taxation relief on foreign-sourced investment income. An added tax advantage is that Malta does not impose any withholding tax upon distributions of outbound dividends to shareholders resident in any other jurisdiction. Malta’s tax system also makes the country the ideal location for establishing companies for the purpose of holding shares, partnership or similar interest in one or more entities, whether located within or outside the European Union. Income or gains derived from such entities that qualify as a ‘participating holding’ are wholly exempt from tax in Malta.

Double taxation relief In addition, Malta has a wide double tax treaty network, and combined with its tax system, this means that businesses operating on the island are able to effectively minimise tax leakage to ensure maximum profitability. The Maltese tax regime governing double taxation relief includes not only treaty relief but also unilateral relief and the flat rate foreign tax credit, and thereby ensures that income arising from overseas is not subject to double taxation, even if there is no double taxation agreement in existence with the relevant jurisdiction.

Forming a company Incorporating a company in Malta is relatively easy and only takes a couple of days. The Maltese legal structure is a hybrid system of Civil and Common law. While it is based on the civil law pattern of continental Europe, most administrative and fiscal legislation is constructed on the British model. This offers Malta a particular advantage in company formation as practitioners have a cultural affinity with both systems and can easily bridge the gap between continental European and Anglo (UK) legal frameworks. The incorporation procedure usually takes one week.


27

FinanceMalta investor guide series

wealth management

Key Features of Malta Companies Company Law: Companies Act 1995 Type of Company: Private and Public Limited Liability Company Language of Legislation and Corporate Documents: English Exchange Control: No Length of Time to Incorporate: approximately 1 week Government Registration Fee: There is a minimum registration fee, payable to the Registry of Companies of €245 (registration in paper) or €210 (registration in electronic format). This increases in proportion to the amount of authorised share capital of the company. Shelf Companies Available: No

Meetings

Corporate Names

Local Requirements

Name Restrictions: Names identical or similar enough to create confusion, offensive or otherwise undesirable Endings and Abbreviations Required: ‘Private Limited Company’, ‘Limited’ or its abbreviation ‘Ltd.’ Length of Time to Verify Name Availability: Less than 24 hours depending on name similarity Reservation of Names Permitted: Yes Language of Name: Any language using the Latin alphabet

Capital and Shareholders Minimum Number of Shareholders: 2 (there are exceptional circumstances where one member is permitted) Corporate Shareholders Permitted: Yes Local Shareholders required: No Disclosure of Shareholders: Yes (Anonymity can be retained through a licensed Fiduciary or Trustee) Minimum Authorised Shares to be Issued: 1,164.69 euro (one thousand one hundred and sixty four euro & sixty nine cents) Bearer Shares Permitted: No Registered Shares Permitted: Yes

Annual General Meeting of Shareholders Required: Yes – notice to be given to every member of the company and its auditor Annual General Meeting of Directors Required: No Location of Directors and Shareholders Meetings: Malta - for place of effective control & management Adoption by Consent Permitted: Yes Quorum Required for Purposes of Meetings: 2 members personally present or by proxy shall be a quorum in so far as the articles of the company do not contain other provisions

Registered Office/Agent: Yes / No Register of Directors / Officers to be kept at Registered Office: Yes Company Seal Required: No Copy of Minutes to be kept at Registered Office: Yes or at any such place as may be specified in the memorandum of articles Copy of Share Register to be kept at Registered Office: Yes

Annual Requirements Minimum Annual Government Fee or Franchise Tax: Registration of an annual return, € 163.06 where the authorised share capital of the company does not exceed 11,646.87 euro Requirement to File Annual Return: Yes (42 days after the date to which it is made up) Requirement for Financial Audited Accounts: Yes Requirement to file Financial Statements: Yes (ten months after the end of the relevant accounting reference period + 42 days) Requirement to file Tax Return: Yes

Other Relevant Information Directors and Company Secretary Minimum Number of Directors: 1 (private), 2 (public) Minimum Number of Company Secretaries: 1 Corporate Directors Permitted: Yes Corporate Company Secretary Permitted: No Local Directors / Company Secretary Required: No Disclosure of Directors / Company Secretary: Yes Appointment of Subsequent Directors / Officers: Yes

Signatory to the Hague Convention: Yes Increase or Reduction of Amount of Issued Shares: By extraordinary resolution - restrictions may apply Appointment or Removal of Director(s): By ordinary resolution - restrictions may apply Redomiciliation Permitted: Yes Reinstatement at Registry: Yes, by court order preceding striking-off Removal from Registry: Following dissolution & consequential winding up Corporate Tax: 35%, however, credit refunds may apply to the shareholder(s) Double Taxation Agreements: 60


FinanceMalta investor guide series

wealth management

28

Retirement Schemes in Malta Despite the current turmoil in the investment market, the pensions market is growing and offering new retirement plan options for high-networth individuals and their businesses. While the European pension system is still mainly a national system, the first cross-border schemes have been authorised in Malta and industry experts expect substantial growth in the months and years ahead.

Special Funds Act Currently, the establishment and operation of retirement schemes which are exempt from income and capital gains tax, in Malta is governed by the Special Funds (Regulation) Act 2002. The law also provides for the establishment of retirement funds which can be used as pension-pooling vehicles. This regulatory framework, which requires the registration and on-going supervision of pension schemes, as well as service providers and scheme administrators, investment managers and custodians by the Malta Financial Services Authority (MFSA), already makes Malta an attractive safe haven for accrued pension funds for expatriates living around the globe.

