Figures are for tax year 2026. Malta taxes by year of assessment: tax is charged on income "accruing or deriving in the year immediately preceding the year of assessment" (Income Tax Act, Cap. 123, article 27B), so 2026 income is taxed in year of assessment 2027. This Guide goes deep on Malta: what a Maltese foundation and a Maltese trust are, the tax options for each, how beneficiaries are taxed, the registers and confidentiality, duty when assets go in and come out, and when neither vehicle helps. It is a working paper for a qualified adviser, not advice.
Read it with its siblings. The comparison with other countries is in trusts-vs-foundations-by-country. A Malta holding company and the participation exemption are in mt-holding-company-participation-exemption. Malta succession and duty on death are in mt-inheritance-and-succession. Forced heirship claims are in succession-and-forced-heirship-compared. Individual rates are in malta-income-tax, the remittance basis in mt-non-dom, and gains on selling an interest in mt-capital-gains.
The method, step by step
- Fix the facts first: who funds the vehicle, where each founder or settlor and each beneficiary is resident and domiciled, what the vehicle will hold, and when money will be paid out. See "Ask the client first".
- Choose the vehicle under the private law. A trust is governed by the Trusts and Trustees Act, Cap. 331. A foundation is governed by the Civil Code, Cap. 16, Second Schedule. See "What each vehicle is".
- Pick the tax route before the first income arrives, because two elections are irrevocable and one has a thirty-day window: the trust company election under Cap. 123, article 27D(1), the foundation trust election under Foundations (Income Tax) Regulations, S.L. 123.114, regulation 4, and the final tax election under Final Income Tax Without Imputation Regulations, S.L. 123.217. See "Tax on a trust" and "Tax on a foundation".
- Work out how each beneficiary is taxed on what they receive under the route chosen (Cap. 123, articles 27D(8) and 68). See "How beneficiaries are taxed".
- Register and keep registering: the foundation with the Registrar for Legal Persons within three months (Civil Code, Second Schedule, article 31); the trust's beneficial owners with the MFSA within fourteen days (S.L. 331.10), then the yearly confirmation by 31 January. See "Registers and confidentiality".
- Price the duty on each asset that goes in or comes out (Duty on Documents and Transfers Act, Cap. 364), and the capital gains position on settlement (Cap. 123, article 5(18)). See "Duty and capital gains when assets go in and come out".
- Run the worked hypothetical with the client's own numbers, and test the plan against "When a trust or foundation does not help".
What each vehicle is
The trust
Under Cap. 331, article 3, a trust exists where a trustee holds or has vested in him property under an obligation to deal with it "for the benefit of persons (called the beneficiaries), whether or not yet ascertained or in existence", and not for the benefit only of the trustee. "The trust property shall constitute a separate fund owned by the trustee", distinct from the trustee's own property (article 3(2)).
Who may act as trustee matters for tax. The company election in article 27D(1) is open only to a Malta-resident trustee authorised under article 43(3) of Cap. 331, or one that does not need that authorisation under article 43(6). An individual related to the settlor, or who has known the settlor for at least ten years, may act as a "private trustee" without authorisation, subject to the conditions in article 43A of Cap. 331. A private trustee is not authorised under article 43(3) and is not one of the licensed persons that article 43(6) of Cap. 331 frees from authorisation, so on this reading a trust whose only Malta trustee is a private trustee cannot make the article 27D(1) election.
The foundation
Under the Civil Code, Second Schedule, article 26(1), a foundation is an organisation consisting of a "universality of things constituted in writing", made by a founder, whose assets are destined for a specified purpose, for the benefit of a named person or class of persons, or both, and entrusted to the administration of one or more designated persons. Its assets and liabilities are distinct from those of its founder, administrators and beneficiaries. A trust under Cap. 331 is not a foundation (article 26(2)).
- Two legal forms. Under article 26(6), a foundation is set up either for the benefit of beneficiaries (a "beneficiary foundation") or for a specified purpose without beneficiaries (a "purpose foundation"). A purpose foundation is registered only if "the purpose is indicated in clear terms" (article 32(1)).
- Private interest foundation. Article 31B(1) defines a private interest foundation as one that is not a public benefit foundation, is not set up for a public or social purpose, and is not a voluntary or non-profit organisation. A family foundation is normally of this kind. It may hold an investment portfolio, own commercial property or a ship or aircraft, and do the other things in article 31B(3), as a passive owner where article 31B(4) applies.
