Malta Taxation of Foundations

EU:Member of the EU & Eurozone TAX SYSTEM: Flexible TIMEZONE: Central European Time Zone
(UTC+01:00) NO WITHHOLDING TAX: On outbound dividends CURRENCY: Euro € SECTOR REGULATION: Authorized by Malta Financial
Services Authority WORKFORCE: Well qualified and multilingual DOUBLE TAX TREATIES: Broad network of approx. 70 signed
DTTS

• Separate Legal Personality
• Asset Protection
• Flexible Tax Treatment
• Reputable EU Jurisdiction

The main rules governing taxation of a Malta private foundation are provided in the Malta Income Tax Act and in the Foundations (Income Tax) Regulations.
The general rule is that a Malta private foundation is taxed in the same manner as a company that is ordinarily resident and domiciled in Malta. Nevertheless, the administrators of a foundation may irrevocably elect for the foundation to be taxed under the provisions applicable to trusts.

A trust would be‘tax transparent’ where the following conditions are met cumulatively:

(a) all the income attributable to a foundation consists of
(i) income arising outside Malta, and/or
(ii) interest, discount, premium or royalties or gains or profits arising from the disposal of units in a collective investment scheme or any units and such like instruments relating to linked long term business of insurance, or shares in a company which is not a property company, and/or
(iii) dividends distributed by one or more companies registered in Malta, out of the foreign income account and                                                                                                                (b) all the beneficiaries of the foundation are persons who are not resident in Malta.

A foundation would still be regarded as tax transparent, where any of its beneficiaries are tax resident in Malta, provided that all the income attributable to a foundation consists of income listed in points (i) and/or (ii) above, and provided that all the beneficiaries of the foundation are not domiciled in Malta.