Home for UK pensions The strength of Malta’s reputation as a base for the international pension market has recently been reinforced, especially for UK pensions. Retirement schemes established in Malta and regulated by the MFSA are recognised by Her Majesty’s Revenue and Customs (HMRC) in the UK as Qualifying Recognised Overseas Pension Schemes (QROPS). This recognition results in tax efficiencies for UK non-residents who wish to transfer their funds from UK schemes to Maltese schemes, without incurring any tax charges in the UK. In particular, Malta offers: ➜ No income tax on pension income - benefits are paid gross; ➜ No income tax on pension cash lump sums; ➜ No capital gains tax on pension fund gains;

Benefits of Malta-based retirement schemes: • Retirement schemes are exempt from income and capital gains tax; • Companies established in other EU member states can sponsor occupational schemes established in Malta; • Fees for the administration and management of the scheme are lower than in other jurisdictions; • The strong regulatory framework ensures the integrity of the plan; • Legislation allows for customised structures that suit the requirements of individuals or international businesses; • English is an official language; • A QROPS jurisdiction.

➜ No inheritance tax or other death duties.

New Legislation To further facilitate the provision of cross-border pension schemes, the Maltese Parliament recently enacted the Retirement Pensions Act which is not yet in force. The Retirement Pensions Act, which is intended to regulate retirement schemes, retirement funds and the service providers related thereto, shall replace the current Special Funds (Regulation) Act. This new legislation, drafted by the MFSA, sets out a framework for pension schemes that will go further to attract multinationals, high-net-worth individuals and wealthy expatriate individuals to base their pension provisions in Malta and benefit from a well-regulated, cost-competitive structure within a tax efficient framework. As a member of the EU, Malta provides a pan-European platform that is secure, well regulated, and innovative. Backed up by a professional support structure and experienced skills base, Malta’s anticipated new pensions legislation is widely expected to be well received internationally and industry insiders are keeping a sharp focus on the provision of international pensions as the next major development in the jurisdiction’s financial services offerings.


29

FinanceMalta investor guide series

wealth management

Banking With bank resiliency high on investor’s agendas, Malta’s banking sector has attracted attention as a secure location to manage wealth. The country’s banking infrastructure caters for all levels of wealth from the mass affluent to the ultra-high-net-worth individual requiring the more personalised services of a private banker. The Maltese banking sector has changed significantly over the last 15 years. It has developed from four retail banks serving the local population to an EU-compliant industry sector of world-class sophistication, with 25 credit institutions of which 22 are foreignowned. All in all, institutions from some 15 countries including Australia, Austria, Bahrain, Belgium, Greece, Portugal, Turkey, Cyprus, Finland, Italy, Kuwait, Switzerland, and the UK, have set up operations in Malta.

Sound and conservative The country’s banks suffered no systemic shocks or failures during the financial crisis and the sector has been ranked as the 12th soundest in the world by the World Economic Forum’s Competitiveness Index 2011-2012. Malta has a deep-rooted conservative approach to banking which supports the stability of the sector. Bank funding in Malta depends on retail deposits, not wholesale borrowing, and has over the years stuck to the conventional banking approach based on old fashioned intermediation between retail depositors and borrowers. Maltese banks do not rely on wholesale funding to support lending and maintain substantial liquidity and adequate capital based on prudent lending policies.

Investment banking Equally, Malta banks are well placed to serve the growing fund sector. With more than 500 funds already licensed by the MFSA, the country’s banks have a track record in setting up and managing different investment vehicles for institutional and individual investors ranging from mutual and real estate funds to pension funds, as well as other investment and financing products and services such as M&A advisory, equity and debt capital markets and the provision of tailor-made discretionary portfolio management services. HSBC, one of the world’s largest global custodians, is present on the island, while many other banks provide custodial services through international partners. Malta is keen to increase the number of custodians. However, apart from HSBC, Bank of Valletta, Mediterranean Bank, Sparkasse Bank Malta, Deutsche Bank and Custom House already hold a custody licence in Malta. In addition to the banks, a number of investment management companies provide services to investors and have strong relationships with international custodians.

Benefits of banking in Malta: Private Banks Malta’s key location at the centre of the Mediterranean has made it one of the top locations for wealth management services and family offices from the region. Specialist wealth managers such as Mediterranean Bank are offering Swiss-style private wealth management, while foreign banks such as Akbank T.A.S., Sparkasse, Volksbank, BAWAG and Raiffeisen all offer management solutions. In addition, retail banks such as Bank of Valletta, Banif and HSBC also provide professional financial advice and products to high-net-worth, corporate and institutional clients.

• Favourable tax regime in a EU and eurozone location; • Around 60 double taxation treaties; • Any interest earned by non-residents on deposits placed with local banking institutions is exempt from any form of taxation and there is also no exit tax on either the capital or the income generated; • Secure location for savings and assets. The country’s banking sector has been judged the 12th soundest in the world.


FinanceMalta investor guide series

wealth management

30

Real Estate In the past few years, Malta has become one of the most soughtafter locations in Europe for foreign nationals seeking to purchase homes as an investment or for relocation purposes. Buying property in Malta has traditionally produced a very attractive return for investors. Unlike in other Mediterranean countries, Malta’s property market has not collapsed in recent years, although prices have dropped slightly. Steady demand from local and foreign buyers and the fact that land is limited by the size of the island have continued to act in favour of property being a solid long-term investment. In fact, the dip in prices has put buyers in a very comfortable situation, providing a choice of high-quality properties at reasonable prices.

Villas, farmhouses and palazzos From exclusive villas with swimming pools to modern apartments with a stunning sea view or traditional properties such as farmhouses in rural areas and townhouses or restored palazzos located in Valletta and its surroundings, buyers are finding that all tastes are catered for. Malta’s status as a member of the European Union and the eurozone makes it even more attractive to foreign nationals from EU member states, while Eastern European and Middle Eastern buyers are also discovering the value of property in Malta.

Five-Star Projects The last few years have seen a large number of high-profile developments taking place. The properties currently being built in Malta reflect the new philosophy filtering across all areas of economic activity: high value-added is the catch-phrase of Government’s strategy for the future, whether it’s looking at manufacturing, tourism or real estate. In the context of real estate, this means building five-star properties with five-star price tags. These multiple major construction projects are worth an estimated 5.43 billion euro and will add some 5,600 new residential properties as well as many commercial and leisure units to the Maltese real estate market. Major projects include Portomaso, Tigne Point, Pendergardens, Metropolis, and Fort Cambridge. These up-market developments turn Malta into an attractive option for lifestyle buyers and investors.

