Wealthy Families using Malta as a Family Office Location
Family offices have been traditionally used by wealthy families in order to have flexibility and privacy in terms of dealing with their own investments. A closer look shows that nowadays more and more families are considering adopting the model and it is indeed a global trend that has developed over the last few years. Wealth management and succession plans are being reconsidered to better prepare against future uncertainty.
Why Malta as a Family Office?
Malta has been a favourite location attracting not only professionals in IT, aviation, financial services and shipping but also family principals and family offices to make this Mediterranean island their base. With its warm climate throughout the year, and safe yet varied lifestyle, Malta appeals to families wanted a family office location that is fun to visit and, on account of Malta's excellent connectivity, fits within their global travel plans.
As family offices seek to geographically diversify their investments and key assets, Malta has served as both as an investment base and as a wealth structuring platform for European and non-European high-net-worth families and their family office staff to operate their European and global assets and portfolios. In the process, many have taken advantage of Malta's property boom , invest and structure themselves and their assets in a tax-efficient.
Advantages of Malta as a Family Office
A Malta family office is able to enjoy the following:
- A legal and regulatory framework that responds to the changing financial markets,
- Estate and succession planning rules that are clear and that allow for various precautions to be put in place by the family for the protection of their family’s wealth,
- State of the art office facilities,
- Regulated lawyers, tax advisors, trustees and insurers,
- Good technology servicing support system with service providers who are at the forefront of technological advancements,
- Pro-business environment,
- Certainty in terms of tax legislation,
- Political and economic stability,
- Favourable lifestyle,
- Well connected to the major European cities,
- Very advanced healthcare system.
Types of Malta Family Offices
There are mainly two types of family offices: single family office or multi family office.
Malta Single Family Office
The first is a Malta single family office, which provides wealth management services similar to what private banks offer but limited to one family. This is a very structured organisation that would reflect the requirements and preferences of the family setting it up. A Malta single- family office has no requirement for a minimum amount of assets under management and neither does it have to obtain a licence in order to be able to invest in financial instruments. This is because a Malta family office would not be managing funds for third parties but only own funds.
If the Malta family office chooses to set itself up as a Malta private fund it can avail itself of a simpler authorisation process by the Malta Financial Services Authority. In such cases the Authority limits the amount of information required on the persons involved and does not assess the competence of the managers of the fund. This fund also commonly referred to as a Malta family and friends fund can have up to fifteen individual investors. The participants need to be close friends or relatives and the scheme should not qualify as a Malta professional investor fund.
Malta Multi-Family Office
The second type is a Malta multi-family office, providing the same services but extending these to various families. A Malta multi-family office is typically set-up as or incorporates in it a licensed or registered fund management company. The number of investment professionals here will depend on the value of the asset base and the number of families that have engaged with it.
Considerations for Setting up or Relocating a Family Office
In considering a new family office setup or a relocation of an existing family office, families and their advisors take into account the following considerations:
Risk Control
The minimisation of risk is a topic that all setups have to deal with whether it is in the family environment or in the business environment. Management of risks which cannot be avoided is also key for the family to be able to carry out their vision and succeed over multiple generations.
Financial Control
In terms of the assessment of financial control together with their advisors the family should consider their current investment strategies and their asset spread. Costs need to be looked at with the aim of controlling these in a world where returns are looking more endangered and unpredictable. Whilst traditionally families were advised of the risk of future generations tampering with the wealth built by their ancestors and the risk of that being lost with the introduction of the second and third generations in the decision-making processes, now families are at risk of losing their wealth now because of external forces. Inflation cost should be one of the main factors under consideration.
Family Offices designed around the Family's Values & Needs
The pandemic has shown us that health threats can be very sudden and devastating and families have realised that preparing the next generation to take over is an ever pressing need that should be dealt with sooner rather than later. Heirs need to be trained not only in the family investment strategies but also in how to deal with major threats such as a pandemic or a war. Having access to global deals is a reality that the next generation needs to be geared up because it can pose an opportunity as much as a threat.
A family vision is at the core of leading the family office into the right direction. Having a strategic plan with goals in place would feed the achievable to the different individuals involved. The family members must be in the know of all the details including cost to income ratios, growth rates and the likelihood of new risks emerging, their likely impact and how these can be mitigated. The choice of jurisdiction and advisor is at the centre of all this and has an inevitable impact on the success of the family office.
Our Malta Family Office Advisory Services
Led by Senior Partners Dr Jean-Philippe Chetcuti and Dr Priscilla Mifsud Parker, our Global Family Office Advisory practice undertakes a limited number of bespoke assignments each year. Family office advisory projects, which include family office design, review, audit, and advice, require a hands-on approach due to their complex and personalised nature.
Our multi-disciplinary approach ensures comprehensive all-in-house services to business families and successful entrepreneurs of all ages, addressing both their business needs and personal family goals. Specialist private client practices combine seamlessly together to provide best-in-class advice on personal tax, corporate tax, trusts, corporate governance, immigration and family law often on an international level. Our experienced family office lawyers understand the unique needs of families and offer strategic advice to enhance wealth growth and protection, business potential, smooth operations and effective personal lifestyle management.
Family Office Services in a Global Context
Our Family Office Structuring practice operates on a global level through our close network of legal and tax firms and works with best-in-class colleagues in their respective fields across the globe. This ensures we are able to offer our clients the best fit for their requirements without country bias.
As a multi-disciplinary legal and tax firm with a strong international practice, Chetcuti Cauchi offers a wide range of services for family offices, tailored to meet the unique needs of high-net-worth families and their businesses. These services are designed to provide comprehensive support to family offices, helping them manage their wealth, ensure compliance, and achieve their long-term goals.
Read Dr Jean-Philippe Chetcuti's contribution to the Maltese legal portal LegalMalta: Malta: The Prime Family Office Location in Europe.
