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Malta: a new magnet for High Net Worth Individuals

Malta has hit headlines for its record economic performance during the last decade and has grown into a booming financial centre in the Euro-Mediterranean region.  Sunseeker interviews prominent Maltese lawyer Dr Jean-Philippe Chetcuti, managing partner of Chetcuti Cauchi Advocates, on the reasons for Malta's attractiveness to affluent international families.

Malta's is a very small island with a mere 430,000 inhabitants.  Sun and sea are the only natural resources and the Maltese have traditionally leveraged the central geographical location of Malta, at the centre of popular Mediterranean shipping routes.  Malta has a long history of serving as a maritime, logistical and strategic centrepoint which strong empires of the time have sought to control for their benefit.  With Malta's Independence in 1964, the Maltese too over the reigns of their Island's future and set out a strategy to turn Malta into a high-end touristic destination based on historical, cultural and quality offering.  Alongside tourism, Maltese governments also set out to build an internationally competitive yet upstanding financial services centre, based on quality, fiscal competitiveness and international compliance, in line with Malta's traditional values of integrity, hard work and hospitality.

3Ss: Soundness, Stability, Safety

Malta's economy and its banks have weathered the financial crisis of the first decade of the century without any of the crippling losses the larger economies in Europe have suffered.  Malta succeeded in maintaining economic growth while other larger economies were failing and, through hard work and clever positioning, built a business environment and legal ecosystem that convinced international businesses and wealthy families that Malta could be their financial and lifestyle home in Europe.  The Maltese government enjoys stability and is respect for high standards of rule of law, while living standards are high, offering a secure, family-friendly environment for locals and expatriates alike.

Malta's Citizenship & Residency by Investment Programs

Under Maltese law, individuals or families who make substantial contributions to the Maltese economy qualify for citizenship of European Malta after just one year of their entry into Malta.  Various residence programmes allow European and non-European nationals to qualify for residency in Malta, which is part of the Schengen Area.  Persons resident but not domiciled in Malta (res-non-doms) are only subject to tax on their foreign income if they receive it in Malta and tax on income received in Malta, if any, is at low flat tax rate of 15%.

A tax-friendly Super-Yacht Hub

Malta's ship registry ranks first in Europe and sixth in the world.  Malta managed to build on its maritime tradition and extend its reputation in the super-yachts sector.  Attractive tax rules for yacht chartering of pleasure boats means super-yachts can be owned and registered in Malta while obtaining a low VAT rate.  Specialised high quality yacht services at competitive rates also complement the yachting ecosystem offered by Malta.

Private Aircraft

Malta offers a  number of fiscal incentives in relation to private aircrafts.  The Malta VAT aircraft leasing procedure as well as the revamped Aircraft Registration Act, make Malta an attractive jurisdiction for aircraft registration for both private and commercial aircraft while ensuring full adherence to EU laws and regulations on the registration and ownership of aircraft within the EU.

Efficient tax system for Business operating from Malta

Malta's pro-business attitude and efficient tax system are the key factors contributing to an increase in the number of businesses selecting Malta as jurisdiction of choice for the set up or re-dom of business operations. Individuals and companies in Malta pay a maximum of 35% on income, with some revenues subject to tax refund for resident and non-resident shareholders. Companies may also benefit from cost-effective operational costs, being 20-30% lower than in other financial centres, whilst Highly Qualified foreign Professionals can benefit from a flat tax rate of 15%.

Trusts & Foundations

Although Malta is traditionally a civil law jurisdiction, it has the rare privilege of being one which has adopted trusts in its legislation and allows for the creation of domestic trusts and recognition of foreign law trusts.   Malta trusts are flexible and efficient vehicles for asset protection & asset management, which are equally adaptable to trade and commerce. Besides offering certainty and security, the jurisdiction offers the benefit of trust mobility, therefore enabling trust re-domicilaition.

About the Author

Dr Jean-Philippe Chetcuti
B.A., LL.M.(Warwick), LL.D., TEP
Managing Partner, Chetcuti Cauchi Advcoates
Legal | Tax | Corporate

Dr Jean-Philippe Chetcuti, managing partner of Chetcuti Cauchi Advocates, a leading law firm with offices in Malta, Cyprus, London and Zurich. Dr Chetcuti heads the firm's Private Client practice, specialising in private client tax planning, wealth structuring and citizenship and residency planning. Dr Chetcuti is a key advisor on Malta Citizenship by InvestmentCyprus Citizenship by Investment, the Malta Golden Visa, the Malta Global Residence Programme and buying property in Malta and Cyprus. Dr Chetcuti was the first to be licenced by the Identity Malta Agency (licence IIP 001) to directly file citizenship applications under the Malta Individual Investor Programme.  Within his tax planning and wealth structuring function, he specialises in the use of Cypriot and Malta holding companiesMalta & Cyprus participation Exemption regimesMalta & Cyprus royalty companiesMalta & Cyprus trusts and foundations and Professional Investor Funds.  Jean-Philippe spends his time between the firm's Malta and Cyprus office.

Dr Chetcuti is a member of the Malta Chamber of Advocates and sits on the executive council of the Institute of Financial Services Practitioners. He is also a co-founder and secretary of the MAFE Malta Association of Family Enterprises and has led proposals for the enactment of a world first Family Business Act in Malta.