Buying property in Malta Purchasing real estate in Malta is a straightforward process consisting of the following steps: Promise of sale: Once a property has been chosen and price and conditions have been agreed, a promise of sale agreement is signed between the vendor and purchaser. At this point an amount equivalent to 1 per cent stamp duty as well as a 10 per cent deposit on the total purchasing price are paid by the buyer. This deposit will be forfeited in favour of the vendor should the purchaser fail to complete the final deed of transfer for no valid reason at law. The agreement is usually valid for three months or as agreed by the parties. Notarial investigations: During this period, a notary will carry out the necessary research into the property to confirm good title. Final contract: Once clear title to the property has been established, the final contract of sale may be entered into. The deed of sale being drawn by the notary will be registered in the Public Registry. The balance of the purchase price and a further 4 per cent stamp duty on the sale is to be paid on the publication of the contract.

Conditions for non-Maltese citizens Buying a primary residence: Non-EU citizens can acquire real estate in Malta only after obtaining a permit for the acquisition of immovable property (AIP permit) from the Ministry of Finance, unless they purchase property in Special Designated Areas (SDA). All major lifestyle complexes are Special Designated Areas. EU citizens, who have not resided in Malta for at least five years, but have the intention of purchasing their primary residence i.e. take up residence in Malta, do not require a permit. EU citizens, who have resided in Malta continuously for a minimum period of five years before the date of


31

FinanceMalta investor guide series

wealth management

Attracting high-net-worth-individuals Endowed with a balmy Mediterranean climate, excellent quality of life and relatively low cost of living, Malta has already attracted a large number of foreigners with a permanent resident scheme, which offered tax and residency benefits to permit holders. While this scheme is not available any longer, the Government has introduced a new scheme targeting high-net-worth individuals. They can benefit from a flat tax rate of 15 per cent on foreign income remitted to Malta (foreign capital gains are exempt), while income in Malta will be taxed at the normal progressive tax rates up to a maximum rate of 35 per cent, as follows: The Income Tax Bands for Individuals and Married Couples 2012

acquisition, can acquire more than one immovable property without the necessity of obtaining a permit.

Buying a second home: Citizens of all EU member states, including Maltese citizens, who have not resided continuously in Malta for a minimum period of five years, require an AIP permit to acquire immovable property for secondary residence purposes. Foreigners (EU and non-EU) may purchase any number of units within developments located in Special Designated Areas, without the need for an AIP permit. Hence, such purchases are not governed by any of the above mentioned conditions.

Married Rates First €11,900 €11,901 – 21,200 €21,201 – 28,700 Over €28,701

Tax rate Tax free 15% 25% 35%

Single Rates First €8,500 €8,501 – 14,500 €14,501 – 19,500 Over €19,501

Tax rate Tax free 15% 25% 35%

To be eligible for the 15% flat tax rate, individuals have to fulfill a number of criteria including:

EU nationals: • EU nationals have to purchase property worth a minimum of € 400,000 or rent a property for at least € 20,000 per year.

Benefits of investing in property • Malta’s economy is stable and one of the best performing economies in the European Union in terms of GDP growth. • A good selection of luxury property is available. A number of developments have been earmarked by the local authorities as Special Designated Areas (SDA), where there are no restrictions on acquisition for foreigners. • Malta is a signatory to around 60 double tax treaties, many of them guaranteeing that profits generated from the sale of immovable property in Malta shall be taxable only in Malta. • Malta is an ideal retirement destination for pensioners. Foreigners who move to the country and draw down pensions only face a 15 per cent tax rate if they apply for the high-net-worth individuals scheme. • Malta is a Mediterranean country with a fantastic climate and English as an official language.

• They have to reside in Malta for a minimum of approximately 90 days per year. The minimum tax payable is € 20,000 per year and € 2,500 per dependent.

Non-EU nationals: • Non-EU nationals have to purchase property worth a minimum of € 400,000 or rent a property for at least € 20,000 per year. • They have to renew their visas every three months or if they intend to become long-term residents in Malta, enter into a contract with the government with a financial bond of € 500,000 and € 150,000 per dependent to cover potential social costs. • They have to reside in Malta for a minimum of 90 days per year. The minimum tax payable is € 25,000 per year and € 5,000 per dependent.


FinanceMalta investor guide series

wealth management

32

Yacht & aircraft registration Malta also offers alternative wealth management tools such as favourable conditions for the registration of ships and aircraft. Benefits of registration of ships and yachts under the Maltese flag: • An internationally-recognised and reputable jurisdiction; • EU compliant legislation; • Clear technical rules; • A well-organised and efficient Commercial Yacht registration system; • An advantageous tax regime; • VAT exemption on commercial yachts; • Low registration costs for commercial yachts; • Efficient holding and administrative structures; • Tax exemption of income from commercially registered yachts and ships over 1000 net tons.

Yachts and pleasure boats The Malta flag is one of the largest flag fleets in Europe. All types of vessels, including pleasure yachts, can be registered in the name of legally-constituted corporate bodies or entities, irrespective of nationality, or by European Union citizens (for pleasure yachts only). Malta is an especially attractive base for super yachts. The owners of more than 260 super yachts (vessels over 30 metres in length) have already chosen Malta as a base for their yachts in order to take advantage of the location of the country and the cost-effective services provided by marinas and ancillary companies.

Registration as commercial yacht Under the Commercial Yacht Code small yachts and super yachts, which do not carry cargo and do not carry more than 12 passengers, can be registered as commercial yachts. If such a Maltese

registered vessel is owned, chartered or managed, then no income tax is due in Malta on or in relation to the ownership, operation or management of the yacht. Instead, the owner, charterer or manager has to pay an annual tonnage tax that is calculated according to the size of the vessel.

