Taxation of Collective Investment Schemes in Malta

Malta offers a robust and comprehensive legal framework for the establishment and licensing of various types of collective investment schemes (“CISs”) within the European Union, with the following main attractions:

A choice of CIS licences such as Professional Investor Funds (or “PIFs”), Alternative Investment Funds (or AIFs) and UCITS schemes, which offer varying levels of regulatory requirements according to the nature of the targeted investors.
A legal framework accommodating various legal structures for the establishment of investment schemes.
Possibility of re-domiciling or migrating existing investment funds and hedge funds from other financial centres to Malta, thereby ensuring a seamless continuity of the fund and its investments.
Availability of multi-fund companies within the same investment company, enabling the creation of separate sub-funds each having a separate patrimony with varying investment objectives.
Availability of incorporated cell company structures, enabling the creation of a fund platform with each incorporated cell having a distinct licence and separate legal personality.
Time-sensitive handling of all applications by an approachable and pragmatic regulator. Target time-frames are of 7 days for issue of licence for Malta PIFs and of 3 months for CIS or UCITS schemes, subject to the submission of a complete application form.
Cost-effective regulatory and professional fee structures.
High level of professional services and presence of all major audit firms.
All business is conducted in the English language, providing international clients with a more comfortable working environment in a Central European time-zone.
Office space and human resources are up to half the cost of other European jurisdictions.
Flexible regulatory environment.
EU passporting rights.

Malta-registered Collective Investment Schemes (‘CISs) enjoy a tax exemption on the investment income earned so long as the said income is not derived from immovable property situated in Malta and investment income referred to in Article 41A(a) of the Income Tax Act. In essence:

No income or company tax is imposed on schemes having more than 85% of their underlying assets situated outside Malta;
No tax on the Net Asset Value of the scheme;
No withholding tax on dividends paid to non-residents;
No taxation on capital gains on the sale of units by non-residents;
No stamp duty on issues or transfers of units;
No taxation on capital gains on the sale of shares or units by residents provided such shares/units are listed on the Malta Stock Exchange (MSE).
Investment Management Companies can avail of Malta’s efficient corporate tax framework, whereby a net effective tax rate of 3.5-5.0% can be achieved, subject to proper tax structuring.
There also exist attractive tax solutions for individuals holding senior positions within MFSA-licensed financial services operators, where a 15% personal tax rate is imposed on all their employment income earned through such position.

For further information about how GVZH Advocates can help you with your Collective Investment Scheme requirements, kindly contact us on finance@gvzh.mt.