malta - TTN Transnational Taxation Network
malta - TTN Transnational Taxation Network
malta - TTN Transnational Taxation Network
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MALTA<br />
• EUROPE’S NEW MODEL FINANCE CENTRE<br />
Michael Xuereb Director Business Development MFSA
• .<br />
pop. 400,000<br />
working pop. 150,000<br />
size<br />
capital<br />
316 sq km<br />
Valletta<br />
currency EUR 1 :<br />
Lm0.4293<br />
.<br />
.
Financial Services Sector<br />
12% of GDP<br />
> 6000 employees<br />
Value Added per employee:<br />
Euro 33,448 (est.)
Industry profile<br />
• + Eur 20 billion in banking sector assets<br />
• 32 banking and financial institutions<br />
• 87 investment intermediaries<br />
• 127 investment service passport notifications<br />
• 168 domiciled collective investment schemes<br />
• 363 UCITS notifications<br />
• 79 insurance operators<br />
• Around 2500 companies registered each year
Investment Funds<br />
Net Asset Value of Funds based in Malta: 1996 - 2005<br />
Lm<br />
2,000,000,000<br />
NAV - LOCALLY BASED CISs<br />
Eur 4.4 billion<br />
1,800,000,000<br />
1,600,000,000<br />
1,400,000,000<br />
1,200,000,000<br />
1,000,000,000<br />
800,000,000<br />
600,000,000<br />
400,000,000<br />
200,000,000<br />
-<br />
1996 1997 1998 1999 2000 2001 2002 2003 2005<br />
2004<br />
Series1 8,200,477 47,388,695 186,362,953 317,122,558 431,531,579 218,395,124 261,112,595 372,079,276 445,330,513 1,812,255,0
Investment Funds<br />
Locally Based CISs: Retail vs PIFs<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
DECEMBER 2000 DECEMBER 2001 DECEMBER 2002 DECEMBER 2003 DECEMBER 2004 DECEMBER 2005<br />
PIFs 0 0 1 2 10 62<br />
Ret ail 44 53 57 46 50 51<br />
Tot al 44 53 58 48 60 113
Financial Services Legislation<br />
Primary Legislation<br />
• Banking Act<br />
• Financial Institutions Act<br />
• Insurance Business Act<br />
• Insurance Brokers and other Intermediaries Act<br />
• Investment Services Act<br />
• Special Funds Act<br />
• Recognition of Trusts Act (Trustees and Trusts Act)<br />
• Malta Financial Services Authority Act<br />
• Central Bank of Malta Act
Financial Services Legislation<br />
Secondary Legislation<br />
• Companies (includes Limited Partnerships) Act<br />
• Financial Markets Act<br />
• Netting upon Insolvency Act<br />
• Securitisation Act<br />
Supporting Legislation<br />
• Insider Dealing and Market Abuse Offences Act<br />
• Professional Secrecy Act<br />
• Prevention of Money Laundering Act
Regulation<br />
• Malta Financial Services Authority (MFSA)<br />
• Single regulator for financial services<br />
• regulates banking, financial institutions,<br />
insurance, investment services, securities, stock<br />
exchanges and listing, trust management<br />
companies, pension funds, – company registry<br />
• Autonomous public institution, self-funded<br />
Avoidance of Prescriptive Regulation to allow promoters<br />
the flexibility to operate
Collective Investment Schemes<br />
Types of fund vehicles:<br />
• Investment companies with fixed or variable<br />
share capital (SICAVs)<br />
• Unit trusts<br />
• Mutual funds<br />
• Investment partnerships<br />
• Limited partnership<br />
Types of funds<br />
•Retail Funds: UCITS/Non-UCITS<br />
•Professional Investor Funds
Professional Investor Funds<br />
For high net worth and institutional investors<br />
Professional Investor<br />
Funds<br />
Qualifying Investors<br />
Experienced Investors
Asset Management<br />
Fast Track Recognition S.9A<br />
• for routine administrative<br />
services:<br />
Preparation of NAV<br />
Reconciliations<br />
Pricing investment portfolio<br />
Payment of bills<br />
Preparation of financial<br />
statements<br />
Fund accounting<br />
Performance reporting<br />
Compliance reporting<br />
Preparing contract notes<br />
4 Licence Categories<br />
• for specialised core<br />
business services:<br />
Dealing or arranging deals n<br />
financial instruments<br />
