Malta lets you choose between a trust and a foundation under its own law. A trust comes from the common law tradition and is regulated by the Trusts and Trustees Act, Chapter 331 of the Laws of Malta. A foundation comes from the civil law tradition and is regulated by the Second Schedule to the Civil Code, Chapter 16. Both can hold a family's assets for the next generation. They get there by different legal routes, and the differences decide which one suits a given plan.
The short answer to "malta trust vs foundation": a trust is an obligation, a foundation is a person. In a trust, the trustee owns the assets and is bound to deal with them for the beneficiaries. In a foundation, the foundation itself owns the assets, and its administrators run it. Almost every other difference follows from that one.
The foundation itself, its parts and its uses, is explained in the guide to the Maltese foundation. What follows is the comparison, article by article.
Who Owns the Assets
Article 3(1) of the Trusts and Trustees Act defines a trust: it exists where a person, the trustee, "holds, as owner or has vested in him property under an obligation to deal with that property for the benefit of persons", the beneficiaries, or for a charitable purpose. The trust has no legal personality of its own. The trustee is the owner, but a special kind of owner. Article 3(2) makes the trust property a separate fund, distinct from the trustee's personal property and from other trusts the trustee holds, and article 3(4) spells out what that means: the trustee's personal creditors have no recourse against it, it does not fall into the trustee's insolvency, and it does not form part of the trustee's estate on death.
The foundation is built differently. Article 26(1) of the Second Schedule describes it as an organisation "consisting of a universality of things", constituted in writing by a founder, whose assets are destined for a specified purpose or for the benefit of named persons or a class of persons, and entrusted to designated administrators. Its patrimony, assets and liabilities, is distinct from that of its founder, its administrators and its beneficiaries. Once registered, it is a legal person: article 1(7) says legal personality exists when an organisation is registered under the Schedule.
So the comparison "maltese foundation vs trust" starts here. In a trust, title sits with the trustee. In a foundation, title sits with the foundation. A bank, a land registry or a company register deals with the trustee in the first case and with the foundation, acting through its administrators, in the second. Article 26(2) also keeps the two apart in law: a foundation under the Civil Code does not include trusts as defined in the Trusts and Trustees Act.
How Each One Is Created
A trust can come into existence with very little formality. Article 7 of the Act says a trust may arise "in any manner", including by oral declaration, by a written instrument or a will, by operation of law or by a court decision. There is a guard rail: where assets are held for another person on the basis of oral arrangements, the law presumes a mandate or a deposit, not a trust, unless there is evidence of an intention to create an oral trust. In practice, a family trust is set up by a written deed, because the trustee needs a document that a bank and a tax authority can read.
A foundation has strict form rules. Under article 29(1) of the Second Schedule it may only be constituted by a public deed inter vivos or by a will. A public deed means a notary. The deed must contain, on pain of nullity, an endowment of money or property worth at least €1,164.69, or €232.94 for a public benefit foundation (article 29(2)). It must state the foundation's name, which includes the word "foundation", a registered address in Malta, its purposes, its initial assets, its administrators or who appoints them, and, where the administrators are not resident in Malta, a local representative ordinarily resident in Malta (article 29(4)).
A beneficiary foundation does not have to name its beneficiaries in the deed. Article 29(4)(h) allows a separate "beneficiary statement", signed by the founder before a notary and addressed to the administrators, which need not form part of the public deed.
Registration and What the Public Can See
A trust is not registered as a legal person anywhere. What is registered is information about the people behind it: the trustee must hold and report beneficial ownership information under the Trusts and Trustees Act (Register of Beneficial Owners) Regulations. Who may see that register changed in September 2026, as set out in the piece on Malta's tighter trust register.
A foundation must be registered with the Registrar for Legal Persons at the Malta Business Registry. The documents go in within three months of the public deed, or of the founder's death where it is created by a public will, or of the will's publication where it is a secret will (article 31(6)). Missing the deadline exposes each person responsible to a penalty of €232.94 (article 31(10)).
