Investors in Malta can make use of a wide array of products and services suited to every need, guided by a multitude of experienced service providers in a competitive market backed by an accessible regulator, finding a stable Eurozone country with full access to European markets and close ties to regional as well as global economies.
The comprehensive legal framework has provisions for specialised use cases, while attractive tax benefits, incentives for investment, and a moderate cost base mean that, trite as it may sound, the old cliché that “so many people can’t be wrong” does hold water when it comes to Malta’s position as a hub for financial services.
Private individuals, wealth managers, and company executives choose Malta for many different reasons. A person selecting Malta as their preferred domicile for luxury assets does not have the same interests as a Fortune 100 multinational choosing to set up a Maltese insurance subsidiary, and both have little in common with a fledgling enterprise whose innovative AI-based offering promises to disrupt traditional finance, a multi-family office expanding to Europe, or a bank seeking to diversify its operational footprint.
The common thread running through the Maltese financial sector’s phenomenal success over the last three decades lies in its commitment to security, progress, and exceptional service. Underpinning the industry’s growth, one finds a regulatory regime that ensures the highest levels of protection without stifling innovation, crafted by receptive authorities keen to facilitate investment by constructing novel legislative frameworks.
A wealth management hub with a difference, the country is also a lifestyle destination with several residency options, while costs remain considerably lower than those of other well-established financial hubs, allowing it to stand out as a significant and competitive jurisdiction.
That Malta offers a compelling alternative to better-known financial centres is certain. For what, exactly, that could mean for you, read on.
A Credible Reputation
Long considered a jurisdiction with compliance requirements that go above and beyond those requested by other countries, Malta’s exit from the FATF grey list in record time cemented its reputation as a top performer. It is now well-positioned to capitalise on its beefed-up compliance framework that marks it as one of the safest places to hold wealth globally.
The Malta Financial Services Authority (MFSA), the regulator for the full spectrum of financial services, keeps a watchful eye on licensed enterprises, and works closely with them as well as with law enforcement and international partners to maintain its credibility.
Customers can further rest assured that their money is safe thanks to a separate and autonomous body, the Arbiter for Financial Services, which mediates, investigates, and adjudicates complaints for customers against financial services providers.
Meanwhile, the country’s push to establish itself at the forefront of the blockchain revolution has led to the establishment of the Malta Digital Innovation Authority, the first regulator of its kind in the world, certifying Distributed Ledger Technology platforms and smart contracts while handling the voluntary registration of technology arrangements.
Unparalleled International Access
As a European Union member state, Malta allows companies with financial products and services licensed by the MFSA the possibility to “passport” their offerings to all other EU countries. This grants companies access to every national market in the EU with minimal operational and bureaucratic costs, while helping to maintain investor confidence in high regulatory standards.
Other elements, more nebulous, often overlooked, but no less salient, provide additional advantages. These include its geographical location, its native Semitic language and official use of English, its Constitutional neutrality, its membership of the Commonwealth and the OECD, and its track record as a fair participant in international affairs and provider of aid to those in need.
Known as a friend to all, Malta offers the possibility of open communication unburdened by historical grievances and biased perceptions. By allowing every party to feel comfortable and at ease, a Maltese setting or domicile acts as a lubricant for the relational gears of investment negotiations to turn freely.
A Mature, Forward-Looking Industry
The financial services sector’s gross value added has increased by an average of 7.7 per cent every year since 2010, and today accounts for roughly 10 per cent of Malta’s GDP while employing some 5 per cent of its workforce. Its important role in reducing the country’s dependence on tourism was thrown into relief during the COVID-19 pandemic-disrupted 2020, when it continued to grow as several other sectors ground to a halt. The sector also plays an important role by contributing to net exports, leading to a consistent current account surplus.
As at mid-2022, there were over 500 investment funds with over €17 billion under administration domiciled in Malta, with Maltese fund administrators additionally managing over 200 funds domiciled abroad with a net asset value of over €5 billion. There are around 25 banks with operations in the country, some 50 financial institutions, and over 40 payment providers, while pension and insurance activities appear to be growing at an even faster rate than other financial services, particularly following Brexit.
Authorities’ proactive approach to regulation has resulted in legislation that provides for a broad and flexible range of investment and corporate vehicles suited to a broad range of uses. A number of these, like the various protected cell structures, are unique in Europe.
In recent years, Malta has made a mark as a hub for innovative financial services and solutions as FinTech and digital-first companies are attracted to its trailblazing regulatory outlook. Among other developments, the country rolled out the world’s first holistic regulatory framework for Virtual Financial Assets and Distributed Ledger Technologies.
In terms of investor service providers, the top seven international audit and advisory networks all have a presence in Malta, along with a number of smaller players, while practically all of the islands’ major law firms have specialised departments for financial matters.
Malta-based operations can benefit from one of the lowest effective tax rates in Europe, thanks to a tax refund system for corporate shareholders. Malta also has over 70 double taxation agreements in place with other countries, including the United States, while nationals of countries not covered by a specific treaty are eligible for unilateral tax relief.
This feature was first carried in the Malta Invest 2023 edition. Malta Invest is the first-ever comprehensive international investment guide focusing on Malta as a destination. It is produced by Content House Group.
Luigi Muscat Filletti / Unsplash
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