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The law applicable to foundations registered in Malta can be found in the Second Schedule Title III to the Civil Code, Chapter 16 of the Laws of Malta.

Foundations under Maltese law may be either a private (the “Private Foundation”) or a purpose foundation (the “Purpose Foundation”). A Private Foundation is established for the benefit of beneficiaries, whereas a Purpose Foundation relates to foundations established exclusively for a charitable, philanthropic or other social purpose or as a non-profit organization. A foundation may be constituted by virtue of a public deed inter vivos or by a will. A public deed is required to be published by a Public Notary and registered in the Public Registry. The Maltese courts have provided broad jurisprudence on the formalities required for the setting up and administration of Maltese foundations.

Definition of Foundation under Maltese Law

Article 26 of Chapter 16 of the Laws of Malta (the “Civil Code”) stipulates that a foundation is an organisation consisting of a universality of things constituted in writing, including by means of a will, by a founder or founders (the “Founder(s)”) whereby assets are destined either:

  • for the fulfilment of a specified purpose; or
  • for the benefit of a named person or class of persons, and are entrusted to the administration of a designated person or persons. The patrimony, namely assets and liabilities, of the foundation is kept distinct from that of its Founder, administrator(s) (the “Administrator(s)”) or any beneficiaries.

The term “foundation” includes all organisations, institutes or similarly titled patrimonies which are set up through the bequest, endowment or appropriation of assets, by public deed or otherwise and howsoever named, for a stated purpose or for the benefit of a named person or class of persons, to be achieved through a designated Administrator or Administrators, but shall not include trusts as defined in Chapter 331 of the Laws of Malta (the “Trusts and Trustees Act.”)

The assets of a foundation may originate from any lawful business or activity and may consist of present or future assets of any nature.

When a testamentary bequest is made, a testamentary executor or the heirs of a deceased person shall be deemed to enjoy the power to convert such bequest into a foundation having the same aims and purposes as stated in the will, and register the same. The testamentary executor or heirs shall have the power, which shall be exercised with the utmost good faith, to draft the terms and conditions of the Statute of the foundation, designate the Administrators and regulate all matters which may appear to them to be relevant to comply with the requirements of registration and the wishes of the testator.

It is imperative to note that pious foundations established for purposes as defined in applicable religious laws are not subject to or in any manner regulated by the Second Schedule of the Civil Code and are regulated by the relative religious laws unless they opt to register as foundations in terms of the Civil Code.

Foundations in the form of marriage legacies shall continue to be regulated by the laws in force on the 31st December, 2006 unless they opt to register as foundations in terms of the Second Schedule of the Civil Code in which case they shall be regulated by the provisions of the Civil Code from such date.

Setting up of a Foundation in Malta

Under Maltese legislation a foundation may only be constituted by virtue of a public deed inter vivos or by a will.

The deed of foundation (the “Statute”) shall contain, on pain of nullity, an endowment of money or property worth at least one thousand and one hundred and sixty-four euro and sixty-nine cents (€1,164.69).This does not apply to the case of a foundation established exclusively for a social purpose or as non-profit making in which case the endowment shall amount to at least two hundred and thirty-two euro and ninety-four cents (€232.94).

When the property endowed is not cash or other asset, the value of which appears on the face of it, the Administrators shall declare, in a statement which shall be attached to the application form for registration, that in their considered opinion the property endowed upon or vested in the foundation has a value of at least the amount required by law:

Provided that a foundation which has been duly registered shall not lose its eligibility to remain registered if, subsequent to registration, the value of its assets is reduced to less than the amount required by law.

The Statute shall, on pain of nullity, state the following:

  • the name of the foundation, which shall include a denomination that clearly indicates that the foundation is in fact a foundation;
  • the registered address, in Malta;
  • the purposes or objects;
  • the constitutive assets with which it is formed;
  • the composition of the board of administration and the names of the first Administrators, and if not yet appointed, the method of their appointment;
  • the legal representation;
  • the term for which it is established, if any;
  • in the case of Administrators which are non-residents of Malta, the name and address of a person resident in Malta who has been appointed to act as the local representative of the foundation in Malta; and
  • in the case of a Private Foundation, either the names of beneficiaries, or a declaration that the foundation is constituted for the benefit of beneficiaries. In the latter case the beneficiaries shall be indicated in a written instrument, which need not form part of the public deed, called the “beneficiary statement”, signed by the Founder and addressed to the Administrators, and the same shall be authenticated by the Notary Public who publishes the Statute.