- How it is made. Only by public deed inter vivos or by will (article 29(1)), with a minimum endowment (article 29(2), table below). The deed must state the items in article 29(4), including, for a beneficiary foundation, either the beneficiaries' names or a declaration that it is constituted for beneficiaries. The beneficiaries may be named instead in a separate "beneficiary statement" signed by the founder before a notary (article 29(4)(h)).
- How long it lasts. A foundation may not state a term longer than one hundred and twenty-five years, except a public benefit foundation and foundations under article 31B(4), (5) and (6), which may last without limit (article 29(7)(a)); a beneficiary foundation that states a longer term ends at the one hundred and twenty-fifth anniversary (article 29(7)(c)).
- Founder. The founder may supervise the administration, obtain copies of the accounts, and may be given powers to "appoint, add or remove any administrators, protectors or beneficiaries" (article 36(1)). A founder may be an administrator or a protector (article 36(2)). The founder may also be a beneficiary of a beneficiary foundation during his lifetime, but then may not be its sole administrator (article 36(3)).
- Administrators. The deed names them or the person who appoints them (article 29(4)(e)). Where the administrators are not resident in Malta, the deed names a local representative ordinarily resident in Malta (article 29(4)(g)).
- Supervisory council or protector. The terms may set up a supervisory council of at least one member, or the office of one or more protectors with similar functions (article 37(1)). They are not administrators (article 37(4)). A founder may not act as protector while he holds office as administrator (article 37(2)).
- Segregated cells. Where a foundation has segregated cells, each cell is treated as a separate foundation for income tax (S.L. 123.114, regulation 5).
| Item | Value | Note (verbatim from the page) |
|---|
| Source | all figures below | https://legislation.mt/eli/cap/16/eng/pdf |
| Minimum endowment of a foundation that is not a public benefit foundation (article 29(2)) | EUR 1,164.69 | "endowment of money or property worth at least one thousand and one hundred and sixty-four euro and sixty-nine cents (€1,164.69)" |
| Penalty on each person liable who does not deliver the registration documents in time (article 31(10)) | EUR 232.94 | "shall be liable to a penalty, payable to the Registrar, of two hundred and thirty-two euro and ninety-four cents (€232.94) each" |
| Longest term of a beneficiary foundation (article 29(7)) | one hundred and twenty-five years | "in excess of one hundred and twenty-five (125) years" |
Tax on a trust
These rules are in Cap. 123, articles 27B to 27D. Rates are in the table at the end of this section.
- Scope. Tax is payable on income attributable to a trust where at least one of the trustees is a person resident in Malta (article 27B(1)). The trustee answers for the tax, and two or more trustees are jointly and severally answerable (article 27C).
- Option 1, transparent by allocation (the default). Where no election under article 27D(1) and no determination under article 27D(2) has been made, the trust's chargeable income is computed "as if the trust was a person that is ordinarily resident and domiciled in Malta", but amounts allocated to beneficiaries are excluded (article 27D(3)(e)). Allocated amounts are amounts in which beneficiaries had a vested right in the income year, amounts to which they were given an entitlement by the end of that year, and other income of the year distributed to them by the end of that year (article 27D(4)(a)). The exclusion holds only if the trustee files the trust return under article 24A of Cap. 372 AND gives each beneficiary a certificate of the amounts (article 27D(4)(b)(i) and (ii)). If vested or entitled amounts are not paid out by 31 March after the income year, the exclusion also needs a payment of tax on the beneficiaries' behalf at the article 56(6) rate. The trustee owes that tax by 30 June after the income year, and the beneficiary takes it as a credit or refund (article 27D(4)(b)(iii)). Income kept in the trust and not allocated is taxed in the trust at the article 56(6) rate (article 27D(5)).
- Look-through for foreign income and foreign beneficiaries. Under the default route, where ALL the trust's income arises outside Malta or is income under article 12(1)(c), AND ALL the beneficiaries are not ordinarily resident in Malta, or not domiciled in Malta, or fully exempt under article 12, the income is treated as derived directly by the beneficiaries and not by the trust. The trustee must tell each beneficiary (article 27D(3)(b)). A second look-through applies where the income is only such income or certain foreign income account dividends, all beneficiaries are not resident in Malta, and the trustee gives the Commissioner the certificate under article 5(3) of Cap. 372 (article 27D(3)(c)). One beneficiary who is ordinarily resident and domiciled in Malta is enough to shut the article 27D(3)(b) route.