Yacht leasing structure As far as yachts which are not commercially registered are concerned, the Maltese VAT guidelines address scenarios where a Maltese company purchases a pleasure yacht and enters into a ‘lease-sale’ of the yacht with a third party. The aim of this structure is to enable owners to pay VAT on their yachts calculated on the percentage of the time that the vessel is deemed to sail in EU waters – based on the assumption that the larger the yacht, the less time it stays there. For example, a 24-metre sailing boat or motor yacht is presumed to spend only 30 per cent of its time in EU waters and thus, VAT (at 18 per cent) should only be calculated at 30 per cent of the lease fee paid.


33

FinanceMalta investor guide series

wealth management

Private aircraft registration Building on the success of its ship and yacht registration centre, Malta is establishing itself as a location for the registration of aircrafts. The Maltese aircraft register was first established in the 1960s, however, the country introduced a new Aircraft Registration Act in 2010, which streamlines and sets a defined legal framework to regulate aircraft registration in Malta. It also widens registration possibilities for aircraft not used for air service and implements the Cape Town Convention, now widely recognised as a market standard in aircraft finance transactions. The legislation also provides for modern trends in aircraft ownership for business and private jets and pays specific consideration towards fractional ownership and the ownership of aircraft by trustees in addition to creating the possibility to register an aircraft while it is still under construction.

The yacht leasing scheme works as follows: 1. The yacht is acquired by a Maltese Company. The company should also be registered for VAT purposes and obtain a VAT number from the VAT department. 2. The yacht is leased by the Malta company to a third party under a financial lease agreement. 3. The financial lease agreement will stipulate the sale of the yacht at a pre-determined price to the lessee after the termination of the financial lease period.

Since it is virtually impossible to track the movements of the yacht and thus calculate the deemed usage in EU waters, the VAT department in Malta has issued guidelines which contemplate the deemed usage percentage in EU waters and reduces the effective VAT rate up to 5.4 per cent.

Applications for aircraft registrations are to include particulars and evidence relating to the aircraft, the ownership, acquisition, chartering and operation thereof and the qualifications of the registrant. The Maltese Aircraft Registration Act is fully compliant with EU legislation and allows the following persons/entities to register an aircraft in Malta: • Citizens of EU or EEA member states with a place of residence or business in the EU, the EEA or Switzerland. • An undertaking formed and existing in accordance with the laws of Malta, a member state of EU, the EEA or Switzerland. The undertaking (which must be owned and controlled to at least 50% by EU/EAA/ Swiss citizens) must have its registered office, central administration and principal place of business in the EU, the EEA or Switzerland. • A natural person who is a citizen of or an undertaking established in an approved jurisdiction other than those referred to above. These shall be qualified to register an aircraft in construction or one which is not used to provide air services provided they satisfy certain conditions.


FinanceMalta investor guide series

wealth management

34

Professional Services Malta’s professional service providers are internationally renowned for the excellence of their service and are well positioned to offer meaningful support and strategic guidance in the field of wealth and asset management.

Legal services: High-net-worth individuals require legal advice that is as sophisticated as their business and investment interests and never loses sight of their goals. Malta’s legal profession is long-established and a large number of law firms operate on the island. They are regularly listed in Chambers, Legal 500, and other directories. All the leading international firms have a presence in Malta through associate links with local law firms. They can assist in the establishment of the necessary corporate vehicles in Malta, the set-up of trusts or foundations or the licensing of investment funds, amongst many other services. Accountancy and audit: The wealth management business in Malta is strongly supported by a large range of accounting and auditing practitioners ranging from small boutique practices to the global big four accountancy firms. There are many consultants on the island providing business advisory and back office support and other services. Fees for professional services are generally lower in Malta and are around two-thirds of those charged in other Western European locations. Top accountancy networks with a presence/ correspondents in Malta Deloitte

Baker Tilly International

PwC

PKF International

Ernst & Young

Moore Stephens International

KPMG

Investment advisors: With approximately 120 investment services firms licensed in Malta, individuals or corporates seeking assistance in the management of their assets are spoilt for choice. As Malta’s regulations do not require an investment advisor to be based in Malta (e.g. in the fund sector), high-net-worth individuals can benefit from the flexibility to work with companies or individuals with whom they already have an established business relationship. However, many professionals and individuals are increasingly making use of the services provided by local companies and find services of equal quality to that found in other wealth management centres but at a substantially reduced cost.

Family offices:

Family offices and multi-family offices have discovered Malta as an alternative wealth management centre. A number of family offices have already transferred their operations to Malta, while local service providers are extending their offerings and started to manage the affairs of high-net-worth individuals and families. The key reasons for this are: • The wide range of investment vehicles ranging from trusts and foundations to investment funds and the combination of these structures provides family planners with the required tools to manage the wealth, business and personal interests of their clients. • The country’s EU-harmonised legislation provides an advantageous operating framework for family offices including a tax regime that is EU and OECD approved, while its position at the centre of the Mediterranean also offers family offices a strategic location to develop and expand further into other countries in the Mediterranean basin.

Nexia International BDO International HLB International RSM International UHY International Grant Thornton ECOVIS International

• With a sound banking system, a reputable stock exchange and a pool of legal and financial advisors, Malta offers the right conditions for family wealth planning, whether serving as a base for family offices, a residency option for the family itself or as a location offering partner services to family offices worldwide.


35

Travel & Living Malta’s balmy weather and sparkling blue seas make for a business environment that is second to none: compact but cosmopolitan, sophisticated but stress-free. In today’s rushed world, Malta offers the perfect balance between work and relaxation. Long sunny days and beautiful surroundings provide for an enviable outdoor lifestyle, and with its short distances, you can wave goodbye to long commuting hours and enjoy the friendly company of a growing expat community.

