As part of Malta’s leading enhanced FATF compliance framework; since May 2021; only entities licensed by the Malta Financial Services Authority (such as CREDAL International Ltd.) can provide the benefit of fiduciary (nominee shareholding) and or trusteeship, achieving additional protective layers of governance and compliance security, and privacy to clients and their families. Since the European Court of Justice’s 22-Nov-22 decision protecting data-privacy as a fundamental right; the Maltese Register of Beneficial Owners, is now duly restricted to competent authorities and licensed subject-persons (such as CREDAL) thereby securing; such client-privacy and data protection.

CORPORATE FIDUCIARY

          Today’s unprecedented levels of obligatory AML, PEP, Sanctions & Bank monitoring, demand the high standard of a fiduciary’s obligatory rigorous and ongoing screening, risk-mitigation, quality record-keeping fulfilling EU-Common Reporting Standards, and US-FATCA; necessary to secure the all-important client protection and peace of mind. This also involves careful GDPR-based management of client, project, transaction, and counter-party data in relation to Regulators, Banks, and Tax-authorities as a part of each trust or company’s legal and operations frame.

Whenever CREDAL acts as a Fiduciary-director or Nominee-shareholder; we maintain our low to medium risk appetite; involving appropriate pre-transaction and “big picture” multi-layer compliance and governance. We do not work with bearer shares; and collaborate exclusively with reputable client-advisors, involving only FATF approved jurisdictions; thus securing risk-appropriate fusion of client business elements and our methodologies.

In building a client-specific Malta/international operation; An entrusted CREDAL management team is designed to secure governance, risk management, business continuity and orderly exit-succession via day-to-day corporate administration, compliance-based record keeping, customised office and IT systems, and full or part-time local or international/remote employees or a sub-contacted/pay-per-use model, enabling use of international resources as and when required.

Our experienced network of lawyers, finance professionals, business administrators, compliance and tech specialists, provides a rich and diverse pool through which a client can be assisted on all corporate matters ranging from strategy to HR & business contracts, M&A work, tax administration and compliance reassurance, investment, joint-venture contracts, and even planning and completing the drafting of testamentary dispositions where necessary.

Be it a Maltese or other EU company or integrating and managing an additional non-EU element, or a trust structure; thanks to our international mind-set and global capacities; we understand and better manage the complexity and challenges, that multi-jurisdictional business inevitably incurs; ranging from local tax exceptions to VAT interpretations that vary from country to country, and treaty variations, resolution of which demands in-depth research, and intelligence-based adaptation to change.

TRUSTS

          Malta’s Trust legislation is modelled on UK jurisprudence and the Trust Law of Jersey (Channel Islands), whereby the trust separates (1) legal OWNERSHIP ; (2) asset ADMINISTRATION; and (3) rights to BENEFIT. As per Malta’s Trust and Trustees Act; “ a trust exists where a person (called a trustee) holds, as owner or has vested in him property under an obligation to deal with that property for the benefit of persons (called the beneficiaries), whether or not yet ascertained or in existence, which is not for the benefit only of the trustee, or for a charitable purpose, or for both such benefit and purpose aforesaid “.

Malta Trusts are considered as tax-neutral for non-Malta-domiciled-residents persons and in relation to income arising from sources other than local activity or Malta immovable property. The rationale is that;  any income attributable to the trust if subject to tax, will be taxed at trustee level; for example receipt of dividends will not be subject to any tax at the trustee level. Upon distribution to beneficiaries, they will be subject to personal income tax on such trust distribution in their home tax residence. Maltese law also provides the useful option where a trust can elect to be tax-treated as if a Malta company, and thus avail itself of Malta’s attractive tax system and its significant amount of double taxation treaties.

The trust is thus created or established by the act of a “ Settlor ” (a natural person or a company), transferring legal ownership of assets or rights to the trust. By the instrument of constitution (trust deed), the guardian, steward or “Trustee” is empowered to hold and administer property as established by terms of the trust for the beneficiaries. The duration of a Malta trust is established in the deed as a fixed period, or until the occurrence of a specific event, or the legal maximum duration of 125 years from the establishment date.

Though not a legal person, the trust is in fact and in law: a “contractual holding of assets” represented by a licensed Maltese trustee, bound to exercise discretion in full accordance with the terms and mechanism established at the outset, with an overriding duty of care to the beneficiaries. Unless specifically prohibited by the trust deed, beneficiaries may be changed but must always be identifiable, be they the original or an additional beneficiary. Although a Malta trust is subject to a duration as above explained, nevertheless; it can be terminated earlier if all beneficiaries acting in unison, request termination, which the trustees are legally obliged to accept and distribute accordingly, unless the Deed specifically prohibits such concerted termination.

The cornerstone of a viable trust, is the settlor’s clear understanding and full acceptance of the legal fact that his proprietary rights are eliminated upon the transfer of assets into the trust, and a measure of influence will be retained only as one of recommended guidance to the trustees in the form of non-binding letters of wishes at the onset or from time to time, or via the reservation of explicit powers such as that of appointing or vetoing an investment advisor, or  reserving (for himself or a protector) the power of specific investment decisions such as acquisition or sale of an immovable asset.

The transfer of these assets into the trust equates to a transfer of ‘beneficial’ rights to the trust, claimable only by the beneficiaries. It is important for the Client to 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.  As a rule; a Trust is used only for the holding of assets and not for any trading activity, thus it is outside the scope of VAT, as there is no economic activity in terms of taxable trading.

          As experienced Trustees, CREDAL always refrains from providing investment advice, however even where the Settlor reserves certain investment powers, or the Trust Deed allows the trustees to vet and appoint an INVESTMENT ADVISOR of the client’s choosing, we always recommend involvement of independent protectors, wealth managers and tax advisors, ensuring respect for beneficiary interests remain the priority, in line with our ethos of law and client respect, prudent custodianship and professional dedication, always placing long-term value above short-sighted gain.

Extract from Malta legislation CAP. 331.TRUSTS AND TRUSTEES Act

Article 3

(1) A trust exists where a person (called a trustee) holds, as owner or has vested in him property under an obligation to deal with that property for the benefit of persons (called the beneficiaries), whether or not yet ascertained or in existence, which is not for the benefit only of the trustee, or for a charitable purpose,or for both such benefit and purpose aforesaid.

(2) The trust property shall constitute a separate fund owned by the trustee, distinct and separate from the personal property of the trustee and from other property held by the trustee under any other trust.

(3) The trust property is held by or in the name or under the control of the trustee who shall have full power as well as the duty for which he is accountable, to administer, employ or dispose of the trust property in accordance with the terms of the trust and any special duties imposed on the trustee by any law applicable thereto, to sue and be sued in respect of the trust and otherwise to act in all matters concerning the trust.

(4) The  holding  of  property  under  trusts  shall  have  the following legal effects: (a) that  personal  creditors  of  the  trustee  shall  have  no recourse against the trust property;(b) that  the  trust  property  shall  not  form  part  of  the trustee’s  personal  estate  upon  his  insolvency  or bankruptcy; and (c) that  the  trust  property  shall  not  form  part  of  the matrimonial property of the trustee or his spouse nor part of the trustee’s estate upon his death.

(5) A trustee shall be entitled to appear or act in his capacity as trustee before any court, any notary or any person acting in an official capacity. Where the trustee desires to register property, movable or immovable, or documents of title to them, he shall be entitled to do so in his capacity as trustee or in such other way that the existence of the trust is disclosed.

(6) Trusts  create  fiduciary  obligations  upon  the  trustee  in favour of the beneficiary of the trusts. The settlor of trusts shall have no rights in relation to trust property except as provided by this Act.