- Option 2, taxed as a company (article 27D(1)). A resident trustee authorised under article 43(3) of Cap. 331, or not needing authorisation under article 43(6), may elect to have the trust's income computed "as if such income was derived by a company ordinarily resident and domiciled in Malta", taxed at the article 56(6) rate. The election is open only where a written trust instrument limits the trust's income to "royalties, dividends, capital gains, interest, rents or any other income from investments". The election is irrevocable. It takes effect on the date the trust is established or the resident trustee is appointed, whichever is later, and the form must reach the Commissioner within the deadline in the table below, counted from that later date. Distributions of allocated profits are then "treated as if they were dividends distributed to shareholders of such a company" (article 27D(1)(c)).
- Option 3, the final tax on top of option 2. A trust that applies article 27D(1) is an "entity" under S.L. 123.217, regulation 2 and may choose the final tax described in "The final tax option". A trust on the default route cannot.
- Temporary trusts held by licensed banks or financial institutions can apply for a determination under article 27D(2), with a flat charge at the article 56(6) rate and no deductions, relief or credit. That route is for commercial transactions, not family wealth.
- Anti-abuse. Where the Commissioner considers transactions involving a trust are carried out "with the sole or main purpose of reducing the amount of tax payable by a person", the Commissioner disregards the trust and taxes the person as if the trust were not there (article 27D(10)(a)).
- No second charge. Income attributable to a trust that has been taxed under article 27D(1), (2) or (3) is not charged to further tax "Unless otherwise provided for in this article" (article 27D(7)).
- Foreign tax paid on trust income is treated as paid by the trustee, and double tax relief is claimed through articles 79 to 88 (article 27D(6)).
| Item | Value | Note (verbatim from the page) |
|---|
| Source | all figures below | https://legislation.mt/eli/cap/123/eng/pdf |
| Rate for a company (article 56(6)); also the rate for a trust under article 27D(5), a trust that elected under article 27D(1), and a foundation under S.L. 123.114 regulation 3(1) | 35% | "at the rate of thirty-five cents (0.35) on every euro of the chargeable income of every" |
| Deadline to file the article 27D(1) election form, from establishment or appointment of a resident trustee, whichever is later | thirty days | "not later than thirty days from the date of the establishment of such trust" |
| Exception in article 27D(5): any foundation, trust or other body whose income is "specifically due to be wholly applied in providing income to members of the clergy" (article 56(4)(b)) | twenty cents per euro | "The tax shall be charged at the rate of twenty cents (0.20) on every euro of the chargeable income of" |
| Resident individual, top band, 2026 income (year of assessment 2027): rate where chargeable income exceeds the threshold below | 35% | "where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35%" |
| Resident individual, threshold for the top band (every resident table) | EUR 60,000 | "where the chargeable income exceeds €60,000, the tax shall be determined by multiplying the chargeable income by 35%" |
Tax on a foundation
These rules are in the Foundations (Income Tax) Regulations, S.L. 123.114 (L.N. 312 of 2010). They cover a foundation under the Civil Code Second Schedule that "has submitted evidence to the Commissioner of its registration or recognition" (regulation 2).
- Default, taxed as a company. For the Income Tax Acts a foundation is treated in the same manner as a company ordinarily resident and domiciled in Malta, and company tax rules apply to it equally. Tax is payable on its profits at the article 56(6) rate (regulation 3(1)); the rate is in the table under "Tax on a trust". Distributable profits are allocated as for companies (regulation 3(2)). Distributions to beneficiaries "shall be treated as if they were dividends distributed to shareholders of a company", and a beneficiary's transfer of a beneficial interest is treated as a transfer of a security (regulation 3(4)). The administrators answer for the tax, jointly and severally where there are two or more, and file returns and pay tax as companies do (regulation 3(3)).
- Exclusion for voluntary-organisation and non-profit foundations. The default does NOT apply to a foundation enrolled under the Voluntary Organisations Act, Cap. 492, or one that is not enrolled but is set up for a social purpose AND is non-profit making, unless it tells the Commissioner in writing that it opts irrevocably to be so treated from a year of assessment onwards. If it does not opt in, its profits are taxed at the article 56(1)(d) rate, subject to article 56(9)(b) (regulation 3(5)).
