Foundations are an incorporation option for those looking to pool together assets, such as money and property, in order to achieve an aim envisaged by the founder. A foundation established in Malta has juridical personality separate to its founder or to its administrators and thus exists as a person in its own right. Foundations have long been present in Maltese society. However, changes in Maltese legislation as found in the Second Schedule of the Maltese Civil Code (Chapter 16 of the Laws of Malta), led to better structured and properly regulated entities. The aim of the foundation will determine whether it will be a private foundation with a specified beneficiary or a purpose foundation established for a charitable, philanthropic or social purpose without any specific beneficiaries. Purpose foundations may also enrol as a voluntary organisation.

A foundation cannot be stablished for the purpose of engaging in active trade or commercial activities, even if the proceeds go towards a social purpose. However, there are a few exceptions to this rule and a foundation may:

  • be endowed with commercial property or a shareholding in either a profit making enterprise or a franchise or a trademark or a ship or any other asset which gives rise to income – as long as the foundation is the passive owner of such assets;
  • be used as a collective investment scheme vehicle and issue units to investors therein, for the passive holding of a common pool of assets, the management of which is delegated to a third party, including a pension and employee benefit arrangements;
  • be used as a vehicle for the purpose of a securitisation transaction, borrow monies against the issue of bonds and do all relative and ancillary acts.


Where the founder is an administrator, he cannot be the sole administrator. The administrators of a foundation may be natural or legal persons but in the case of a legal person, such as a company, the legal person is to have at least three directors. Purpose foundations require at least three administrators or one juridical person acting as an administrator. Where the administrators are not ordinarily resident in Malta, the foundation has to engage a judicial representative who is ordinarily resident in Malta.

The initial endowment to set up a foundation must be equivalent to a minimum of €1,164.69 if it is a private foundation or €232.94 if it is a purpose foundation. A foundation has to be constituted by virtue of a public deed or through a will, in which case it will come into force upon the death of the testator. The deed of foundation shall, on pain of nullity, state the following:

  • the name of the foundation, which shall include the word “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 a foundation, the administrators of 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, in the absence of such indication, a declaration that the foundation is constituted for the benefit of beneficiaries.

The deed, together with the written consent of the administrators named in the statute to act as administrators of the foundation, must be filed with the Public Registry in Malta.

Founders exercise their rights in accordance with the deed of foundation. In the absence of any provisions in the deed to this effect, decisions are taken by majority. If there are two founders, decisions must be taken unanimously. The founder generally:

  • Contributes the first endowment;
  • May add to the assets of the foundation through additional endowments;
  • Determines the purposes or objects of the foundation: He can also alter or add such purposes;
  • Nominates beneficiaries and can add, remove or substitute beneficiaries;
  • Determines who the administrators of the foundation are (he can also be one of the administrators of the foundation);
  • Appoints the members of the supervisory council or protectors in the deed of foundation or by means of a subsequent instrument;
  • Determines the manner in which the foundation is to operate and exercises supervision over the administration of such foundation. He can obtain copies of documents relating to the foundation such as accounts, inventories and descriptive notes of property;
  • Can be a beneficiary BUT in this case, the founder cannot be the sole administrator of the foundation;
  • Can reserve the right to revoke a private foundation. (However this right cannot be exercisable by the heirs or spouse of the founder unless expressly provided otherwise in the deed of foundation. The creditors of the founder may not exercise the right to revoke a foundation. Purpose foundations may only be constituted in an irrevocable manner).

Administrators are bound to submit an account of their administration. They may also be remunerated as provided for in the deed of foundation. Administrators represent and bind the foundation to the extent of the powers vested in them by law, the deed of foundation and any other by-laws or as otherwise stated in the law applicable to the foundation. Administrators are also bound by fiduciary obligations: they must carry out their obligations with utmost good faith and act honestly in all cases. They must ensure that they act in the interest of the foundation, that that the assets of the foundation are used to pursue the purposes and objects for which the foundation was set up and keep the property of the foundation segregated from their personal property.

For the purpose of the Income Tax Act, foundations are treated in the same manner as are companies ordinarily resident and domiciled in Malta. Distribution of profits to the foundation’s beneficiaries is to be treated as if dividends were distributed to the shareholders of a company. Tax is paid on the profits of the foundation. Administrators may however choose to have the foundation treated for tax purposes in the same manner as a trust.

Equinox is able to assist with the establishment of a foundation in Malta and any advice related thereto, including advice in relation to property and estate planning, efficient tax structuring, drafting of the deed of incorporation and liaising with the Public Registry. We can also undertake the registration of a foundation with the Commissioner for Voluntary Organisations.

For further information on online Maltese foundations, please contact us on

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