Corporate & Trust Governance

CREDAL has earned a reputation for delivering success, primarily because of our intensive and comprehensive methodologies, but also because we strive to achieve for each client; a winning balance of operability and compliance. Since our founding, we have protected our brand and our client base with equal vigour, firstly via careful filtering of referrals, project-viability, legal and tax integrity, and secondly by keeping in place a consistent standard of governance achieved via our hallmark multidisciplinary integrating of the accounting, banking, contracting into a transparent accountable system. Such system, ensures each client management team, is ‘built for purpose’; corresponding to client objectives, consistently maintained within a robust frame of International Accounting Standards, ATF & FATCA demands, and independent audit.

 

Advantage Malta as Europe’s Leading Corporate Residence

Cognizant of its timeless geo-strategic location, British Banking heritage, and European civil law contracts and fund sophistication, Malta has for decades maintained a balanced Regulator / Business friendly approach that has been blessed by political stability. Malta has been assimilating international expertise as several start up and back office operations and funds of the eighties evolved into world class players. As one would expect, Malta has implemented all major EU legislation – including the Parent Subsidiary, Royalties and Mergers Directive.

The coming together of these enabling factors has served both as client filter as well as maker of a unique market; attracting small and medium value generating clients, in turn fueling the industry’s depth and expansion. Whilst Malta is not the natural home of established multi-national giants, it is the place where the new multi-national business stars can build a strong foundation that enables them to compete with the best in class on a global basis.

In the last decade, in spite of such Euro-Mediterranean challenges, an increasing number of firms, and individual professional, traders, and entrepreneurs have set up shop in Malta due to its unrivalled European mix of business platforms and quality of life. In such situations, CREDAL switches from an advisory role to administering day-to-day operations as a strategic service partner responsible for the operations frame.

 

Tax Matters

A Malta company remains Europe’s most advantageous corporate solution, providing excellent results since 1995 via its Tax Credit & Refund system. Companies incorporated or re-domiciled to Malta are considered ordinarily resident and such domiciliation subjects them to tax on their world-wide income and capital gains at 35%. Thanks to Malta’s imputation system (utilized since 1948) and both resident and non-resident shareholders alike may benefit from Malta’s full imputation system of taxation, providing significant income tax credits on distribution of profits.

Although fully compliant with EU directives and ECJ case law; in today’s internationally tax aggressive environment; one must be prudent and ensure fitness for purpose also that from a perception level. Therefore we at CREDAL attend to compliance of a Malta corporate solution in line with local, EU, and FATCA demands, as the first half of the job. The second and most vital part is ensuring that Maltese management and control, and the capacities developed by the Maltese structure and team; can and do in fact generate new and unique economic value and do so within the appropriate anti-laundering monitoring security system.

Add to this an impressive array of double tax treaties, and one achieves a solid frame, that is ideal to max the EU’s or Swiss Parent-Subsidiary Directive as well as the EU Interest and Royalties Directives, making Malta the smartest choice even for non-Europeans seeking a Master Holding to manage their European challenges and obligations.

 

Irresistible Peace of mind

In an increasingly uncertain world, one of the few aspects where certainty is achievable is by requesting an Advance Revenue Ruling from the International Tax Unit of the Inland Revenue Department. Such ruling is valid for a period of 5 years and is renewable for a further five-year period. Whilst the ruling is not mandatory, nevertheless it primarily confirms the tax authorities’ interpretation and furthermore preserves the exact tax treatment for at least two years should there be a change in legislation potentially affecting the tax treatment in question.

A family office dedicated to family offices via pro-active trusteeship

In today’s increasingly regulated world of international business and private wealth, and in the face of a new normal automatic exchange of information, where the right to individual privacy has been completely eroded, the best we as Trustees can do is help clients plan and operate in such a way that there will be no unpleasant surprises.

Our approach to this challenge is to direct and prepare all structures and contracts in such a way that the legitimate motivations and methodology are self-evident, always respecting tried and tested models that have legal precedent and justification in principle, business logic and case law. Whilst innovative in our thinking, CREDAL does not experiment with client solutions, and will only endorse an international plan, once there is comprehensive and independent verification of all aspects of the solution.

Be it a traditional family succession plan, or new investors/shareholders wishing to structure their interpersonal dealings, or two parties seeking a safe escrow / security custodian for a loan/investment; CREDAL as trustees makes it clear that our first loyalty is to the principles of fairness and integrity, and not to the strongest or most attractive voice. In this spirit; as escrow trustees or investment trustees, we act as the neutral transaction middle-man; holding security, that is released or converted in part or whole, as and when the independently verifiable triggers or eventualities play out.