- Election to be taxed as a trust. The administrators may, by notice in writing to the Commissioner, "irrevocably elect that a foundation" be taxed under the provisions of the Act that apply to trusts (regulation 4(1)). The trust rules then apply with the founder read as settlor, the administrators as trustees, and the beneficiaries as beneficiaries; for a purpose foundation, the beneficiaries are "those persons who personally benefit" (regulation 4(2)). Trust returns are used until foundation returns are prescribed, and the return must say it is filed for a foundation under the election (regulation 6). Regulation 4 states no date by which the notice must be given; settle the timing with the Commissioner before income arises.
- The final tax option. Whether a foundation taxed as a company under regulation 3(1) is an "entity" that may choose the final tax is not settled by the text: see the next section.
The final tax option
The Final Income Tax Without Imputation Regulations, S.L. 123.217 (L.N. 188 of 2025, dated 2 September 2025) let an "entity" choose a final tax instead of the article 56(6) rate.
- Who. An "entity" is "a company, including any body of persons that elects to be treated as a company or is deemed to be a company in accordance with the provisions of the Act and any trust that applies the provisions of article 27D(1) of the Act" (regulation 2(1)). A trust that made the article 27D(1) election is inside. A foundation is treated "in the same manner as a company" by S.L. 123.114, which is a regulation, not the Act; whether that makes it an entity is for the accountant to confirm with the Commissioner.
- What is excluded from the charge. Chargeable income under the final tax "shall not include" "(i) dividends received from profits that are not allocated to the final tax account of another company registered in Malta" or "(ii) income that has been subject to tax at a final rate of tax in terms of any other provision of the Act and, save for the provisions of these regulations, are allocated to the final tax account" (regulation 3(1)(b) proviso). Read literally, paragraph (i) may take dividends received from foreign companies out of the final tax charge. The page does not settle this. A vehicle whose income is mainly dividends must have this answered before it elects.
- When. It may cover income of "the fiscal year preceding the year of assessment 2025 and subsequent years", by a notice in the form and by the date the Commissioner sets (regulation 3(2)). It applies from the year of assessment in which the election is made (regulation 3(3)).
- Five-year lock. The entity may not notify a return to the ordinary system "before the end of the five (5)- year period" starting at the beginning of the first year of assessment in which it applied the final tax. After it returns, the ordinary system applies "for at least five (5) consecutive years of assessment" (regulation 3(3) proviso).
- Floor. The final tax "shall in no case be lower than" the ordinary tax reduced by the refunds claimed or claimable under article 48(4) or (4A) of Cap. 372 by all the shareholders on the same profits, "and applying the provisions of article 43(6) of the Act, where applicable" (article 43(6) deems a resident individual registered for these refunds to have received a dividend of the profits) (regulation 3(4)(a)). Where no refund is claimable, the floor equals the ordinary tax, and the election saves nothing.
- Final, no refund. The final tax "shall be final and shall not be available as a credit or set off against the tax liability of any individual or entity, or as a refund to any person" (regulation 3(4)(b)). The taxed profits are moved to the final tax account (regulation 3(4)(c)).
| Item | Value | Note (verbatim from the page) |
|---|
| Source | all figures below | https://legislation.mt/eli/sl/123.217/eng/pdf |
| Final tax rate for an entity that elects, in place of the article 56(6) rate (regulation 3(1)(b)) | 15% | "at the rate of fifteen cents (0.15) on every euro of the chargeable income, in lieu of the rate determined in article 56(6)" |
| Earliest income the election can cover (regulation 3(2)(a)) | fiscal year preceding year of assessment 2025 | "in the fiscal year preceding the year of assessment 2025 and subsequent years" |
| Lock-in before the entity may return to the ordinary system (regulation 3(3)(a)) | five (5) years | "shall not be made before the end of the five (5)- year period" |
| Minimum period in the ordinary system after returning (regulation 3(3)(c)) | five consecutive years of assessment | "shall apply for at least five (5) consecutive years of assessment" |
How beneficiaries are taxed
The answer depends on the route the vehicle is on. All references are to Cap. 123 unless stated.