Article 31C sets out what the public can see. The application form, most notified forms including the Note of Initial Registration, the administrators' consent and the certificate of registration are public. For a private foundation, everything else submitted to the Registrar stays closed to third parties unless the administrators consent or a court allows access to someone with a legitimate interest, and the Registrar may not ask for the beneficiary statement of a private interest foundation (article 31(9)). A founder can waive that confidentiality in writing.
Neither structure makes its beneficial owners invisible to the authorities. The difference is in the public face: a foundation has a public registration file, a trust has none.
Duration
Here the two are close. Article 12 of the Trusts and Trustees Act lets a trust continue until the 125th anniversary of the date it came into existence, then it ends. Charitable trusts, unit trusts and licensed retirement schemes set up as trusts are exempt from the limit.
The Civil Code uses the same number for foundations. Under article 29(7), a foundation's term may not exceed 125 years, and where the deed states no term the foundation is valid for 125 years. Public benefit foundations, and private interest foundations used for the commercial purposes in article 31B(4) to (6), may have an unlimited duration. A beneficiary foundation stated to last longer ends on its 125th anniversary.
For a family plan covering children and grandchildren, the duration rarely decides the choice.
Who Runs It, and Who Needs a Licence
This is one of the most practical differences, and it is often missed.
A trustee needs authorisation from the Malta Financial Services Authority under article 43(1) of the Trusts and Trustees Act when operating in or from Malta and either being paid for acting as trustee, acting on a "regular and habitual basis", or holding himself out as a trustee. A relative or friend acting once, unpaid, as trustee of one family trust does not fall into those three cases.
The rule for foundations is stricter. Article 43(12)(b) requires authorisation for anyone resident or operating in or from Malta who acts as administrator, trustee, director or similar functionary exercising control over the assets of a private interest foundation, "irrespective of the extent of his activities, whether remuneration is payable therefor or whether he holds himself out as providing such services or not". The exempt categories in article 43(6) still apply, but the unpaid family administrator is not one of them. What fiduciaries do under those authorisations is covered in the guide to fiduciary services in Malta.
Both structures allow an oversight role. A trust may have a protector, who under article 24A may, subject to the trust's terms, appoint or remove trustees and require the trustee to obtain consent before exercising a discretion. The protector is not a trustee. A foundation may have a supervisory council, a body the Second Schedule itself refers to, for example in articles 31C and 32.
How Much Control the Founder Keeps
The Trusts and Trustees Act is blunt about the settlor: under article 3(6), "the settlor of trusts shall have no rights in relation to trust property except as provided by this Act". Whatever the settlor keeps must be written into the trust terms. For a purpose foundation, the Civil Code gives the founder a statutory power to amend or add to the deed, including its purpose, at any time in the way the statute allows (article 32(2)). After the founder's death, a court can authorise amendments if the statute is silent.
Keeping more control has a price on both sides. Powers the founder or settlor retains are the first thing a creditor, a court or a foreign tax authority looks at when it asks whose assets these really are.
Succession Rules and Creditors
A common reason to compare the two is succession. Both laws carry the same safeguard, in almost the same words. Article 6A of the Trusts and Trustees Act and article 29A of the Second Schedule let Maltese rules of mandatory application prevail over the terms of the structure. Those include the protection of minors and succession rights, especially the reserved shares of spouses, ascendants and descendants. Both laws also switch those Maltese rules off where the structure has no Maltese connection through the founder's or settlor's domicile, or through immovable property in Malta.
Neither structure is therefore a way round Malta's own reserved shares for a person domiciled in Malta. For an international family, the law of the country of domicile matters at least as much as Maltese law. Where a Maltese family company is the main asset, the duty side is covered in the piece on transferring a family business on death.
