Malta has developed into an international banking centre, and accounts for a significant share of global banking activity with more than 25 credit institutions having a presence on the island.
International and regional players have established operations in the country, offering a full set of banking services that range from retail and investment banking to trade finance and custody services, and prospects for future growth are high. Rated repeatedly as the 10th soundest banking system in the world by the World Economic Forum’s Competitiveness Index 2014-2015, Malta’s banking sector is thriving. The sector’s continued robustness is based on conservative investment policies and a stable deposit base. The island’s constantly expanding international finance sector offers plenty of growth opportunities in areas such as ship finance, investment banking, and custody services.
The information included in this publication is for information purposes only and is subject to change.
Malta has emerged as one of Europe’s top domiciles for investment funds and asset management, hosting more than 580 investment funds.
Malta has long been an established jurisdiction for alternative funds, and its new fund regime has all bases covered, as managers are allowed to run funds under the island’s PIF regime, outside the scope of the directive, or Alternative Investment Funds (AIFs) under the AIFMD, as well as EU-compliant and globally recognised UCITS schemes. In 2016, Malta introduced the Notified AIF (NAIF) regime. The sector gained momentum due to increased asset management and fund servicing activity, with Malta‘s flexible and pro-business attitude helping to consolidate the island’s claim for prominence as a fund jurisdiction. In fact, fund service providers recently voted the island as their favoured European fund domicile. As more offshore funds choose to move into regulated onshore jurisdictions, Malta is poised to win a significant share of the business seeking an EU location.
Malta has made significant strides to the international insurance market in attracting world-class companies to its shores. EU passporting rights and competitive operating costs are key attractions of locating in Malta. The country also championed the introduction of innovative structures such as Protected and Incorporated Cell Companies. Both structures allow firms to write risks through cells within a core company and provide businesses with a cost-effective alternative to setting up a stand-alone insurance company. The cell model is also applicable to insurance managers and brokers. Some 60 insurance companies are today registered in Malta, with the large majority being international players and only a handful of companies being active in the local market. International insurance business now accounts for more than 80 per cent of the total gross written premiums. With new legislation on reinsurance special purpose vehicles, Malta is positioning itself to tap new markets. The island has recognised the growing importance of insurance linked securities and catastrophe bonds, as well as the convergence of reinsurance and capital markets.
Offering a new breed of retirement products, Malta has become a key centre for pension transfers.
The island provides the ideal solution for high-net-worth individuals looking for an investment vehicle, international workers planning for retirement and global corporations seeking pension schemes for their staff. Malta is one of the jurisdictions that meet the requirements set out by the UK tax authorities for Qualifying Recognised Overseas Pension Schemes (QROPS). A retirement scheme licensed in Malta is also eligible as a Qualifying Non-UK Pension Scheme (QNUPS), providing it satisfies the requirements specified in the UK Inheritance Tax Law. While Malta has seen the breakthrough in the international pension sector due to its attractiveness for QROPS and QNUPS, it is now aiming to come to similar agreements with other countries and the island sees an opportunity to cater for the pension needs of companies and individuals from EU markets.
Malta’s strengths as a wealth management centre lie in its holistic offering that caters for a wide spectrum of needs, including succession planning, investment advisory, corporate structuring, investment banking and even lifestyle administration.
The Malta trust, combining all the features of the Anglo-Saxon trust concept within a civil law framework, has quickly become the preferred vehicle for professionals and high-net-worth individuals seeking an effective and trustworthy solution to wealth management issues. Trusts have been set up in Malta to safeguard everything from heirlooms to stocks, bonds, art and real estate. Recently, the island modernised its trust law to bring it in line with international trends and rival trust jurisdictions, ensuring that Malta remains one of the ‘go-to’ names for those in search of wealth management solutions. Private bankers and asset managers cater to all levels of wealth from the mass affluent to the ultra-high-net-worth individual. A wide range of investment vehicles is available – from simple trusts and company structures for families, to high value and more complex set-ups involving trusts, companies, investment funds and foundations for affluent clients.
The information included in these publications is for information purposes only and is subject to change.
Malta offers a highly efficient fiscal regime which avoids double taxation on taxed company profits distributed as dividends.
Companies are taxed at a rate of 35 per cent. However, a full imputation system applies to the taxation of dividends, whereby the tax paid by the company is imputed as a credit to the shareholder receiving the dividend. Following the distribution of a dividend, shareholders are also entitled to claim a tax refund of six-sevenths of the relevant tax paid in respect of trading income and five-sevenths of the relevant tax paid in the case of passive interest and royalties. The refund is reduced to two-thirds where the distributing company claims double-taxation relief. Malta’s tax system has been deemed by the European Commission to be compliant with EU non-discrimination principles and has also gained approval from the OECD.
Malta is increasingly being perceived as a gateway for Islamic finance.
The island believes that its finance linkages and close association with traditional markets for Shariah-compliant finance could be a catalyst for Malta to emerge as a new Islamic financial services hub. Located strategically at the centre of the Mediterranean, Malta offers access to 230 million Muslims in Europe and North Africa, providing a massive client base for Islamic finance practitioners.
Malta’s strategy of winning a share of the Islamic finance pie centres on investment funds, banking and the capital markets. The growth of Islamic finance globally also means there is an increasing demand for new Shariah-compliant business activities. In this climate, Malta is seeking to develop a framework for Islamic banking in Malta while the island’s government is also studying the possibility of following in the footsteps of London and Dubai by issuing a Sukuk, an Islamic finance bond.
With a market capitalisation of €10.3 billion and a turnover of €940 million in 2014, the Malta Stock Exchange is presenting itself as an ideal place to accommodate specialist services, providing small and medium cap companies (SMEs) a step towards eventual listing on the main European exchanges. The island’s strategic position in the Mediterranean also lends itself to Malta becoming a gateway to European investors by using the EU Prospectus Directive to tap into the wider EU capital market. Despite being equipped with and connected to the latest technology, what differentiates the Malta Stock Exchange is its very high standard of personal service. In Malta it is possible to go through the preparation for an initial public offering (IPO) with a lot more support than on a larger exchange. In addition to this, costs and fees remain competitive while those making primary and secondary applications can expect a swift, well-organised process. Local as well as foreign companies can also benefit from ancillary services that range from admission and trading to depository and custodial services.
Wealth Management 2015-2016
© 2014 FinanceMalta