- Default trust route, or a foundation that elected trust treatment. Allocated amounts "shall be aggregated with other income of the said beneficiaries" and taxed under article 4 (article 27D(8)(a)). They are income of the beneficiary when they vest, when the beneficiary becomes entitled, or when distributed, as the case may be (article 27D(8)(b)). "Income distributed to beneficiaries shall retain its character as to type and country of source", and double tax relief may be claimed (article 27D(8)(c)). A resident individual beneficiary is therefore taxed at personal rates (see
malta-income-tax). A beneficiary who is resident but not domiciled or not ordinarily resident keeps the foreign character of the income, which matters under the remittance basis (see mt-non-dom). Any tax the trustee paid for undistributed amounts under article 27D(4)(b)(iii) is a credit or refund for the beneficiary.
- Trust with no Malta trustee. The same beneficiary rules apply where no trustee is resident in Malta and the beneficiaries include persons who are ordinarily resident and domiciled in Malta, or ordinarily resident or domiciled in Malta where the income is received in Malta (article 27D(8), proviso).
- Company route: a foundation on the default, or a trust that elected under article 27D(1). Distributions are treated as dividends (S.L. 123.114 regulation 3(4); article 27D(1)(c)). An individual resident in Malta who receives a dividend paid out of profits allocated to any taxed account other than the final tax account is not obliged to disclose the dividend in a return, and is not charged to further tax on it (article 68(1)(a) and (b)). Whether the beneficiary is better off declaring the dividend is a computation for the accountant.
- Final tax route. Dividends paid out of profits allocated to the final tax account "shall not be charged to further tax and shall not form part of the chargeable income of any person", and no credit or refund may be claimed on the tax paid on them (article 68(1)(c)).
- Shareholder refunds. Cap. 372, article 48(4A) gives a refund to "a person, in receipt of a dividend paid to him by a company registered in Malta" out of its Maltese taxed account or foreign income account, of six-sevenths of the tax on those profits, five-sevenths for passive interest, royalties and some participating-holding dividends, and none where the company claimed double tax relief on foreign income account profits (Income Tax Management Act, Cap. 372). The claim is open only "provided that such person is for such purpose registered in such manner as may be prescribed", and a refund never exceeds the tax the company actually paid on the profits distributed. Cap. 123, article 2, says "a company registered in Malta" shall mean a company which is resident in Malta (among other cases). S.L. 123.114 regulation 3(1) treats a foundation, for the Income Tax Acts, "in the same manner as a company that is ordinarily" resident and domiciled in Malta, and article 27D(1)(c) computes an electing trust's income "as if such income was derived by a company ordinarily resident and domiciled in Malta". Whether that makes the vehicle a company registered in Malta for article 48(4A) is not settled on the page. Do not promise a refund until the accountant has confirmed it.
- The article 56(4) exception. A foundation, trust or other body whose income is wholly due to be applied in providing income to members of the clergy is taxed at the article 56(4) rate in the table under "Tax on a trust", not the article 56(6) rate. Where the Commissioner is satisfied that part of the income was applied for clergy or ecclesiastical communities resident in Malta, that part is exempt in the hands of the body (article 56(4), proviso).
Registers and confidentiality
The foundation register
- Registration. A foundation acquires legal personality on registration with the Registrar for Legal Persons, unless another law grants it (Civil Code, Second Schedule). For a private interest foundation the application goes in with the constitutive instrument and statute "without the beneficiary statement", the Note of Initial Registration, and the administrators' written consent (article 31(1)(a)). The documents must be delivered within three months of the public deed, of the founder's death for a public will, or of the publication of a secret will (article 31(6)). The late-delivery penalty is in the table under "The foundation". The Registrar may not ask the administrators or the notary for the beneficiary statement of a private interest foundation (article 31(9)).
- Confidentiality. For a private foundation, unless the founder has expressly waived confidentiality, "all documents, statements or declarations submitted to the Registrar" are not open to third parties without the administrators' or supervisory council's written consent duly authenticated by a Notary Public, or the court's permission for someone with "a legitimate interest"; the Note of Initial Registration that must be filed "shall be accessible to the public" (Second Schedule, article 31C). Transactions that must be entered in the Public Registry by law are not made confidential (article 31C(2)(a)). The founder may open all registration documents to third parties by a statement in the statute or a notarially authenticated notice (article 31C(3)). The administrators may give a person they deal with a certificate that the foundation exists and is registered, who the administrators are, and the latest accounts, without breaching confidentiality (article 31C(6)).
