Trusts And Trustees The setting up of trusts and the authorization and supervision of Trustees is regulated in Malta by the Trusts and Trustees Act. Said Act incorporates within its provisions the Hague Convention on the Law Applicable to Trusts and on their Recognition which Malta has ratified. A trust regulated by Maltese law must be registered with the Malta Financial Services Authority. It is defined as an obligation which binds a trustee to deal with property over which he has control (called ‘the trust property’) for the benefit of persons (called the beneficiaries) or for a charitable purpose in accordance with the terms of the trust. When carefully set up, it serves an important tool for estate and wealth management and in certain circumstances it may also serve as an asset protection tool. Commencement/Termination of a Trust - A trust can come into existence in any manner (by instrument in writing, by a will, by oral declaration, by operation of the law or by a judicial decision). - Unless sooner terminated, a trust terminates on the 100th anniversary of the date on which it came into existence. The Parties in a Trust - In a trust, the settlor places the property in the trust, thereby ceasing to have any active role in the trust and leaving it in the hands of a qualified trustee. - The trustee on the other hand, holds the property on trust for the benefit of beneficiaries. - The beneficiaries are those identifiable persons which are ultimately entitled to receive the property benefits under the trust. - The settlor or a company owned by him may be the sole beneficiary of the trust. - It is also allowable to have a Protector of the trust who would normally have the power to appoint/remove trustees and obtain information relating to the management of the trust from said trustees. A trust registered in Malta must have a Maltese Professional Trustee as one of its trustees. Our subsidiary company, Profitrust Services Ltd is licensed by the Malta Financial Services Authority (MFSA) to act as trustee in accordance with applicable legislation. Coupled with the high standards of probity and honesty which Maltese law requires of trustees, trustees are required to execute and exercise their powers and discretions with prudence, diligence and with utmost good faith. A trustee is required to exercise his powers in the interest of the beneficiaries and according to the terms of the trust. Stringent regulations govern the confidentialty duties imposed on trustees. Tax Treatment When income attributable to a trust is distributed by the trustee to a beneficiary, then no tax is charged in the hands of the trustee on that income. Thus, in that case, tax is only charged to the beneficiary who receives the distributed income. Furthermore, provided that (i) the income is distributed by the trustee to the beneficiaries; (ii) all the beneficiaries of a trust are not resident in Malta; and (iii) all the income attributable to a trust does not arise in Malta, then there is no tax impact under Maltese tax law. For a non-resident beneficiary, this means that no tax is payable in Malta by him where the income attributable to the trust and distributed to him, does not arise in Malta. Income not distributed to the beneficiaries is charged in the hands of the trustee at the rate of 35%. Where the trust derives income which is partly arising in Malta, then the normal rates for resident taxation will apply. Naturally, as Malta is also signatory to a number of Double Double Tax Treaties with various countries in the world, a non-resident beneficiary who is taxed in Malta may avail himself of the applicable Tax Treaty provisions in order to avoid double taxation.  
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