Malta has been dubbed as the fastest-growing EU market for securitisation transactions for the last five years by a leading arranger of structured investment products and securitisation transactions firm. This firm has chosen Malta as its domicile, owing to its potential to become a hub for global players that operate within the sphere of securitisation- and with good reason.
Malta is already gearing itself to take on the role of a global hub for securitisation. The island is set to launch an Institutional Securitisations Market (ISM) later on in 2017 which will put Malta at par and direct competition with the financial services hubs of Luxemburg and Dublin.
Securitisation and the Institutional Securitisations Market
Securitisation is a means to raise finance on markets for financial instruments on the back of other forms of assets. The launch of the ISM embodies a part of the Malta Stock Exchange (MSE)’s efforts to provide a higher quality service and advance Malta’s standing as a financial services hub.
The Maltese securitisation framework offers a number of tax benefits, including no VAT applied to transactions, no withholding tax payable on dividends or interests, and no taxation on profits made inside securitisations in Malta. Such benefits allow the benefits which do not suffer tax to be accrued inside an asset-backed security, thus offsetting the depreciation of underlying asset. This significantly reduces the default risk and significantly reduces the possibility of bankruptcy. Moreover, a Malta securitisation vehicle may always claim the deductions on the cost of acquisition, finance expenses as well as operating expenses, and a further deduction on its remaining taxable income.
Additionally, incorporating a Malta Securitisation Vehicle does not require a local presence, and the process is a highly expedient one, requiring just 2-3 weeks.
Stephanie Galea, head of business development and marketing at the MSE, has noted: ‘The ISM will be a regulated and very specialised market for institutional investors. We anticipate that it will be attractive to those issuers looking for a less expensive alternative to other markets but still with high professional standards and a comprehensive range of services to give issuers and investors a one-stop shop in this sector.”
For more information on the set up of Malta Securitisation Vehicles, please have a look at our factsheet or contact us to see how we can help you. Our dedicated team of Financial Services specialists will assist you in benefitting from Malta’s sterling financial services.