FinanceMalta investor guide series

wealth management


FinanceMalta investor guide series

wealth management

36

Globally connected

Best climate in the world

It just takes two to three hours flying time from most European cities to reach Malta International Airport (MIA), the islands’ only airport. Regular flights are provided by Air Malta, Malta’s national airline, as well as other airlines such as Lufthansa, Emirates, Air France, Aerosvit, Alitalia, Austrian Airlines, Scandinavian Airlines, Ryanair, Easyjet and Spanair.

Malta enjoys more than 300 days of sunshine during the year. The magazine ‘International Living’ has rated the country’s climate the best in the world. Summers are dry and warm and winters are mild with daytime temperatures usually above 12 degrees. Even in winter Malta enjoys an average of 5 to 6 hours of sunshine and more than 12 hours a day in summer.

Five-star luxury International hotel chains such as Hilton, Radisson, Corinthia and Intercontinental are present in Malta. Superior accommodation is also offered at the Palace Hotel, the Phoenicia Hotel, the Westin Dragonara Resort or the five-star boutique hotel Xara Palace Relais & Chateaux. The main tourist centres are Sliema and St. Julian’s as well as Bugibba and Qawra.

Flavours of the Mediterranean There are many restaurants in which to enjoy a pleasant Mediterranean evening: from smart city restaurants in Baroque palaces to familyrun trattoria-style places or seafront fish restaurants, the choice is wide. Bacchus Restaurant in Mdina and Barracuda Restaurant in St. Julian’s are two of Malta’s best establishments.

Living heritage With 7,000 years of history and many remains visible to this day, Malta has been described as an open-air museum. Megalithic temples, medieval towns and massive bastions have all been declared as UNESCO World Heritage Sites. They regularly provide the backdrop for events listed in Malta’s packed cultural calendar such as concerts, plays or art exhibitions.

Markets and Malls Most international chains and brands have a presence in Malta. Exclusive boutiques also sell designer wear at relatively low prices. The main shopping districts are Sliema and Valletta, where one can also find shopping complexes and street markets. Shops are usually open from 9 am – 1 pm and 4 pm – 7 pm and most are closed on Sundays.


37

FinanceMalta investor guide series

wealth management

Short distances

Value for money

Malta has a road network of 1,500 kilometres, however, it only takes 45 minutes to cross the island. The public transport system has recently been overhauled and is now operated by German-owned Arriva group. A new network of routes and a new fleet of modern buses provide a reliable and extensive service across Malta and Gozo. A train service does not exist in Malta.

The cost of living in Malta is one of the lowest in Europe, yet banking, taxation, insurance, social security, utilities and communications services are sophisticated, professional and reliable, often surpassing those offered in many European nations.

Low crime location

Malta has one of the best health services in the world. EU nationals resident in Malta are eligible to receive free medical treatment at public hospitals and clinics. The main general hospital is the stateof-the-art Mater Dei Hospital in Msida, while many towns and villages have their own medical clinics. Malta also has several private hospitals located around the island, such as the renowned St. James Hospital in Sliema.

Malta offers a stable, secure environment for families and young children. Crime is almost non-existent. Children play on the streets and there are still some areas where people leave their door unlocked at night. Foreigners find it easy to integrate with the local community. The Maltese are a sociable bunch and make every visitor feel welcome.

First class healthcare

English-speaking destination English is one of Malta’s official languages, Maltese the other. English is the main language of business while laws and regulations are published in both languages. Many Maltese are also fluent in Italian and some even speak another language, mainly German or French.

Morning news and evening shows Malta’s bilingual culture is also reflected in the media landscape and half the newspapers are published in English. Foreign newspapers can be purchased easily due to Malta’s orientation towards tourism. In addition to satellite TV, two private cable-TV providers offer most international channels and favourite programmes.

High quality education Malta provides an excellent standard of education. Children can be educated in one of the private international schools such as St Michael’s School in Pembroke or enrolled in the local state, church or independent schools. Kindergarten facilities are also available. Tertiary education is offered through the University of Malta and other institutes and private colleges.

A home in the sun There is a wide range of properties available to rent or purchase, from furnished apartments to farmhouses, villas with pools, and even palaces, all at competitive prices. A number of five-star developments have recently been built on the island, including Portomaso and Tigne Point, which offer luxury apartments


FinanceMalta investor guide series

wealth management

38 Perfect spots for sports Water sports are popular in Malta. The conditions for scuba diving and snorkelling are excellent, particularly as the sea temperature never drops below 13 degrees C (55 degrees F), even in winter. Malta has one golf course, located at the Royal Malta Golf Club. Gyms, as well as football or water polo clubs can be found all over the island. Boating excursions are offered by Hera Cruises and Malta Yacht Charters Company.

Competitive income tax rates Highly-qualified financial services professionals can benefit from a flat 15 per cent tax rate on employment income up to 5 million euro instead of the maximum standard tax rate of 35 per cent. In addition, any emplyment income over 5 million euro will be tax-free. To qualify for this tax incentive the employee must earn a minimum of 75,000 euro per year, amongst other criteria.

Personal financial services As a sophisticated finance centre, Malta offers a wide range of services and insurance and investment products for the personal needs of executives and managers moving to Malta. The country’s banks operate a strong network of ATMs and branches across the islands. All major cards are accepted. Malta is also part of SEPA, the EU’s Single Euro Payments Area.


39

FinanceMalta investor guide series

wealth management

Buzzing entertainment hub The sea, cafés, restaurants, clubs, cinemas, theatres, sports clubs or gyms are almost always within walking distance of office complexes or residential areas. There are a wide range of festivals celebrated in Malta, the biggest one being the annual Carnival. In addition, every town or village in Malta celebrates the feast of its patron saint with a big outdoor festival.

