Funds are generally set up in Malta as investment companies, usually limited liability companies with a variable share capital (SICAV), or less frequently without such variable share capital (INVCO). Such companies have a separate juridicial personality from its shareholders or unit holders.

For tax purposes, a collective investment scheme or in the case that the scheme is divided into sub-funds, a sub fund of that scheme must be categorised either as a prescribed fund or a non-prescribed fund.

A fund incorporated in Malta, will be treated as a prescribed fund if:

  • the value of the assests situated in Malta is or is expected to be at least 85% of the value of the total asssests; and 
  • it has been so classified by the Commissioner of Inland Revenue by means of a notice in writing.

If, on the other hand, the fund does not satisfy the aforementioned conditions it will be classified as a non-prescribed fund.

This classification is important in order to establish whether and how tax is charged on investment income, capital gains and dividend distributions. Funds incorporated in Malta are deemed to be resident in Malta for tax purposes and as a result could take advantage of Malta‚Äôs Double Taxation Treaties.

 

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