Malta allows you to set up foundations instead of trusts. Foundations have the benefit of being both a legal entity and a well-understood and recognized idea in nations with a Roman legal system. EMD Advocates offers comprehensive Legal and Compliance Malta assistance, ensuring seamless foundation establishment. They specialize in navigating the legal intricacies, ensuring compliance with local regulations for a robust foundation.

Advantages of establishing a foundation in Malta

Here are the top advantages of registering a foundation in Malta:

Asset Management and Distribution Flexibility

Foundations can be used for a variety of purposes, including financial structuring and planning, as well as estate planning. In a word, a foundation allows a person more control over their assets and how they are allocated.

Administrative Management

A foundation can choose an administrator to handle its finances and distribute them to its beneficiaries. Although a purpose foundation must designate at least three administrators—or at least one legal person serving as administrator—as long as the business has at least three directors, every private foundation is required to have at least one administrator. The founder might be both an administrator and a beneficiary.

Legal autonomy and fiduciary responsibility

It is vital to emphasize that a foundation's assets and liabilities are independent of those of its founders, managers, and beneficiaries. In reality, administrators have fiduciary responsibilities.

How to Establish a Foundation in Malta?

Foundations are established by one or more founders through a written document, including a will, in accordance with the stipulations of the Malta Trusts and Trustees Act, in which given assets of a value equal to or greater than € 1,164.69 are trusted to the administration of one or more administrators for a specific legal purpose, such as charity or philanthropy (Public Foundations) or for the benefit of a person or a class of persons (Private Foundations).

Tax Framework

Malta introduced foundation-specific laws for the Taxation of Foundations in 2010. In general, foundations can choose to be taxed as a corporation (by default) or as a trust (by irrevocable choice).

Foundations taxed as corporations are handled the same as firms with resident and domicile in Malta, and are subject to 35% tax, the complete imputation system, and the tax refund regime. Profit distribution to beneficiaries equals dividend payout to company shareholders.

Because they may apply the participation exemption to dividends and capital gains from participating interests, foundations are frequently employed as holding corporations.

If the foundation is treated as a Trust and meets specific standards, it might be deemed transparent for tax reasons, which means that there are no taxes in Malta in circumstances when the founders, beneficiaries, and assets are not residents of Malta.

According to the provisions set forth in the Malta Trusts and Trustees Act, Maltese law permits the conversion of a Foundation into a Trust and vice versa.

Conclusion

In conclusion, the Legal and Compliance Malta framework for foundations offers a powerful amalgamation of asset management control, administrative flexibility, legal autonomy, and tax advantages. Establishing a foundation in Malta empowers individuals with unparalleled control over asset distribution and allocation, providing avenues for diverse financial structuring and estate planning. The tax flexibility, offering options to be taxed as corporations or trusts, coupled with the ability to convert between foundations and trusts, solidifies Malta's position as an attractive destination for those seeking to optimize wealth management strategies while ensuring legal compliance and asset protection.