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Malta Strong Interest as a Family Office Jurisdiction

Malta Attracting Strong Interest as a Family Office Jurisdiction

Family offices have increasingly become popular, with high net worth individuals, seeking ways and means to safeguard their accumulated wealth, preserve it within the family coffers, and seek tax efficient manners to pass it on to the future generations.

The parameters therefore are to secure an adequate legislative framework which can accommodate the most diversified asset portfolios, yet score very highly with regard to tax optimization and more importantly confidentiality. The ability to transfer ownership in a tax-free environment, as well as having clear and unequivocal rule relating to inheritances and asset transfers are essential.

Malta, has recently enacted a series of legislation that seeks to further complement the existing legal framework.   Malta applies no wealth taxes and applies blanket tax exemptions regarding the transfer of assets between non-residents, irrespective of their consanguinity and/or affinity. The use of discrete wealth preservation institutes such as trusts and foundations, is widely used, as well as private collective investment schemes, whose participation is limited to fifteen (15) participants such as family members, friend and acquaintances to the promoters.

The use of trusts as an effective tool within the ambit of family offices has been given new momentum, with the proposal of allowing family trust companies. Currently, the activity of trustees within a Maltese trust (and likewise administrators within a private foundation) is the sole prerogative of licensed entities, approved by the local regulator – the Malta Financial Services Authority. Although, a system of checks and balances may be installed, via the use of protectors with supervisory and veto powers to the trustees, this may result as a hinderance to promoters of family offices, who often prefer hands-on control over assets settled in a trust or endowed in a foundation. New legislation will now allow the creation of family trust companies – whereby the trustee function can now be carried out by Maltese limited liability companies composed of a hybrid of approved resident professionals and family members.

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