Malta, the Flexible Option for Fund Structuring

Whilst one of the smallest of the European Union’s member states, Malta is proving to be one of the fastest growing financial services centres in the world due to its reputation as a dynamic and flexible regulator.

As part of this commitment, Malta is playing to its strengths and becoming recognised as a viable alternative and stable jurisdiction to its larger peers within the fund sector. With a significantly lower cost base and the ability to establish new funds quickly and efficiently, Malta is attracting businesses which need to operate in a well-regulated EU domicile that is able to be flexible and pragmatic but without the high costs, which operate as a barrier to entrants.

Malta indeed offers a wide number of benefits to both funds and their management companies; one of Malta’s two official languages is English, it is ideally placed at the crossroads between Europe, North Africa and the Middle East, has low set-up cost for new companies and fund vehicles and is supported by a proactive regulator: the Malta Financial Services Authority (MFSA).

As Malta’s single appointed regulator, the MFSA has significantly proven itself to be pro-active and has built a name in international circles by making itself accessible to fund managers and investors. Its encouragement for openness, transparency and dialogue, together with its keen interest in meeting with shareholders to discuss their objectives and plans, has strengthened the Island’s reputation as a viable alternative to other well-known EU fund jurisdictions.

Other key factors that underline Malta’s position as a perfect location for fund structuring are its advanced telecommunications network, its extensive double tax treaty network and its effective tax system. The tax legislation has been revised over the years and it is still one of the main drivers for attracting investors to Malta.

In fact, funds in Malta enjoy a number of specific tax advantages, including:

  • No stamp duty on the issue or transfer of shares.
  • No tax on the net asset value of the scheme.
  • No withholding tax on dividends paid to non-residents.
  • No taxation on capital gains on the sale of shares/units by non-residents.
  • No taxation on capital gains on the sale of shares or units by residents provided such shares/units are listed on the Malta Stock Exchange.
  • Non prescribed funds enjoy an important exemption, which applies to the income and gains of the fund.

 

Also, Malta was among the first countries to transpose the UCITS Directive (Undertakings for Collective Investment in Transferable Securities schemes) and host a number of UCITS schemes, which have become popular due to their tax efficiency, high degree of investor protection and harmonised regime throughout Europe.

Along with a UCITS legislation in direct parallel to the larger centres, the Island offers its own highly flexible PIF schemes (Professional Investor Funds), which allow for the development of a wide range of alternative asset structures alongside more traditional investment strategies.

Malta therefore offers a sturdy regulatory framework to investors, fully supported by a business-minded government and business-oriented community. These key elements give the Island qualities associated with a well-established, effective jurisdiction both in regulating a range of financial services and sustaining the fund industry.

Essentially all of Malta’s benefits and attractiveness as a fund jurisdiction, align with those of Abacus – the skill set of our fund team is ideally positioned to support any requirements with a depth of fund establishment and ongoing administration expertise, as well as an efficient cost base and a client service ethic which is designed to add speed and flexibility to the administration process.

Our strength lies in our ability to both advise and structure according to our clients’ needs – we don’t offer a ‘one size fits all’, we seek to work with our clients to ensure they have the best approach to suit their specific needs. We then develop the structure alongside the client, at a level which meets their needs.

We also maintain a flexible and extensive IT platform, which can be tailored to each client’s needs, offering an array of formats to account for each fund type and a choice of client defined reporting.

If you need the support of a service provider with the resources and expertise to allow you to focus on achieving your overarching objective, whilst ensuring that all aspects of the back office operations are delivered to the highest standard of quality and integrity, feel free to contact Paul Watterson at paul.watterson@abacusiom.com or call on +44 1624 689 750.

 

Written by Marta Bellamoli, Marketing Co-ordinator