The Statute shall be signed by the Founders and any person subscribing to the Statute after a foundation is established shall be deemed to have consented to all the provisions of the Statute and all rules which may have been validly promulgated by the foundation until such date. In the event that more than three (3) Founders wish to establish a foundation, a statement may be made of this fact in the Statute and the signature of three (3) Founders on behalf of all founding members stated in a schedule to the Statute shall be sufficient to indicate the consent of all stated Founders.

As soon as a foundation is registered with the Registrar for Legal Persons, it acquires legal personality. It is not lawful to state a term in excess of one hundred (100) years except in case of a Purpose Foundation, a foundation used as a collective investment vehicle or a foundation used in a securitisation transaction which may be established for an unlimited term.

When no term is specified, a foundation shall be valid for one (100) hundred years from its establishment. In the event that a longer term is stated in the Statute

it shall terminate on the hundredth anniversary from when it came into existence. A foundation and its legal personality cease to exist with effect from the date when it is struck off from the relevant register.

The limitation on duration also applies in the case a foundation results from the conversion of another organisation or of a trust in accordance with the provisions found in the Second Schedule of the Civil Code and any regulations. In such a case periods of existence shall be considered cumulatively.

Generally, a Foundation may not have the right to trade or carry on commercial activities, even if the proceeds of such efforts are destined to social purposes. However there are three (3) exceptions found under Article 32A of the Second Schedule of the Civil Code.

Purpose Foundation in Malta

A Purpose Foundation is a foundation which is established exclusively for a charitable, philanthropic or other social purpose or as a non-profit organisation or for any other lawful purpose.

The purpose of a foundation may be amended or added by means of an additional public deed if the Founder so wishes, or if permitted by the statute, another body or person. The Court may authorize such amendment or addition to the purpose on the application of the Administrator, after the death of the Founder. The Statute of the foundation can indicate the manner in which the monies or property of the foundation may be utilized for the attainment of the purpose for which the foundation is established. However, when there is no such indication the Administrators may exercise their discretion. In the Statute establishing a foundation, an indication may be done on how the assets of the foundation are to be applied if its purpose is achieved, exhausted or becomes impossible. When no such indication is made, the Administrators or the supervisory council may make specific proposals to the Court for authorization to use or dispose of the assets, unless the Founder amends the purpose of the foundation.

Any disposal of assets shall be made only to another purpose foundation with similar purposes.

When the dominant purpose of a foundation is to support a class of persons which constitute a sector within the community as a whole, because of a particular social, physical or other need they may have or disability they may suffer from, the indication of such a class of persons or one or more members of such a class shall not render it a Private Foundation but it shall be treated as a Purpose Foundation in terms of law.

Private Foundation in Malta

A private foundation is a foundation which is established for a private benefit. . Unless evident from the Statute, a foundation shall be considered to be a private foundation.

Its Main Characteristics

A foundation may be established for the private benefit of one or more persons or of a class of persons and such beneficiaries shall enjoy such benefits, and shall have legally enforceable rights against the foundation, as may be stated in the terms of the foundation and the provisions of the Second Schedule of the Civil Code.

The interest of the beneficiary (the “Beneficiary”) under a foundation shall be deemed to be movable property even if it includes immovable property.

It is pertinent to note that the benefit under a foundation is personal to the Beneficiary. However this benefit is subject to any applicable laws and only as stated in the terms of the foundation. The creditors, spouses, heirs or legatees of the Beneficiary may have rights only to the extent of the Beneficiary’s entitlements under the foundation and have no other rights in relation to the assets of the foundation.

Of utmost importance is the fact that unless expressly provided for in the Statute, upon the death of the Beneficiary the Beneficiary’s entitlement under a foundation shall not be transferred to his heirs but shall terminate.

A Private Foundation may be terminated prior to the term for which it is established if all beneficiaries demand this. However, if the Founder is still alive his consent is also required. The Founder may in the Statute exclude such a right of the beneficiaries. Moreover, the Statute may determine how the assets remaining in the foundation are to be distributed on termination.

When a foundation terminates for any other reason at law, the assets of the foundation shall, subject to the terms of the foundation, devolve on the Founder or his / her heirs at law.

Beneficiaries in a Malta Foundation

It is obligatory that Private Foundations must clearly state the class of persons who are entitled to benefit or the person or persons entitled to benefit as clearly and as fully as possible. This is done by firstly specifying names, surnames, number of an identification document which is legally valid, father’s name, mother’s name and maiden surname and other relevant personal or family factors to eliminate any doubt as to who the intended Beneficiary is, and if there are no beneficiaries identifiable or ascertainable as aforesaid, the foundation shall be deemed to be for the private benefit of the Founders or their successors in title.

Such identification need not be made in the Statute but may be made in a separate Beneficiary statement.