10 reasons why expats enjoy living in Malta ➜ Fabulous all-year round weather with 300 days of sunshine and a crystal clear sea. ➜ Short distances between destinations save commuting time. ➜ Friendly and hospitable local population. ➜ No communication problems with English and Maltese as official languages, while Italian is widely spoken, as well as German and French within the tourism sector. ➜ Low cost of living while all goods are easily available.

Visa-free travel in the Schengen zone Malta’s immigration laws are in line with EU policies. The country is part of the Schengen zone. EU nationals are free to work and live in Malta. Non-EU citizens can find details about visa-exempt countries and visa application procedures on the website of the Ministry of Justice and Home Affairs at www.mjha.gov.mt. Third-country nationals also require work permits to work in Malta.

Powering the finance centre Energy and water supplies are stable. Though costs have been rising in recent years, tariffs are still lower than in other EU countries. The energy and water requirements are catered for by Enemalta and the Water Services Corporation respectively. Oil is so far the only type of energy used for electricity generation, while recent years have also seen a move towards alternative sources.

➜ Family-friendly country with a low crime rate. ➜ Excellent social life for all ages, with bars, clubs and restaurants to suit all tastes and budgets and a thriving cultural scene with big name concerts, weekly outdoor festivals and many theatres and cinemas. ➜ Good medical services with a recently built state-of-the-art government hospital and many private clinics. ➜ Above UK-average schooling in English-speaking schools, and a respected university. ➜ A wide variety of property is available in all price ranges.


FinanceMalta investor guide series

wealth management

40

Top 5

Places to Visit

1

Valletta. Named after Jean Parisot de la Valette, who was Grand Master of the Order of St. John and founder of the city, Malta’s capital is today a UNESCO World Heritage site dotted with museums, art and architecture.

3

Prehistoric sites such as Ħaġar Qim, Tarxien Temples, Għar Dalam. In all, five of these temples are listed as UNESCO World Heritage sites including the oldest known freestanding temples in the world at Ġgantija and the underground wonder of the Ħal Saflieni Hypogeum.

2

Mdina, Malta’s medieval jewel. Until the 15th century, Mdina was Malta’s capital. The city is one of Europe’s finest examples of an ancient walled city and extraordinary in its mix of medieval and Baroque architecture.

4

Beaches. Malta enjoys sunshine all year round. There are lots of lovely beaches to check out such as Għadira Bay (Mellieħa), Ramla l-Ħamra (Gozo), Paradise Bay (on the way to Ċirkewwa) and Golden Bay (Mellieħa).

5

Gozo. Malta’s smaller sister island is just a 20 minute ferry ride away. Gozo is distinctly different from Malta. The island has stunning seascapes and rural landscapes and is also known for its scenic hills.


41

WHO’S

WHO M A LTA B U S I N E S S profiles

FinanceMalta investor guide series

wealth management

Accounting & Auditing Deloitte 42 PwC 44 RSM Malta 44 Banking HSBC Bank Malta P.L.C.- Custody Services HSBC International Banking Centre HSBC Bank Malta P.L.C.- Premier HSBC Bank Malta P.L.C- Retail Banking And Wealth Management Sparkasse Bank Malta Plc

43 43 43 44 44

Corporate Services Amicorp Malta Limited

42

Fund Services Alter Domus Services Malta Limited

42

HR & Recruitment Castille Financial Services Limited Konnekt Search and Selection

42 44

Insurance Firstunited Insurance Brokers Ltd

42

Investment Services HSBC Global Asset Management (Malta) LTD

43

Trust and Foundation Services HSBC Bank Malta P.L.C. Trusts And Fiduciary Services

43


FinanceMalta investor guide series

wealth management

42

Alter Domus Services Malta Limited Alter Domus provides outsourced administration services to a prestigious list of clients mainly in the field of investment management. The Group employs over 550 professionals in its 14 offices in Asia, Europe and US. It offers company management, fund administration and financial reporting services to corporate clients, private family offices, fund managers and financial institutions. It has been independently owned by its management since 2001.

Chris Casapinta Managing Director

Domestica Building, 4th Floor, Msida Valley Road, Msida MSD9020 - Malta T: (+356) 2148 0828 • F: (+356) 2748 0829 E: chris.casapinta@alterdomus.com W: www.alterdomus.com Contact Person: Chris Casapinta - Managing Director

Amicorp Malta Limited Amicorp Malta Limited is a corporate services company assisting international clients with company formation and secretarial services together with accounting, payroll and tax compliance services. The company is licensed locally to act as a trustee and to carry out other fiduciary activities.

Level 1 Blue Harbour Business Centre, Ta’ Xbiex Yacht Marina, Ta’ Xbiex XBX 1027 - Malta T: (+356) 2258 4700 • F: (+356) 2258 4701 E: r.psaila@amicorp.com • W: www.amicorp.com Contact Person: Rudolph Psaila - Managing Director

Rudolph Psaila Managing Director

Castille FINANCIAL SERVICES Limited Castille is widely recognised as the leading financial recruitment firm in Malta, boasting an unparalleled track record in the areas of banking, insurance, assurance, fund management, fund administration, FOREX and corporate services. Castille Resources delivers best in class talent through our Permanent Placement, Executive Search and Interim services.

