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Offshore Mutual Funds in Malta
Offshore mutual funds are mutual funds that are based in and managed from jurisdictions outside of the investor's home country. These types of investments can offer investors access to international markets and major exchanges. To qualify as an offshore fund, a mutual fund must be incorporated in a foreign location. The fund must also be intended to be used by investors who are not residents of the fundâs jurisdiction.
Offshore mutual funds generally operate like traditional mutual funds. Investors with similar investment interests combine their resources to form the fundâs investment capital. The fundâs manager then invests the capital in stocks, bonds or other investments that are consistent with the fundâs objectives.
Offshore mutual funds are usually established in countries that provide significant tax benefits to foreign investors. As a result, these investors are often able to reduce or even eliminate the amount of taxes they pay.
Ever since joining the European Union in 2005 Malta has attracted an ever-increasing interest in its financial services and is steadily becoming an alternative European fund domicile of choice.
There are several advantages when setting up mutual funds in Malta. The main reason is the tax treatment of funds in Malta:
- A fund which owns 15% or more of its portfolio invested in assets outside of Malta is exempt from any income or capital gains tax;
- Capital gains received by investors in the fund who are non-residents of Malta are not subject to any tax in Malta;
- Management and performance fees charged by service companies can be taxed at the rate of 5% if the country of origin has a double taxation agreement with Malta.
There are also many other advantages which give Malta a competitive edge including:
- Low set up costs, efficient regulation, a beneficial tax treatment and Malta's specialized professionals;
- A comprehensive legislative and regulatory framework for financial services activities and international business which have incorporated the latest European standards and EU Directives that is dedicated to tend to all industry needs;
- Service providers do not need to be established or have a physical presence in Malta;
- Extensive network of double taxation agreements;
- Efficient licensing process.