Managing financial instruments<br />
discretion to invest assets in<br />
financial instruments<br />
Trustee or custody services<br />
Investment advice<br />
Stockbroking<br />
Notification<br />
• freedom of establishment<br />
• freedom of services
Occupational Pension Funds<br />
“Users” could include:<br />
• Maltese employers<br />
• Multi-national companies setting up plans for<br />
their own employees<br />
• Service providers who would create<br />
“packaged” plans for individuals and smaller<br />
businesses<br />
• Individual international executives and<br />
professionals
Occupational Pension Funds<br />
• Compatible with EU Directive on Institutions<br />
for Occupational Retirement Provision – IORP<br />
(2003/41/EEC)<br />
• European Passport Rights for Retirement<br />
Schemes<br />
• Pension Schemes may be set up by contract or<br />
as trusts, corporates<br />
• May invest in Retirement Funds, Collective<br />
Investment Schemes, financial instruments<br />
• May be managed by asset managers who are<br />
authorised to passport their services into<br />
Malta
Banking<br />
• Credit Institutions<br />
Minimum Capital Eur 2million<br />
• Financial Institutions<br />
Niche banking activity<br />
• Electronic Money Institutions<br />
EU Directive 2000/46/EC<br />
Minimum Capital Eur 0.5 million
Insurance Business<br />
• Insurance Companies<br />
EU standards and legislation, including passporting<br />
• Captive Insurance<br />
Insruance companies set up by:<br />
- Large Corporate Groups<br />
- Trade, Industry & Professional Associations<br />
• Insurance Management Companies<br />
• Insurance Brokers
Captive Insurance<br />
Key Advantages<br />
a) Direct writing<br />
b) Protected Cell Company legislation<br />
c) IFRS (IAS) reporting standards<br />
d) Third party business;<br />
e) Continuation of Companies legislation<br />
f) Insurance Management Services<br />
“one of the best overall captive insurance domiciles & best<br />
upcoming domicile” - Reactions Research May 2006
Trusts<br />
• Trustees require authorisation and regulated<br />
to high standards<br />
• Trusts need not be registered<br />
• Assets constitute a separate estate “owned by<br />
trustees”<br />
• Mainstream legislation, no difference as to<br />
nationality, residence<br />
• Signatory to the Hague Convention on<br />
recognition of Trusts<br />
• STEP
Companies<br />
• One company regime, fully transparent<br />
• Based on UK company law<br />
• Limited liability companies, limited/unlimited<br />
partnerships/branches of overseas companies<br />
• Redomiciliation from recognised jurisdictions<br />
with equivalent laws<br />
• Share capital/accounts in any currency<br />
• Shareholders/directors need not be resident in<br />
Malta
External Evaluation<br />
“Malta’s financial system appears to be healthy and<br />
well supervised …. Malta has a comprehensive legal<br />
framework and strongly adheres to most of the<br />
international standards and codes…. The authorities<br />
have undertaken major efforts in strengthening the<br />
supervisory framework”<br />
(International Monetary Fund, Financial System Stability Assessment (FSSA),<br />
September 2003)<br />
FATF – OECD – IMF – EU – MONEYVAL – FSF - FATF – OECD – IMF – EU – MONEYVAL - FA
MALTA<br />
CRITICAL SUCCESS FACTORS
Law<br />
• flexible & versatile legal framework<br />
• Civil Law jurisdiction<br />
• business legislation based on English law<br />
principles<br />
• old, established juridical system<br />
• Laws and Regulations published in English and<br />
Maltese
Human Resources<br />
• Multilingual community<br />
• English is the working language. Well-spoken<br />
Italian, French, Spanish, German and Arabic<br />
• Free market for labour<br />
• Availability of multilingual graduates in<br />
disciplines related to financial services;<br />
• Availability of multilingual administrative and<br />
clerical staff;<br />
• High levels of productivity.