The trust beneficial owner register
Under the Trusts and Trustees Act (Register of Beneficial Owners) Regulations, S.L. 331.10, as amended to L.N. 252 of 2026:
- A trustee authorised or registered under article 43 or 43B of Cap. 331, or a private trustee under article 43A, must send the MFSA a declaration of beneficial ownership within fourteen days of being appointed as trustee of an express trust, for every such trust (regulation 3(1)).
- A trustee "whose place of establishment or residence is outside the European Union" files the same declaration where, as trustee, it enters into a business relationship or acquires real estate in Malta, within fourteen days of that event (regulation 3A).
- A change in beneficial ownership is notified within fourteen days after the trustee records it (regulation 5(1)).
- Every trustee who filed a declaration confirms each year, "by not later than 31st January of each year", that there were no changes in the previous calendar year other than notified changes (regulation 5(2)).
Duty and capital gains when assets go in and come out
Duty is charged under the Duty on Documents and Transfers Act, Cap. 364. Rates are in the table below, in words, as the Act prints them.
- The general charge. Article 32(1) charges duty on every document whereby any immovable property or real right over it "is transferred to any person", on the higher of the consideration and the value. Article 42(1) charges duty on the transfers of marketable securities it lists, on the higher of the consideration and the real value.
- Trust exemptions for immovable property (article 32B(1)). No duty is charged on a transfer of immovable property: (a) by a settlor to trustees where the settlor is the sole beneficiary AND has an irrevocable vested right to receive the trust property; (b) and (c) into trusts for certain commercial transactions; (d) between trustees on a change of trustees, provided no beneficial interest is transferred with it; (e) by trustees back to the settlor when the property reverts; (f) by trustees to a beneficiary where duty was charged on the settlor's initial transfer under article 32(1), but duty is then charged on any increase in value between the two dates. In every case the trust "must be established or evidenced by means of a written instrument". A settlement on a family trust where others benefit is not on this list.
- Transfers of beneficial interests. A beneficiary who transfers his beneficial interest in a trust of immovable property to a third party makes a transfer for duty, on the proportionate value (article 32B(2)). The same applies to any change in beneficiary, including a disclaimer, unless the Commissioner orders otherwise for an irrevocable disclaimer not made mainly to avoid duty (article 32B(3)).
- Shares. Article 32B applies in the same way to transfers of marketable securities (article 42A). Shares in a company that mostly holds immovable property carry the increase in the table (article 42(2)(a)).
- Foundations. The administrators may elect that the foundation be treated as a trust for transactions of the article 32B type between the founder and the foundation and between the foundation and beneficiaries; the trust provisions then apply to the foundation (article 32D(1)). Without that election, a transfer of immovable property to a foundation is a transfer "to any person" under article 32(1).
- Family business. Where an individual transfers to family members shares or interests in a partnership, trust or foundation held in a registered family business, the first slice of value in the table is not taken into account. This applies only where the family business owns no immovable property other than business property used for at least three years before the transfer, AND it is more than eighty-five per cent controlled and owned by the individual or family members, AND the Commissioner certifies the conditions (article 41C(2) to (4)).
- Capital gains on settlement. Under Cap. 123, article 5(18), a settlement on a trust evidenced in writing is deemed to be no transfer only "where the sole settlor is also the sole beneficiary". It is deemed a direct donation to beneficiaries other than the settlor only where the instrument gives them "an irrevocable vested right to receive all the property settled in trust" and limits them, for each settlor, to the persons referred to in article 5(2)(e), and the beneficiaries include persons in existence at the time. It gives rise to no gain or loss only under the further conditions of article 5(18)(c), which include a beneficiary with a proven incapacity or impairment. Outside those cases, treat the settlement as a transfer and see
mt-capital-gains.