A person who is not yet conceived, at the time of the creation of a foundation, may still be named as a Beneficiary or form part of a class of beneficiaries but his or her rights arise only once he or she is born viable.

The Founder of a foundation may also be a Beneficiary.

If the Founders are still alive and capable of acting they may amend the Statute subject to its terms and conditions. The Statute may be amended by substituting, adding or removing beneficiaries. However such decision must not affect the validity of anything lawfully done by the Administrators prior to such decision, before he receives notice of such amendment, nor shall it affect or interrupt lawful acts in progress or lawful commitments made and not yet fulfilled by the administrators.

A Beneficiary may be appointed subject to a condition; or for a specified time or up to a specified value of benefit. However, if the Founder dies, the Beneficiary may apply to the Court requesting it to eliminate any condition or requirement which is considered to be unreasonable paying regard to all the circumstances.

Persons who are unworthy of receiving under a will cannot receive as beneficiaries under a foundation.

The Statute may provide for the addition of a person as a Beneficiary or the exclusion of a Beneficiary from benefit at the discretion of the administrators.

The may make the interest of a Beneficiary:

  • liable to termination; or
  • subject to restriction on alienation or dealing; or
  • subject to diminution or termination in the event of the Beneficiary becoming bankrupt, or insolvent, or any of his property becoming liable to seizure for the benefit of his creditors; or
  • not liable to attachment under a garnishee order issued against the administrator or to termination without the prior consent of the Court, when the interest is expressed to be for the maintenance of the Beneficiary or as a pension.
  • If the benefit consists in an annuity or pension or the use and enjoyment of property and the enjoyment of fruits therefrom, the terms of the foundation may make the interests of the Beneficiary:
  1. subject to restriction on alienation or dealing;
  2. not liable to attachment under a garnishee order served on the Administrators as garnishees; or
  3. not liable to termination without the prior consent of the Court.

It is pertinent to note that when the Administrator is granted power and discretion to add a Beneficiary, such power shall be valid on condition that adequate indication is given in the Statute or in the Beneficiary statement as to the class of which the Beneficiary forms part. In the absence of such indication the power shall be null and void.

A person who may be appointed as a Beneficiary in terms of a power or discretion granted to the Administrator shall not enjoy any rights in relation to the foundation or vis-a-vis the Administrator and shall not be considered a Beneficiary until appointed a Beneficiary by the Administrator.

Rights of Beneficiaries in a Foundation based in Malta

The Beneficiary has a right to information subject to certain restrictions as stipulated in Article 38, Second Schedule of the Civil Code.

Administrators in a Malta Foundation

Administrators of a foundation may be juridical persons provided that the juridical person is composed of at least three (3) directors.

With regards to Purpose Foundations, these shall have at least three (3) Administrators or at least one (1) juridical person acting as Administrator.

If a person who is nominated as an Administrator in the Statute is unwilling or unable to accept such responsibility, then he shall, within fifteen (15) days, notify his intentions in writing to the Registrar, the Founder or his / her heirs and the persons named as succeeding, if any.

If possession is taken of any assets of a foundation, this shall imply acceptance to act as an Administrator thereof. Thus, in such case the Administrator is bound to confirm his / her acceptance in writing to so act on demand of any interested person or the Registrar. Failure to do so within thirty (30) days from a written request shall be a breach of duty by the Administrator.

Persons who are named or appointed to succeed in administration shall enter into the same obligations as if they were the person named in the first place and shall notify the Registrar in writing upon taking up office. Upon taking up office but not later than thirty (30) days, it shall be lawful for an Administrator to notify in writing the Registrar and any interested parties of any reservations he may have regarding anything relating to the foundation or the actions of the previous Administrators and he shall not be liable for any matters so reserved until such time as the reservations are operative.

If acts of administration are made by the Administrators, the Administrators are bound to submit an account of their administration on relinquishing the administration in addition to such accounts as are required to be submitted in accordance with applicable law. Such account shall be submitted to the succeeding Administrators or in their absence to the Registrar.

Administrators may be remunerated from the income or capital of the foundation, unless the Statute provides otherwise. The amount of the remuneration shall be in such amounts and in such manner as may be stated in the Statute or in any agreement between the Founder and the Administrator or in accordance with applicable law. Moreover, remuneration may also be established by the Court on application by the Administrator or any interested party.

An Administrator may resign from office by notice in writing to his co-Administrators and in case of there being no other Administrator, to the Founder or to the beneficiaries or, if impracticable, to at least one Beneficiary, or if there are none to whom notice can be given, to the Administrator’s duly appointed successor and the resignation shall take effect on delivery of the aforesaid notice.

