Structure for succession

A foundation is considered a separate legal entity which simplifies management. They can founded for commercial or charitable purposes and there are different types of foundation structures, including public, private, corporate and charitable.

A private foundation company: often funded by families, individuals or companies that wish to donate or provide a grant to a charitable donation.

A public foundation company: typically used for community-based projects and is funded by various streams, including government contributions and public donations

A corporate foundation company: usually formed to support philanthropic activities to promote corporate social sustainability, education and community well-being. They are often also utilised to structure wealth, as a foundation company is a separate legal entity.

A charitable foundation company: established to support charitable initiatives.

A foundation company is considered a separate legal entity which means it can enter into contracts, own assets, and sue or be sued. A foundation structure helps to avoid probate and aid succession planning, it keeps assets centralised and ring-fenced in one vehicle and can allow for greater control than trusts.  Foundation structures can be used to support estate planning to facilitate wealth transfers through clear governance structures. Foundations benefit from perpetuity, meaning they can last indefinitely. Depending on where the foundation is structure, it can benefit from various tax advantages.

A trust is a legal relationship managed by trustees, whilst a foundation company is considered a separate legal entity. Foundations are managed by a board of directors, whilst a trust is managed by the designated trustees. Foundations follow a clear structure, defined by governance whilst trusts can benefit from enhanced flexibility and tend to be tailored more to the settlors wishes.

A foundation in Malta is a blend of trusts and companies established either by a public deed between living persons or by a will. Key characteristics include:
• Legal Personality: It has its own legal personality, separate from its founders or administrators.
• Purpose and Beneficiaries: It can be set up for a specific purpose (“purpose foundation”) or for the benefit of named beneficiaries.
• Asset Endowment: Requires an endowment of assets, with a minimum requirement depending on the foundation type.
• Duration: Can be established for a definite (up to 100 years) or indefinite period.
• Management: Managed by a board of administrators, with their powers and duties outlined in the foundation deed.
• Legal Requirements: Must have a name (including the word “Foundation”) and a registered office in Malta.

Malta foundations offer several advantages, including:

• Asset Protection: Strong protection against future creditors’ claims.
• Estate Planning: Useful in civil law jurisdictions where the trust concept is not recognised.
• Confidentiality: Certain details, especially about beneficiaries, can remain private.
• Flexibility: Operations and management can be tailored in the foundation deed.
• Tax Efficiency: Potential for low effective tax rates for non-resident beneficiaries.
• Recognition: More easily recognised in civil law jurisdictions.
• Perpetual Existence: Continues irrespective of changes in beneficiaries or administrators.
• Clear Legal Framework: Well-established regulations provide clarity and predictability.

Yes, Maltese foundations can be established for specific charitable purposes and offer several benefits for philanthropic endeavours:

• Legal Framework: Malta offers a clear and predictable legal framework for establishing and operating charitable foundations.
• Professional Administration: Foundations can appoint professional administrators for effective management.
• Confidentiality and Objectives: Maintains confidentiality and allows detailed specification of charitable objectives.
• Tax Incentives: May benefit from tax exemptions on donations and income from charitable activities.
• Perpetual Existence: Allows for long-term planning and execution of charitable projects.
• Asset Protection: Assets are generally protected from external claims, ensuring dedication to the charitable cause.

• Tax advantages: Recognised charities can claim exemption from income tax, corporation tax, capital gains tax, and certain property taxes, provided the income and gains are used for charitable purposes.
• Credibility: Charitable foundations are seen as transparent and trustworthy, fostering greater confidence among donors, partners, and beneficiaries.
• Succession Planning and Legacy: For families or individuals, setting up a foundation is a way to create a lasting legacy and engage future generations in philanthropy.
• Flexibility and Control: The founder(s) can define the foundation’s mission and how funds are allocated, offering flexibility in supporting various charitable causes.

A recognised private wealth hub: The Isle of Man boasts a stable landscape, which is attractive to structure wealth.
Robust legal environment: The Isle of Man's legislation is based on English Common Law which offers strong protection.
Efficient fiscal regime: The Isle of Man provides many tax advantages, including 0% corporation tax, 0% inheritance tax, 0% wealth tax and 0% stamp duty.  
Enhanced privacy: The Isle of Man forbids the unlawful sharing of confidential information.
Reputable jurisdiction: The Isle of Man is considered a well-regulated, transparent jurisdiction which is compliant with OECD/EU and has a credible, trust-worthy reputation. The jurisdiction is regulated by the Isle of Man Financial Services Authority which ensures foundations operate with integrity.