| Item | Value | Note (verbatim from the page) |
|---|
| Source | all figures below | https://legislation.mt/eli/cap/364/eng/pdf |
| Duty on a document transferring immovable property or a real right over it (article 32(1)) | five euro per one hundred euro | "a duty of five euro (5.00) for every one" |
| Duty on the transfers of marketable securities listed in article 42(1) | two euro per one hundred euro | "A duty of two euro for every one hundred euro or part" |
| Increase where seventy-five percent or more of the company's assets, leaving out current assets other than immovable property, are immovable property or rights over it (article 42(2)(a)) | three euro per one hundred euro | "increased by three euro for every one hundred euro or part thereof of the amount or value of the consideration or the real value of the marketable security" |
| Value not taken into account on a family-business transfer of shares or interests in a partnership, trust or foundation (article 41C(2)) | EUR 150,000 | "no account shall be taken of the first one hundred and fifty thousand euro (€150,000)" |
Worked hypothetical
Hypothetical facts, not a real client. A private interest foundation registered in Malta, with Malta-resident administrators, receives EUR 200,000 of dividends in 2026 from a foreign company. The holding is not a participating holding (see mt-holding-company-participation-exemption), no foreign tax is withheld, and there are no expenses. In 2026 the foundation distributes EUR 100,000 to one beneficiary who is ordinarily resident and domiciled in Malta and whose other chargeable income already exceeds the top-band threshold in the table under "Tax on a trust". Because a beneficiary is ordinarily resident and domiciled in Malta, the article 27D(3)(b) look-through is not available. Amounts are Malta tax only.
Route A: the default, foundation taxed as a company (S.L. 123.114 regulation 3; the result is the same for a trust that elected under article 27D(1)).
| Step | Value | Note |
|---|
| Source | all figures below | https://legislation.mt/eli/cap/123/eng/pdf |
| Hypothetical dividends received | EUR 200,000 | assumption |
| Foundation tax at thirty-five cents per euro | EUR 70,000 | hypothetical, article 56(6) |
| Profit left to distribute | EUR 130,000 | hypothetical |
| Hypothetical distribution to the beneficiary, treated as a dividend | EUR 100,000 | assumption |
The beneficiary need not disclose the dividend and pays no further tax on it (article 68(1)(a) and (b)). Malta tax in total is the foundation's tax in the table. Any article 48(4A) refund is left out because it is not settled that one is claimable on a foundation distribution (see "How beneficiaries are taxed").
Route B: the foundation elected to be taxed as a trust (S.L. 123.114 regulation 4; article 27D(3)(e) and (4)). The administrators file the return and give the beneficiary the certificate.
| Step | Value | Note |
|---|
| Source | all figures below | https://legislation.mt/eli/cap/123/eng/pdf |
| Distributed by the end of 2026 and excluded from the foundation's income | EUR 100,000 | hypothetical, article 27D(3)(e) and (4)(a)(iii) |
| Tax in the foundation on the income it keeps, at thirty-five cents per euro | EUR 35,000 | hypothetical, article 27D(5) |
| Beneficiary's tax on the allocation, all in the 35% band because other income already exceeds EUR 60,000 | EUR 35,000 | hypothetical, articles 27D(8) and 56(1) |
| Malta tax in total | EUR 70,000 | hypothetical |
With these facts the total is the same as route A. The difference is who pays: a beneficiary with lower other income pays less on the allocation, and the income keeps its foreign character, which matters for a non-domiciled beneficiary.
Route C: the final tax (S.L. 123.217). This route assumes, first, that the vehicle is an entity (certain for a trust that elected under article 27D(1), unsettled for a foundation), and second, that the foreign dividends are inside the final tax charge despite proviso (i) to regulation 3(1)(b). If either assumption fails, route C is not available for this income.
| Step | Value | Note |
|---|
| Source | all figures below | https://legislation.mt/eli/sl/123.217/eng/pdf |
| Final tax at fifteen cents per euro on the dividends | EUR 30,000 | hypothetical, regulation 3(1)(b) |
| Floor if a six-sevenths refund is claimable on all the profits: route A tax less six-sevenths of it | EUR 10,000 | hypothetical, regulation 3(4)(a) |
| Floor if no refund is claimable on the profits | EUR 70,000 | hypothetical, regulation 3(4)(a) |
The tax due is the higher of the final tax and the floor. If the six-sevenths refund is claimable, the floor is lower and the final tax in the table stands. If no refund is claimable, the floor equals the route A tax and the election saves nothing. The beneficiary pays no further tax on a dividend from the final tax account, and nobody can claim a credit or refund of the final tax (article 68(1)(c); regulation 3(4)(b)). These branches are not directly comparable with route A, which shows no refund. Where the six-sevenths refund is in fact claimable, the route A total also falls by the refunds claimed, so the route C saving must be measured against route A after refunds.
