Malta has become an internationally recognized investment funds destination because of the facilities it offers to those setting up investment companies here. The main legislation ruling over collective investment schemes in Malta are the Investment Services Act and the Commercial Law. The Maltese legislation on investment services provides for the following types of collective investment schemes: retail collective investment schemes; private collective investment schemes; professional investor funds (PIFs) and alternative investment funds (AIFs).
The first type of investment funds also includes Undertakings for Collective Investments in Transferable Securities (UCITS), which can retail or non-retail.
Maltese retail collective investment schemes
Malta allows for all types of funds to be called collective investment schemes. Retail investment funds are:
Both types of funds can receive the authorization from the Malta Financial Services Authority (MFSA) provided that they can create and issue units and in they can be operated within or outside of Malta.
Open-ended and closed-ended retail funds in Malta can be operated by itself or by fund managers. However, fund managers will be subject to certain requirements under the Maltese legislation on investment services. The fund manager can also be an investment company based in the EU.
Our Maltese lawyers can provide you with more information on open and closed-ended collective investment schemes.
Private collective investment schemes in Malta
A special category among the collective investment schemes are private funds which are subject to several criteria in Malta. These are:
- it must be set up by a maximum number of 15 investors;
- the investors must be related or close to the promoters of the fund;
- the fund cannot be deemed as professional;
- the fund is set up for personal purposes only.
Maltese private investment funds do not require a license from the MFSA, as the authority will keep it in its data base.
The video below shows the types of collective investment schemes foreign investors can set up in Malta:
How to register collective investment schemes in Malta
All types of Maltese collective investment schemes must obtain a license with the MFSA and then be incorporated under one of the structures allowed by the Company Law. The following types of business forms are available for registering investment funds in Malta:
- investment companies with variable share capital (SICAV);
- investment companies with fixed share capital (INVCO);
- incorporated cell companies (ICC);
- recognized incorporated cell companies (RICC);
- limited partnerships;
- unit trusts;
- common contractual funds.
The SICAV company can also be registered as a multi-class entity which allows the company to divide its shares into different class under one fund, or as a multi-fund or umbrella company which allows the business to divide its shares into classes under multiple funds.
Our lawyers in Malta can assist you in registering a company for any type of collective investment fund.
Taxation of Maltese collective investment funds
All types of collective investment schemes in Malta are subject to the same taxation criteria: at fund or at investor level. The taxation of the fund depends on whether it is prescribed or non-prescribed. Prescribed schemes will be imposed a 15% withholding tax on interest and 10% on other income, while non-prescribed funds are exempt from taxation in Malta. Income from immovable property will be subject to the corporate tax for both types of collective investment schemes. Taxation at investor level implies a 15% withholding tax on any distribution for Maltese resident investors. Non-resident investors will benefit from capital tax exemptions in Malta.
Not long ago, Malta enabled a new type of collective investment schemes which allow for faster incorporation. For complete information on the investment schemes market, do not hesitate to contact our law firm in Malta.