Creating an offshore trust to protect assets in Malta
The principles of trust are the same in all jurisdictions; trusts must always have a trust founder, a trustee, a beneficiary and a guarantor. The founder transfers its assets to a trust, where they will be managed and managed by the appointed trustee. This trustee will act as a third party between the founder and the beneficiary, which received all the assets. As a result, the founder loses all property rights. A declaration of trust is usually drawn up, which specifies the specific requirements of the founder, which must be fulfilled before the beneficiary gets access to the assets. There may be a need for a guarantor to ensure that the trust of the trust declaration is consistent with the activities and to ensure high management standards on the part of the trustee.
What is the purpose of creating an offshore trust in Malta?
Despite the fact that Malta is the smallest state of the European Union, it was not affected by the recent economic crisis and a healthy political and financial climate was preserved here. Recently (in 2007) Malta enacted a law facilitating the creation of offshore trusts in Malta. Prior to the introduction of this law, trusts in this jurisdiction did not exist. However, as a result of the developing financial infrastructure of the Government of Malta, it was decided to establish offshore trusts in the jurisdiction.
What is an offshore trust in Malta?
The declaration of the creation of a trust must be submitted in writing, this can be done in the form of a unilateral declaration, will or any other form of the written document.
A trust in Malta will be a legal entity if the founder, not the beneficiaries or the trust itself, is located in Malta. In addition, an offshore trust in Malta cannot own real estate in Malta and shares of a company registered in Malta.
Purpose of an offshore trust in Malta
Since the trusts were a relatively new institution in Malta, there was an opinion about them that they were intended for very rich people and that the procedure of their establishment is so long and expensive that it does not justify the final result. However, all this is very far from the truth. In some cases, a trust can be created in 48 hours, and it can have a variety of purposes, depending on what benefits you expect from it. Assignment of trusts:
– Asset Protection
– inheritance planning
– Providing benefits to children
– Benefit for employees
– A trust can also be used for charitable or social purposes.
The main reason for creating an offshore trust is to protect the status of the founder and to take care of future generations of the family or the designated beneficiaries. Malta has the best asset protection thanks to a stable and developed financial and political structure.
Advantages of an offshore trust in Malta
The advantages peculiar to the Maltese trusts include:
– Highly favorable tax climate
– A high degree of confidentiality and anonymity in Malta – trusts are created and operate in an atmosphere of confidentiality
– Assets can be protected and controlled accordingly.
– There is no need to prove the authenticity of instructions – the assets of deceased founders may be distributed according to the instructions of the founder, and not at the discretion of the governing bodies
– Income from fund assets is tax-free
– In Malta, there is no stamp duty and tax on inherited property
– There are no controls and restrictions on currency exchange
– Trust assets may be imported into Malta without paying any customs duty.
Creating an offshore fund in Malta
Funds are a corporate version of the trust. Funds can own many corporations and assets, and become legal entities immediately after establishment. This means that the funds operate under their own name and can act in the courts as plaintiffs and defendants. Funds can also enter into agreements with third parties. The main principles of the foundation imply the presence of the founder, guarantor, beneficiary, and members of the board.
After its establishment, the foundation in Malta acquires the qualities of a legal entity and, accordingly, does not have a specific owner. In Malta, foundations function in the same way as trusts — there is a declaration in the funds describing the requirements for the operation of the foundation. Funds can be used for various purposes, but mainly they are intended for commercial, charitable or private use. Malta funds are an excellent investment protection tool.
Types of funds in Malta
The activities of foundations in Malta are based mainly on the provisions of the civil law of France and Italy, i.e. it is possible to create both public and private foundations within the framework of Maltese jurisdiction. According to the laws of Malta, funds can be of two types: “private funds” and “trust funds”.
Benefits of Foundations in Malta
– Tax benefits in terms of avoiding double taxation of capital gains
– Efficient and structured distribution management system and state management
– Reduced Inheritance Tax
– Payment of reasonable compensation for the services you provide to the fund
– Asset Protection
– donations to the fund are excluded from taxation