A resignation shall have no effect if it is given in order to facilitate a breach of duty, or which would result in there being no Administrator for the foundation. However, in the latter case an Administrator may resign office if, before the resignation takes effect, application is made to the Court for the appointment of a new Administrator and a new Administrator is so appointed.

There shall be immediate cessation of an Administrator upon:

  • the removal of the Administrator by the Court; or
  • the coming into effect of a condition in the Statute in terms of which such Administrator is removed from office; or
  • steps are taken for the winding up of the Administrator when the Administrator is a juridical person.

The Administrator is bound to immediately deliver all property of the foundation which may be in his possession to the remaining successor Administrators and to take all such formal or other actions as may be necessary in the interest of the foundation upon ceasing to be an Administrator.

Revocation of Foundations in Malta

A Foundation shall not be subject to revocation prior to the term for which it is established.

The Statute may provide that it is irrevocable, provided that revocation shall not affect or invalidate acts already lawfully carried out or interrupt lawful acts in progress. Nor shall revocation affect lawful commitments made and not yet fulfilled. Termination upon revocation shall be suspended until such time as the administrators certify to the Registrar that all lawful commitments have been fulfilled.

It is pertinent to note that Purpose Foundations may only be constituted in an irrevocable manner and any clause in the Statute reserving the right to revoke the Foundation shall be disregarded. Provided that a power of the Administrators to apply the proceeds to another purpose when the stated purpose has been achieved or is no longer possible shall be valid. Provided further that the reservation by the Founder of a right to maintenance for himself and his immediate family, in case of need, from the funds of the Foundation established by such Founder shall also be valid and in such case the Court shall have the exclusive right to determine whether the funds of the Foundation may be used for such maintenance.

Foundations in practice

Foundations may be used for several purposes amongst which are:

  • as an asset protection vehicle;
  • as a vehicle to take care for persons with special needs;
  • to manage payments of money/distribution of assets to family and provide for education;
  • housing maintenance or profit sharing in the family;
  • to hold shares in companies both local and foreign;
  • as a vehicle for the collection of royalties;
  • as a vehicle to invest in shares/bonds;
  • as a vehicle to own real estate or other assets of considerable value;
  • to manage pension plans for employees.

Taxation of Maltese Foundations

Taxation of Maltese Foundations, distribution and reversion of property endowed to a foundation is regulated by Legal Notice 312 of 2010 entitled Foundations (Income Tax) Regulations, 2010 (the “Regulation”).

The Regulation establishes that for tax purposes, foundations are akin to limited liability companies resident and domiciled in Malta. Private foundations do not enjoy exemptions and are taxed at the rate of thirty five (35%) percent. The beneficiaries of the foundation, upon receipt of a distribution of profit from the foundation would then be eligible to claim the refunds of tax envisaged under the Income Tax Management Act as if they were shareholders of a limited liability company. The shareholders become entitled to claim refunds of 6/7ths if profit is derived from an entity resident in Malta or 5/7ths, if the profit is derived out of a non-resident entity, of the tax paid.

Where however a foundation is either enrolled in terms of the Voluntary Organisations Act or, where not so enrolled, is established for the achievement of a social purpose and is non-profit making, it would only be taxed in the same manner as a company where it informs the Commissioner of Inland Revenue in writing that it opts irrevocably to be treated in this manner. Where such option is exercised, any rules pertaining to the taxation of income applicable to companies as provided for under the laws of Malta shall equally apply to the foundation.

The Administrators of a foundation may also, by notice in writing to the Commissioner, irrevocably elect that a foundation be taxed under the provisions of the Income Tax Act applicable to trusts.

Foundations which are enrolled in terms of the Voluntary Organisations Act or established for the achievement of a social purpose and with a non profit-making intention are subject to progressive rates of tax where the highest rate of tax is capped at thirty (30%) percent instead of thirty-five (35%) percent. The tax is calculated on the chargeable income of the foundation where no part of its profits constitutes distributable profits or are destined for the personal benefit of any member, Administrator or owner of the property of the foundation.


The laws regulating foundations in Malta strive to legislate on foundations in a comprehensive and broad manner. It is foreseen that foundations are bound to be of more frequent use in the Maltese context since they may be used in several scenarios, particularly by high-net worth individuals wishing to structure and plan their finances. The establishment of foundations in Malta is not restrictive, and the institute may be used as a vehicle for several purposes. Malta can boast of extensive judicial and practical experience in relation to the employment and flexibility of the institute and the obligations inherent in fiduciary duties have long been recognized and enforced. This makes Malta an ideal location for the setting up of foundations.


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This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact Mr. Dominique Lecocq on for any questions.

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