32-33, Old Bakery Street, Valletta - Malta T: (+356) 2123 4102 • F: (+356) 2123 4103 E: mac@castilleresources.com W: www.castilleresources.com Contact Person: Matthew Camilleri CA - Managing Director

Matthew Camilleri CA Managing Director

Deloitte Expatriate Taxation: Deloitte has the largest international tax practice in Malta, serving high-net-worth individuals and expatriates resident and working in Malta. As part of delivering tailored solutions to multinational businesses and owner-managed entities, we will ensure that you take full advantage of Malta’s skill base, competitive cost base, regulatory environment, EU membership and attractive tax system in a manner appropriate to your needs. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help you succeed. Andrew Manduca Leader Global Employer Services

FirstUnited Insurance Brokers Ltd FirstUnited Insurance Brokers Ltd is one of Malta’s leading independent insurance broker’s and is the Malta Network Partner for Willis International. Our dedicated team of insurance specialists provide a focused and personalised service offering market-leading solutions and products to institutional, private and multinational clients. Our experience, dedication and integrity are the most valuable assets we offer. Our specialised services include: Professional Risks - PI, D & O and Commercial Crime; Employee Benefits including Employers Liability, Accident & Sickness, Retirement, Life and Health insurance; Financial & Political Risks and other Business Solutions including Marine, Property, Construction and associated liabilities. Kevin Galea Pace Partner

Deloitte Place, Mriehel Bypass, Mriehel BKR 3000 - Malta T: (+356) 2343 2000 • F: (+356) 21344 443 E: amanduca@deloitte.com.mt W: www.deloitte.com.mt Contact Person: Andrew Manduca Leader Global Employer Services

25, Villa Eden, Princess Elizabeth Street, Ta’ Xbiex XBX 1103 - Malta T: (+356) 2131 9000 • F: (+356) 2134 7734 E: kgp@firstunited.com.mt W: www.firstunited.com.mt Contact Person: Kevin Galea Pace - Partner


43 HSBC Bank Malta p.l.c. – Custody Services HSBC Bank Malta p.l.c. is the leading global custodian in Malta providing a comprehensive custody proposition to institutional and retail clients. The service is tailored to cover investment in a broad range of asset classes as well as a diverse range of investment strategies. We provide a highly professional service with a strong focus on accuracy and transparency of assets. HSBC Bank Malta p.l.c. is meticulous in segregating assets with a view to ensuring that client beneficial ownership is protected. HSBC Bank Malta p.l.c. is a member of the HSBC Group, whose ultimate parent company is HSBC Holdings plc., which has one of the strongest balance sheets in the securities services industry. Joseph J Agius Head of Custody

HSBC Bank Malta p.l.c. is licensed by the MFSA to conduct investment services business and is enrolled as a tied assurance intermediary of HSBC Life Assurance (Malta) Ltd.

HSBC Global Asset Management (Malta) Ltd HSBC Global Asset Management (Malta) Ltd was incorporated in 1996 and is a wholly owned subsidiary of HSBC Bank Malta p.l.c. overseeing over USD1.3 billion in assets as at 30 June 2011 across a range of mandates that invest in both domestic and international financial markets. HSBC Global Asset Management (Malta) Ltd provides an array of locally managed funds and is the distributor for HSBC Global Asset Management’s global fund range, providing access to a global asset management platform with a network spanning over 30 countries and territories worldwide. HSBC Global Asset Management (Malta) Ltd is active in the provision of tailor-made discretionary portfolio management services for institutions and family offices and has considerable expertise in managing insurance companies’ investment portfolios. Reuben Fenech Managing Director

HSBC Bank Malta p.l.c. and HSBC Global Asset Management (Malta) Ltd are licensed to conduct investment services business by the MFSA.

HSBC International Banking Centre The International Banking Centre is a specialised unit of HSBC Bank Malta p.l.c. with a wealth of experience in providing the necessary banking services to corporate clients registered overseas, locally registered shipping and international trading companies (including trusts), companies with holding structures investing in Malta and foreignmanaged companies. HSBC Bank Malta p.l.c. is enhanced by its global reach, expertise and networking capabilities and has all the necessary functions locally to assist such businesses with their Deposits, as well as Trade and Payments through its award winning HSBCnet cross-border internet platform. HSBC Group’s rating of AA is an additional level of comfort for the bank’s customers. Michel Cordina head of commercial banking

HSBC Bank Malta p.lc. – Premier HSBC Premier is an individually tailored package of exclusive premier banking services that can be accessed from anywhere you choose to live or work. With HSBC Premier, customers will have a dedicated relationship manager who will provide them with tailored financial solutions to meet their personal needs, overseas bank account opening and worldwide online premier banking, international recognition and emergency support, investment expertise and credit card privileges and rewards. HSBC Premier is the first internationally linked-up banking service being offered to our most valued customers. The focus is on making banking a convenient and pleasurable experience. Speranza Catania Head of Premier Proposition

HSBC Bank Malta p.l.c. is licensed by the MFSA to conduct investment service business and is enrolled as a tied insurance intermediary of HSBC Life Assurance (Malta) Ltd.

HSBC Bank Malta p.lc. Trusts and Fiduciary Services HSBC Group has been involved in the field of trusts and estate administration for over 100 years. In Malta, HSBC Bank Malta p.l.c is one of the leading fiduciary services providers offering services relating to trusts, foundations, estate and corporate administration. We offer a number of straightforward and bespoke asset holding structures that will suit your requirements. Our services include the formation and administration of trusts, foundations, nominee arrangements and other structures with a wide range of uses such as asset/ portfolio management, inheritance planning, buying property in Malta and overseas, charities and special purposes, commercial uses and asset protection. Emanuel Magri Head of Trusts and Fiduciary Services

HSBC Bank Malta p.l.c. is licensed by the MFSA to conduct investment services business and is enrolled as a tied assurance intermediary of HSBC Life Assurance (Malta) Ltd. HSBC Bank Malta p.l.c. is authorised by the MFSA to act as trustee.