When a trust or foundation does not help
- A beneficiary taxed at home. Malta's rules decide Malta tax only. A beneficiary resident in another country is taxed on what they receive under that country's law, whatever route the Malta vehicle is on. See
trusts-vs-foundations-by-country.
- Forced heirship in the founder's home country. For a Maltese foundation, Malta's own rules on succession rights, "especially the indefeasible shares of spouses, ascendants and descendants", prevail over the terms of the foundation, except where the foundation has no connection to Malta through the founder's domicile at the time of the endowment or the situs of immovable property (Civil Code, Second Schedule, article 29A). The Malta courts "may apply" the mandatory rules of a foreign law that applies under Maltese private international law, and may recognise a foreign judgment enforcing them (article 29A(6) and (7)). Article 29B then keeps the foundation alive for the unaffected property, and the founder's property not endowed to the foundation is used first, to the extent possible, to meet claims. The Trusts and Trustees Act has matching rules for trusts in articles 6A and 6B (Cap. 331). A Malta vehicle therefore does not shut out a forced heir. See
succession-and-forced-heirship-compared and mt-inheritance-and-succession.
- A tax-driven structure. The Commissioner may disregard a trust used with the sole or main purpose of reducing tax (Cap. 123, article 27D(10)(a)).
- No refund, no saving. The final tax saves nothing where no shareholder refund is claimable, and its five-year lock then works against the family.
- Malta property going in. A settlement of Malta immovable property on a family trust, or an endowment to a foundation, does not fit the article 32B exemptions unless the settlor is the sole beneficiary, so duty and capital gains are in play.
Ask the client first
- Where are the founder or settlor and each beneficiary resident, ordinarily resident and domiciled, now and when the vehicle will pay out? (This decides the article 27D(3)(b) look-through, the remittance basis and home-country tax.)
- What will the vehicle hold: only investments, or a trading business or Malta immovable property? (The article 27D(1) election needs an investment-only instrument; Malta property brings duty and capital gains.)
- Has any election already been made, and on what date was the trust established or the resident trustee appointed? (The thirty-day window and the five-year lock run from fixed dates.)
- Will income be paid out each year, kept in the vehicle, or vested without payment? (This decides the article 27D(4) allocation and the 31 March and 30 June dates.)
- Does the founder or settlor have a spouse, children or parents with forced shares under the law of their domicile or nationality?
- Is any beneficiary a US person, or resident in a country that taxes foreign trusts or foundations on its own rules?
When to refuse or refer
- Refer any claim that a foundation's or trust's beneficiaries can take an article 48(4A) refund. The page does not settle it.
- Refer before any final tax election by a foundation, or by any vehicle whose income is mainly dividends: the entity definition and proviso (i) to regulation 3(1)(b) are unsettled on the page, and the election locks in for five years.
- Refer when an heir with a forced share exists, or the founder is domiciled outside Malta. The private international law and home-country tax are outside this Guide.
- Refer foundations that are voluntary organisations, social-purpose non-profit foundations, public benefit foundations or clergy bodies: their tax is set by regulation 3(5) of S.L. 123.114 or article 56(4) of Cap. 123.
- Refuse to present a vehicle as confidential from tax authorities or registers: the Note of Initial Registration is public, trustees file beneficial owner declarations, and the Commissioner may disregard tax-driven trusts.
- Refer trading foundations, segregated cell foundations, temporary trusts under article 27D(2), and transfers of Malta immovable property into or out of the vehicle.
Sources
- Income Tax Act, Cap. 123: articles 5(18), 27B to 27D, 43(6), 56(1), 56(4), 56(6), 68
- Income Tax Management Act, Cap. 372: article 48(4A)
- Foundations (Income Tax) Regulations, S.L. 123.114
- Final Income Tax Without Imputation Regulations, S.L. 123.217
- Civil Code, Cap. 16, Second Schedule: articles 26 to 37
- Trusts and Trustees Act, Cap. 331: articles 3, 6A, 6B, 43, 43A
- Trusts and Trustees Act (Register of Beneficial Owners) Regulations, S.L. 331.10
- Duty on Documents and Transfers Act, Cap. 364: articles 32, 32B, 32D, 41C, 42, 42(2), 42A