Foundations Law

Foundations Law

Successful families and HNW individuals often seek our professionals' guidance with regards to foundations law and trusts law as a means of asset protection. Often referred to as the civil law alternative to a trust, a foundation is an organisation which consists of a universality of things constituted in writing, by one or more founders 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 whose assets are entrusted to the administration of a designated person or persons.

Malta Foundations Law

Malta’s history with foundations is a long one as they are a product which the jurisdiction inherited from continental law. However, they have become regulated by codified legislation through Act XIIII of 2007. This legal instrument is complimented by the Voluntary Organisations Act of 2007 (Chapter 492 of the Laws of Malta).

The 2007 revamp of Malta’s foundations law tackles the various issues raised by foundations when used unconventionally, and has helped Malta foundations become successful entities.

Anyone, national or otherwise, may establish legal organisations, including Malta foundations as long as the person complies with the prescribed rules vis-a-vis form and content.

Malta Foundations set up by Public Deed or Will 

As per Maltese Foundations Law, one may set up a foundation by virtue of a public deed inter vivos or by means of a will published in Malta. Such foundation will need to have a name and be in conformity with Maltese Law and include a denomination that clearly indicates that the foundation is in fact a foundation. Additionally, the foundations must have an address in Malta where communications can be received and information requested about its activities.

Malta Foundations set up by Endowement

As part of the setting up of the Malta foundation, the founders will also need to make an endowment of money or property worth at least EUR 1,164.69 to the same foundation. Foundations established for a purely social purpose or as non-profit making entities will only need to make an endowment worth EUR 232.94. If the endowment is not carried out in cash or any other asset the value of which appears at the face of it, the administrators of the Malta foundation law need to make a statement which states that in their considered opinion, the property endowed upon or vested in the Malta foundation has a value of at least the amount required by Malta foundation law as stated above. The assets settled as an endowment may be used by the Malta foundation when this is eventually set up, and in fact there is no obligation to maintain such assets by way of minimum capital within the foundation.

Cyprus Foundations Law  

While Cypriot trusts and trustees have no separate legal personality, a foundation can be established with its own identity as per Cypriot foundations law, mainly the Clubs and Institutions Law (1972). Moreover, as per the Charities Law of 1952 (Chapter 41 of the Laws of Cyprus) provides that where the trustees of a charity for educational, literary, scientific or public charitable purpose obtain a certificate of registration from the Council of Ministers, the trustees will thereafter become a body corporate with its own legal personality. Such a charitable foundation which has been properly declared and recognised would be exempt from paying tax.

Since there is no authority for trusts and foundations, there is uncertainty about how a foundation set up in another jurisdiction would be treated by the Cypriot courts, however it would probably depend on compliance with the formal and substantive requirements of the proper law of the foundation.

Our Foundations Law Team

Apart from having first-hand experience with the setting up of Claris Foundation, Chetcuti Cauchi Advocates' charitable foundation, our specialist team consisting of lawyers, accountants and tax advisors have also assisted clients with the setting up of foundations in Malta and Cyprus. They have written extensively with regards to foundations law in Malta and have a wide range of experience with the administration of foundations.

Additionally, our Trusts & Foundations Law team can help you choose the best asset preservation vehicle to suit your needs.

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Key Contacts

Mr Steve Muscat Azzopardi

Senior Manager, Tax, Corporate Services

+356 2205 6328

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