A person/entity wishing to provide one or a combination of the following activities in or from Malta is required to obtain a Category 2 licence in terms of the Investment Services Act prior to undertaking any such activities:
Individual Portfolio Management – Discretionary management of third party assets, where the personmanaging the assets has a discretion to invest any of those assets. Commonly referred to as “managed accounts”.
Collective portfolio management of assets- Discretionary management of assets belonging to a collective investment scheme, where the person managing those assets has a discretion to invest those assets.
Individual Portfolio Management
Once the licence is obtained, it is possible for the Malta company to avail itself of the benefit of passporting such licence into any or all of the EU Member State countries in accordance with the Markets in Financial Instruments Directive (MiFID) subject to a basic notification procedure submitted to the MFSA. This would enable the Maltese Company to provide its services within the relevant Member State/s either (i) through the establishment of a branch or (ii) on the basis of the cross-border provision of services.
Management of Collective Investment Schemes
This category of licence is further sub-divided into 3 sub-categories:
UCITS Management Companies which are those entities which are licenced in terms of the UCITS Directive to provide discretionary management to UCITS Funds and which can passport their services throughout the EU in terms of the said Directive;
Alternative Investment Fund Management companies (AIFMs) which are those companies licensed in terms of the AIFMD to provide discretionary management to Alternative Investment Funds and which can passport their services throughout the EU in terms of the said Directive;
De Minimis AIFMs which are those AIFMs which satisfy one of the following conditions:
(a) Those that manage AIF portfolios whose assets under management (AUM) in total do not exceed a threshold of EUR 100 million (including any assets acquired through use of leverage) whether directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs whose assets under management, including any assets acquired through use of leverage, in total do not exceed a threshold of EUR 100 million; or
(b) Either directly or indirectly, through a company with which the AIFM is linked by common management or control, or by a substantive direct or indirect holding, manage portfolios of AIFs whose assets under management in total do not exceed a threshold of EUR 500 million when the portfolios of AIFs consist of AIFs that are unleveraged and have no redemption rights exercisable during a period of 5 years following the date of initial investment in each AIF;
Besides, Malta’s corporate tax framework, there also exist attractive tax solutions for individuals holding senior positions within MFSA-licensed financial services operators. Such persons may benefit from a favourable tax rate of 15% on all their employment income earned through such position. The Highly Qualified Persons Rules require that such individuals must satisfy a minimum income threshold (exclusive of the annual value of any fringe benefits) in terms of a contract of employment. This 15% personal tax rate is furthermore reduced to 0% for any income in excess of €5m per annum.