FinanceMalta investor guide series

wealth management

80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 5102 • F: (+356) 2380 5190 E: josephagius@hsbc.com W: www.hsbc.com.mt Contact Person: Joseph J Agius Head of Custody

80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 5130 • F: (+356) 2380 5191 E: reubenfenech@hsbc.com W: www.hsbc.com.mt Contact Person: Reuben Fenech - Managing Director

80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 4832 • F: (+356) 2380 4532 E: michelcordina@hsbc.com • W: www.hsbc.com.mt Contact Person: Michel Cordina Head of Commercial Banking

HSBC Retail Banking and Wealth Management Centre, 80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 2931 • F: (+356) 2380 2219 E: speranzacatania@hsbc.com W: www.hsbc.com.mt/premier Contact Person: Speranza Catania - Head of Premier Proposition

HSBC Retail Banking and Wealth Management Centre, 80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 2263 • F: (+356) 2380 2205 E: trustservicesmalta@hsbc.com W: www.hsbc.com.mt Contact Person: Emanuel Magri Head of Trusts and Fiduciary Services


FinanceMalta investor guide series

wealth management

44

HSBC Bank Malta p.lc. - Retail Banking and Wealth Management Wealth Management HSBC Bank Malta p.l.c. protects and enhances the wealth of local and international high-net-worth customers through the provision of professional financial advice based on a comprehensive range of local and international HSBC products and a select list of products managed by third-party providers. The scope of advice encompasses protection, retirement, savings and investments both on a personal and corporate basis. Advice is also available in relation to wealth planning, estate planning and the settlement and administration of Trusts and Foundations through our specialist Trust Services Department.

Martin Scicluna Head of Premier and

HSBC Bank Malta p.l.c. is licensed by the MFSA to conduct investment services business and is enrolled as a tied insurance intermediary of HSBC Life Assurance (Malta) Ltd. HSBC Bank Malta p.l.c. is authorised by the MFSA to act as trustee.

Wealth Management

KONNEKT Search & Selection KONNEKT is an established independent recruitment agency committed to deliver high quality solutions with passion, care and integrity. We are totally focused on Search and Selection with an uncompromising approach to quality and responsiveness, throughout the whole company. We have a recruitment methodology stemming from extensive experience in the business, international best practice and relentless research. Developments and improvements in our selection methodology are done in an iterative manner, moving on with social and technological trends. All our consultants ensure the conscientious application of our values and search and selection methodology, we also invest heavily in continuous professional development by attending training sessions both locally and overseas. Josef Said managing Director

80, Mill Street, Qormi QRM 3101 - Malta T: (+356) 2380 2950 • F: (+356) 2380 2205 E: martinscicluna@hsbc.com W: www.hsbc.com.mt Contact Person: Martin Scicluna Head of Premier and Wealth Management

Europa Centre, Level 1, St. Anne Street, Floriana FRN 9011 - Malta T: (+356) 2123 4010 E: info@konnekt.com • W: www.konnekt.com Contact Person: Josef Said - Managing Director

PwC PwC is the leading and largest professional services organisation in Malta providing industryfocused assurance, tax and advisory services. The Malta firm forms part of the PwC network where more than 169,000 people in 158 countries share their thinking, experience and solutions to develop fresh perspectives and practical advice. PwC Malta’s dedicated team of professionals provides a wide variety of wealth management and related services, including tax advice, estate and succession planning, advice on tax-efficient structuring of business and personal assets, advice on tax residence, emigration and immigration, tax compliance services and dispute resolution with tax authorities. 167, Merchants Street, Valletta VLT 1174 - Malta T: (+356) 2124 7000 • F: (+356) 2124 4768 E: david.ferry@mt.pwc.com • W: www.pwc.com Contact Person: David Ferry - Partner

David Ferry PARTNER

RSM Malta RSM Malta is a multi-disciplinary firm with a proven track record that provides sound and practical advice to international investors interested to set up a business in Malta. We employ various specialists to provide a full range of services including: tax planning and compliance, company formation and re-domiciliation, due diligence, mergers and acquisitions, accounting and payroll, business and IT advisory and audit. Our organisational set up is such that enables us to provide swift and efficient solutions tailored to client needs and ensure the highest standard of quality services at all times. The firm forms part of RSM International, a global network of independent accounting and consulting firms. George Gregory tax and corporate services partner

Cobalt House, Level 2, Notabile Road, Mriehel BKR 3000 - Malta T: (+356) 2149 3313 • F: (+356) 2149 3318 E: george.gregory@rsmmalta.com.mt W: www.rsmmalta.com.mt Contact Person: George Gregory - Tax and Corporate Services Partner

SPARKASSE BANK MALTA PLC The Bank forms part of the Austrian Savings Banks and the Ertse Group Bank AG network. From Malta the Bank provides Private Banking, Wealth Management and Fund Custody solutions. As trained Private Bankers, the bank delivers private, personal and tailored solutions to its customers by offering seamless banking, execution, settlement and custody solutions from one account.

Paul A. Mifsud Managing Director

101 Townsquare, Ix-Xatt ta’ Qui-si-Sana, Sliema SLM 3112 - Malta T: (+356) 2133 5705 • F: (+356) 2133 5710 E: Paul.mifsud@sparkasse-bank-malta.com W: www.sparkasse-bank-malta.com Contact Person: Paul A. Mifsud - Managing Director


Getting it Right Malta’s financial services centre offers financial institutions a combination of the essential ingredients for success: convenient location, rapid access to market, effective regulation, rocksolid legislation, accessible authorities and a pool of highly competent, experienced professionals. Many internationally recognised financial institutions have already experienced the merits of operating out of Malta and their continued growth and success stands as testament to Malta’s strengths and potential The jurisdiction already hosts hundreds of international finance companies, credit and financial institutions, insurance companies, fund managers, insurance managers, pensions, trusts and treasury companies, all attracted by Malta’s unique and well-balanced recipe for success. Success depends on getting it right - Malta is getting it right.

more information on:

www.financemalta.org

Scan QR Code with your smartphone

Effective

|

Secure

|

Skilled

FinanceMalta - Garrison Chapel, Castille Place, Valletta VLT1063 - Malta | info@financemalta.org | tel. +356 2122 4525 | fax. +356 2144 9212 FinanceMalta is the public-private initiative set up to promote Malta’s International Financial Centre


Malta

The culture of getting things done

Securely Regulated Market Driven Competitively Skilled


Wealth Management 2012