Taxation on Trusts

Malta Trusts Highlights

Need a tax advisor?

We connect you with the most reputable and licensed service providers in Malta.

Taxation On Maltese Trusts

Income from trusts in Malta are under Maltese tax law also to be taxed in the country, provided that at least one of the trustees is a Maltese tax resident. Furthermore, the Maltese law provides the option for a licensed trustee to have the trust treated as a company.

The election to be treated as a company is possible where:

• The trustee is an authorised trustee;
• The trust has been established by an instrument in writing;
• Election is made within 30 days from constitution of trust or appointment of Malta resident trustees; and
• Income attributable to the trust consists only of dividends, interest, royalties, capital gains and income from investments

After the election has been made, it is irrevocable, and the trust will be treated as a company and taxed at the normal corporate income tax rate of 35%. Tax credits and double taxation relief on income and tax from overseas are applicable just like regular companies.

Maltese tax legislation on trusts also deems income to be taxable in the hands of the beneficiaries opposed to the trustees. The trustee of a trust would therefore be wholly transparent for Maltese tax purposes. This happens when:

• All income of a trust arises outside Malta or consists of interest, royalties, gains or profits on disposable shares or securities of a company, the assets which do not consists wholly of immovable property in Malta
• All the beneficiaries of the trust are not persons ordinary resident and domiciled in Malta or persons whose income is exempt from tax under Maltese law.

Any transfers by a beneficiary of his or her beneficial interest would be charged no tax on in Malta when:

• the trust property does not include any chargeable assets; or
• the transferring beneficiary is not ordinarily resident and domiciled in Malta and the trust property does not include any chargeable assets.