 

Focus & Trust Integrity

To achieve a successful long term trust; it is imperative that the Settlor fully understands and accepts the legal and functional fundamental that his proprietary rights are eliminated upon the transfer of assets into the trust, because the transfer of these assets into the trust equates to a “vesting” of beneficial rights to the trust, claimable only by the beneficiaries. A client / settlor must understand that the legal integrity of a trust is conditional upon the Settlor effectively transferring assets/rights to the trust, relinquishing control, so the trustees may administer according to the trust’s establishment purposes. Nevertheless a trust deed may itself provide for specific direction or expert recommendation from the Client-approved legal tax or other specialist or close family friend able to provide useful insight to the Trustees. For example, a trust deed may provide that some or all property is to be managed by a third party recommended by the Client. In all cases as a condition for its acceptance as trustee, CREDAL demands that auditors are appointed and tasked with timely verification of asset value and trust accounts, and communication thereof to the beneficiaries.

 

Enhanced Client Security

In addition to the high standard of care binding a Maltese Trustee, a Co-Trustee or a “Protector” may be appointed by the client to add to the level of Trust monitoring, especially in situations where the trust is established as a transaction mediation mechanism. Typically, the Protector would liaise with the client and client advisors, monitoring the conduct and policy of the Trustee, and obtaining clear records as to trustee deliberations and actions. We strongly recommend the use of a combination of auditor and protector as the most effective fortification of the Trust, safeguarding all that a trust can achieve, especially in intergenerational changes where it is essential for new trust parties or beneficiaries to have immediate confidence in the solution and people ‘inherited’. Moreover, whilst CREDAL does not provide investment advice, should a client request such assistance, the Trust Deed may allow for the appointment of an INVESTMENT ADVISOR of the client’s choosing, (with a discretionary mandate) who would then be responsible to provide investment recommendations (in line with client recommendations) which the Trustees will then consider and unless contra to the spirit of the trust, be legally responsible to carry out such recommendations.

 

Whist it is also recommended to deposit all Trust-documents and Financial-statements as updated with a Notary approved by the Client, it is comforting to note that at all times; trustees are answerable (personal liability under Maltese law), primarily for preservation of the trust fund, as well as their fulfillment of the terms and spirit of the obligations under the Trust Deed. Of course whilst there is nothing more effective than a trust to protect assets by isolating them and legally ring fencing via a trust; this only works if at the time of such establishment there is no actual specific threat. A Malta trust is a non-starter as a delaying tactic or device to frustrate legitimate claimants, as Maltese courts will not tolerate such abuse, and there is clear prohibition against this or the intentional dissipation or transfer of assets as an anti-creditor manoeuver.

 

 Trust Taxation

Maltese trusts are intended by the legislator to be tax neutral, thus functioning to estate plan or tax defer rather than reduce or avoid any taxes ordinarily due. In the case of non-resident beneficiaries deriving income from non-Maltese activities or assets, Capital Growth and any Income derived from trust activity or trust assets will not be subject to tax in Malta, however is subject to tax in the personal income declaration made at the tax residence of the beneficial owner following any receipt of a trust distribution. CREDAL therefore insists that each Settlor obtains written advice from a tax expert in his home jurisdiction as to how such distributions from a Malta trust will be taxed, or where necessary engage our trusted experts in all major cities to provide the requisite certainty, enabling establishment.

 

Family Office – Business & Personal International

          A family office dedicated to family offices via pro-active trusteeship

We at CREDAL specialize in teaming up with extraordinary people, and together developing a next-level operations platform; incorporating tailored systems and support, such that costs are pre-dominantly result driven, within a strong yet versatile governance structure.

In providing family office clients with a platform enabling parallel development and governance of both business and personal matters, transactions and holdings, we advocate the combination of a Malta Trust, Malta Holding Company, and Maltese or Uk or offshore trading subsidiary according to the specific location of the proposed business or assets. In this regard it is useful to note that a Trust may alternatively elect to be treated as a company and pay full Malta tax of 35% on profits, triggering an entitlement to refunds according to the nature of such income being Trading Holding or Passive, as per Malta’s Company Tax Credit & Refund system. However it is important to note that when it comes to tax treaties; a trust can only benefit where it is specifically included as such, and in most cases it was never included at negotiation.

Be it a trust, Maltese or other EU company or an additional non-EU element, thanks to our international mind-set and capacities; we understand and better manage the complexity multi-jurisdictional business inevitably incurs; ranging from local tax exceptions to VAT interpretations that vary from country to country, and treaty variations, all of which demands in-depth research, and constant client – advisor communication and adaptation to change. This advisory and support versatility is what a Family-office gets as CREDAL standard.

The CREDAL foundation is then built upon via transparent and trustworthy governance, legal versatility, and tax sense to secure long term appeal and benefit. To build such a relationship driven long terms rapport, a client cannot view the CREDAL-Malta solution as a stand-alone entity; he must be comfortable with and committed to the engagement of a team as a Joint-Venture-Service-Partner and clear regular communication enabling adjustment as and when circumstances require. Once both sides prioritize this; CREDAL immediately adds the value of more than twenty years of international experience and expertise founded and shaped by family values.

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