The Maltese Trust For The Italian Market

Over time, in the professional landscape, Italian practitioners have inevitably developed a certain familiarity, though not always solid expertise, in the use of foreign trust laws, particularly those of Anglo-Saxon origin, as well as the law of San Marino, which have become key points of reference in Italian practice.

In recent years, however, attention has also turned to Maltese, legislation which has attracted growing interest and is increasingly appreciated as a reliable and appealing solution for Italian clients.

The reasons for this interest lie in a combination of factors, such as regulatory certainty, strict governance and, not least, excellent compatibility with Italian civil law and tax principles.

As a member of the European Union, Malta offers a transparent regulatory framework for trusts and Maltese foundations, which is highly regulated and subject to strict institutional supervision ensuring high standards of transparency, integrity and compliance with international anti-money laundering and fiduciary governance obligations.

The relevant legislation is contained in the Trusts and Trustees Act (Cap. 331), adopted in 2004 and subsequently updated with various measures relating to governance, supervision and anti-money laundering.

For a settlor resident in Italy, and/or with assets located in Italy or Europe, choosing Maltese law can offer several advantages, not only in operational terms, but also in terms of clarity and assessment of the structure by Italian authorities and third parties.

Structurally, the Maltese legislator has built a framework largely based on the fundamental principles of the Anglo-Saxon trust, while expressing them within a codified legal structure, which harmoniously combines elements of common law and civil law.

This approach makes the regulation particularly understandable and manageable for professionals familiar with continental legal culture, including Italian practitioners.

Among the most relevant features, the following aspects stand out:

• A remarkable typological flexibility that allows for the establishment of "fixed", "discretionary", "mixed", "charitable" and "purpose trusts". This variety corresponds well with the categories used in Italian practice and allows the structure to be designed according to the specific needs of Italian families and businesses.
• A clear definition of the trustee's powers and the related decision-making mechanisms helps delineate the scope of their autonomy and the distribution of responsibilities within the trust structure.
• A further distinction between the powers of the trustee and those reserved for the settlor, specifying which powers are admissible and which are incompatible with the trustee's autonomy. This aspect is particularly important for Italian professionals, as it is directly linked to assessments of possible interpositions and substantive controls.
• There is strong focus on the concept and codification of asset segregation, with a clear separation of assets, which facilitates the assessment of the structure's authenticity.
• Self-declared trusts are permitted, but subject to strict regulation, in line with Italian case law (e.g., Cass. 8082/2020), recognising their validity only if supported by real substance and managerial autonomy.
• In addition, detailed rules govern the "guardian" and their limits, clarifying their functions, powers and methods of intervention, contributing to balanced and consistent governance.
• There is also a provision for flexible duration, which can last up to 125 years, supporting multigenerational planning and meets the diverse needs of families and businesses.
• Finally, there is a comprehensive system of remedies and safeguards against abuse, including the removal of the trustee, liability for breach of fiduciary duties, recourse to equity tracing and the return of assets. All these elements reinforce the solidity and defensibility of the structure.

These features are particularly valuable in contexts such as tax audits or litigation, where the authenticity of the trust, its non-interposition, and its real substance may be examined.

Indicators of the settlor's effective dispossession and the trustee's independence can be derived from the proper construction of the trust, in accordance with the applicable legislation.

These elements have been highlighted on several occasions by Italian case law (Cass. 21614/2016; Cass. 1131/2019; Cass. 8082/2020; Cass. 20816/2022), providing an interpretation that aligns well with the characteristics of the Maltese model.

Maltese trust law may therefore be an efficient choice in the Italian context, offering provisions and principles that integrate smoothly with the framework and operation of trusts, in relation to the approach and analysis of the Italian tax authorities.

For example, although these cannot be considered definitive conclusions, the characteristics of the Maltese trust are fully consistent with the criteria referred to in Italian legislation and practice, such as Article 73 of the TUIR, ADE Circular 61/E (2010), Circular ADE 34/E (2022), and Cassation rulings 8082/2020 and 20816/2022, which place particular importance on the effective autonomy of the trustee and the overall substance of the structure.

In this context, trusts regulated under Maltese law may be easier to assess under Italian tax law, simplifying the work of the parties involved, while keeping in mind that any classification for tax purposes will still require a detailed analysis of the specific case.

Moving beyond the mere analysis of the governing law itself, appointing a professional trustee based in Malta, additional positive benefits emerge through the regulatory framework that oversees the entity.

In this case, the added value lies not only in the law governing trusts but also in the authorisation, supervision and compliance regime to which the Maltese professional trustee is subject, which affects the soundness, traceability and reliability of the trust structure itself. These qualities stem from the regulatory system overseeing local financial operators and, to some extent, trustees.

The supervisory framework in question is entrusted to the Malta Financial Services Authority (MFSA), the government authority responsible for regulating and supervising the Maltese financial sector. The MFSA performs functions like those of a European financial regulator, including issuing authorisations, conducting prudential and supervisory checks, establishing rules and guidelines, and monitoring compliance with international standards on governance, transparency, anti-money laundering and user protection. In the context of trusts, it regulates and authorises professional trustees, ensuring a high degree of reliability, integrity and accountability within the trust sector.

These structural elements, together with the MFSA Rulebooks (in particular Part B: Duties of Trustees and Fiduciaries), i.e., the regulatory manuals issued by the Supervisory Authority detailing the obligations, operating procedures, and standards of conduct for the professionals involved, enable the maintenance of rigorous and well-documented governance in line with international best practices and the European regulatory framework on anti-money laundering, transparency and proper management.

This framework operates within a regulatory environment fully aligned with European AML and fiscal transparency standards and is therefore integrated into the main international information exchange systems such as CRS, FATCA and DAC6.

Furthermore, the fact that Malta is on the so-called "whitelist" and its adherence to important international cooperation and information exchange protocols contributes significantly to the transparency and traceability of the structure, thereby reducing the risk of disputes.

This regulatory environment also has a significant practical effect, as it positively influences the trust's ability to operate with banks and financial institutions, both in Italy and across Europe. Such a strictly regulated and transparent structure, managed by professional trustees subject to supervision and rigorous AML controls, is generally received with greater confidence.

Its clarity and ease of assessment facilitate the establishment of relationships from the early stages of onboarding, making processes more straightforward and compliant with uniform KYC procedures.

This leads to a greater willingness among institutions to open accounts, and to easier access to complex financial services, with a tangible benefit for both trustees and end clients.

In conclusion, Maltese law is one of the most robust and coherent options for setting up a trust that can meet the needs of an international clientele, even in complex contexts, as well as the specific requirements of Italian clients.

Its balance between Anglo-Saxon roots, civil-law structure and European regulations allows it to combine asset protection, transparency and governance with full compatibility with the Italian legal and tax framework in various application scenarios.

In a landscape where substance, responsibility and compliance have become fundamental in modern asset planning, the Maltese trust emerges as a clear, reliable and sustainable solution, capable of communicating effectively with professionals, tax authorities and financial intermediaries, offering a solid and adaptable model tailored to the needs of a modern, demanding clientele increasingly oriented towards high standards of service.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.