Average Annual Salaries<br />
General Manager Euro 50,000<br />
Senior IT manager Euro 33,000<br />
Finance & Admin manager Euro 26,000<br />
<strong>Network</strong> Admin/Programmer Euro 20,000<br />
Executive/Professional Staff Euro 18,000 – 22,000<br />
Secretary/Clerk Euro 13,000<br />
Clerk Euro 11,000<br />
Receptionist Euro 10,000<br />
Source: Malta Financial Services Authority
Financial Reporting<br />
• IFRS – International Financial Reporting<br />
Standards since1997<br />
• Accounting records and bank accounts in<br />
foreign currencies
Office Rent<br />
(per sq.m. per annum)<br />
Dublin 592<br />
London 753<br />
Paris<br />
657<br />
Frankfurt 402<br />
Malta 100<br />
Source: CB Richard Ellis – Global Market Rents (May 2006) and MFSA Figures
<strong>Taxation</strong><br />
• Modern and competitive tax regime<br />
• Tax-efficient base for outsourcing activities<br />
• Tax system based on the full imputation<br />
system:<br />
- 35% tax on company profits ……<br />
- shareholders receive full credit for any tax<br />
paid by the company from which a dividend is<br />
received<br />
• Double tax treaties with 43 countries
Malta Double Tax Treaties<br />
EU Countries<br />
Other<br />
European<br />
Countries<br />
Rest of the World<br />
Austria<br />
Belgium<br />
Cyprus<br />
Czech Re<br />
Denmark<br />
Estonia<br />
France<br />
Finland<br />
Germany<br />
Hungary<br />
Italy<br />
Latvia<br />
Lithuania<br />
Luxembourg<br />
Netherlands<br />
Poland<br />
Portugal<br />
Slovenia<br />
Slovakia<br />
Spain<br />
Sweden<br />
Utd Kingdom<br />
Albania<br />
Bulgaria<br />
Croatia<br />
Iceland<br />
Norway<br />
Romania<br />
San Marino<br />
Switzerland<br />
Australia<br />
Barbados<br />
Canada<br />
China<br />
Egypt<br />
India<br />
Korea (Rep)<br />
Kuwait<br />
Lebanon<br />
Libya<br />
Malaysia<br />
Pakistan<br />
Syria<br />
Tunisia<br />
South<br />
Africa
Malta Double Tax Treaties<br />
EU Countries<br />
Other European<br />
Countries<br />
Rest of the World<br />
Greece<br />
Ireland<br />
Russia<br />
Serbia Montenegro<br />
Ukraine<br />
Jordan<br />
Morocco<br />
Thailand<br />
Turkey<br />
Singapore<br />
United Arab Emirates<br />
United States<br />
Double tax agreements:<br />
signed but not yet in force/initialled: being negotiated
Indirect <strong>Taxation</strong><br />
• Banking, financial, insurance and reinsurance activity,<br />
deemed to be supplied in the country where the customer<br />
is established<br />
• Back office activity such as accounting, consultancy, data<br />
processing, supply of information deemed to be supplied<br />
in the country where the customer is established<br />
• Licensed insurance companies and insurance<br />
intermediaries are exempt without credit<br />
• Acquisition/disposal of shares in an ITC are exempt from<br />
the provisions of the Duty on Documents and Transfers<br />
Act<br />
• Social Security: 10% Employer, 10% Employee
IT & Telecommunications<br />
• Highly regarded IT skills<br />
• Widely available, highly-competent IT support services<br />
• Advanced telecommunications infrastructure with direct<br />
access to all countries<br />
• Privatisation, deregulation and competition driving<br />
telecommunications sector<br />
• Full competition in data transfer and mobile telephony;<br />
• Globally competitive package deals for incoming<br />
companies.
300,000<br />
250,000<br />
200,000<br />
150,000<br />
100,000<br />
50,000<br />
0<br />
Communication Costs<br />
Communication Costs<br />
Price per annum for 1Mbps of bandwidth<br />
Aug-99<br />
Oct-99<br />
Dec-99<br />
Feb-00<br />
Apr-00<br />
Jun-00<br />
Aug-00<br />
Oct-00<br />
Dec-00<br />
Feb-01<br />
Apr-01<br />
Jun-01<br />
Aug-01<br />
Oct-01<br />
Dec-01<br />
Feb-02<br />
Apr-02<br />
Jun-02<br />
Aug-02<br />
Jun-99<br />
Apr-99<br />
Feb-99<br />
Dec-98<br />
US$
Airline Connections<br />
Amsterdam<br />
Athens<br />
Berlin<br />
Brussels<br />
Cairo<br />
Casablanca<br />
Dublin<br />
London<br />
Frankfurt<br />
Helsinki<br />
Istanbul<br />
Larnaca<br />
Milan<br />
Oslo<br />
Paris<br />
Rome<br />
Stockholm<br />
Tunis<br />
Tripoli<br />
Vienna<br />
Zurich
MALTA<br />
OPPORTUNITIES IN FINANCIAL SERVICES<br />
Michael Xuereb Director Business Development MFSA
Potential for further growth<br />
What makes Malta different from other locations?<br />
- single passport (vis-à-vis non EU jurisdictions)<br />
- product-driven environment (vis-à-vis most EU<br />
jurisdictions)<br />
- relative cost advantage (vis-à-vis most established<br />
EU financial centres)<br />
- English language (vis-à-vis all continental EU<br />
jurisdictions)
Develop synergies<br />
between<br />
Maltese firms seeking:<br />
Diversification<br />
Increase in business<br />
Knowledge transfer<br />
Distribution channels<br />
Foreign firms seeking:<br />
Increased cost<br />
efficiency<br />
Cultural interface with<br />
other countries<br />
into/out of the EU<br />
International<br />
expansion with least<br />
disruption to business<br />
continuity
The opportunities<br />
• open architecture<br />
• framework for asset servicing and back<br />
office activity<br />
• regional distribution<br />
• customer servicing<br />
• access to EU markets<br />
• cost optimisation
Thank . you!<br />
www.mfsa.com.mt
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