On creditors, the trust has one tool written into the Act: a protective trust under article 13, whose terms can make a beneficiary's interest end or be restricted if the beneficiary becomes bankrupt or the interest becomes liable to seizure. The foundation's protection comes from its separate patrimony under article 26(1).
What Each Can Do With the Assets
A trustee has, under article 24, all the powers of a natural person with absolute title to the property, exercised in the beneficiaries' interest and under the trust's terms.
A private interest foundation's activities are set out in article 31B of the Second Schedule. It may hold an investment portfolio, act with the shares it holds as the statute designates, own and license intellectual property, and own commercial property, a ship or an aircraft. In those cases the foundation acts as a passive owner and delegates the day-to-day administration to a third party, such as a company with its own board. It may also set up another legal organisation to trade in pursuit of its purposes. Holding a Maltese company through a foundation is one of the structures described in the guide to the Malta holding company.
How Each One Is Taxed
Tax is where the two converge, because Malta lets each one opt into the other's treatment.
Trusts. Under article 27B of the Income Tax Act, Chapter 123, income attributable to a trust is taxable in Malta where at least one trustee is resident in Malta, and the trustee is answerable for the tax (article 27C). Article 27D then sets out three routes.
- Where all the trust's income arises outside Malta (or is income referred to in article 12(1)(c)) and all beneficiaries are not ordinarily resident or not domiciled in Malta, or are fully tax-exempt, the income is treated as derived directly by the beneficiaries, not by the trust (article 27D(3)(b)).
- Otherwise, the trust is taxed as if it were a person ordinarily resident and domiciled in Malta, but amounts that vested in, were bestowed on or were distributed to beneficiaries are excluded and taxed in the beneficiaries' hands, provided the trustee files the return and certificates the law requires and, for amounts not actually distributed by the following 31 March, pays tax on the beneficiaries' behalf (article 27D(3)(e), (4) and (8)).
- A resident trustee that is authorised under article 43 of the Trusts and Trustees Act, or exempt from authorisation under article 43(6), may elect irrevocably to have the trust taxed as a company, but only where the trust deed limits its income to investment income such as dividends, interest, royalties, rents and capital gains. The election must reach the Commissioner within 30 days of the trust's establishment or the resident trustee's appointment, whichever is later (article 27D(1)).
Article 27D(10) lets the Commissioner disregard a trust used with the sole or main purpose of reducing tax.
Foundations. The rules sit in the Foundations (Income Tax) Regulations, 2010, made under article 27E of the Income Tax Act. Regulation 3 treats a foundation like a company ordinarily resident and domiciled in Malta: company tax rules apply, distributions to beneficiaries are treated as dividends, and a transfer of a beneficial interest counts as a transfer of a security. Regulation 4 lets the administrators elect irrevocably to have the foundation taxed under the rules for trusts.
So the tax answer depends less on the label than on the election made at the start, and on where the founder, settlor and beneficiaries live. A beneficiary's own country taxes what it receives under its own rules, which may ignore Maltese classifications altogether.
Which One Fits
The law points to a few patterns.
- A trust tends to fit where the family or its advisers come from a common law background, where flexibility in setting up matters, where a single trusted trustee will hold the assets, and where the absence of a public registration file is important.
- A foundation tends to fit where the family comes from a civil law background and wants a structure its home country's courts and banks recognise as a legal person, where assets such as a company, property, a ship or an aircraft should be held by an entity in its own name, and where the founder wants a documented power to amend the purpose.
- Either works for long-term succession within the 125-year limits, and either can be taxed in the way the other is, through the elections in article 27D and regulation 4.
The Civil Code also allows a legal person to be converted into a trust under article 21 of the Second Schedule, which article 27F of the Income Tax Act refers to. The choice made today is therefore not entirely final, but conversion has its own procedure and tax treatment.
What decides the matter in practice is the family's own situation: where its members are domiciled, what the assets are, which home countries will look at the structure, and how much control the founder or settlor wants to keep. That is a conversation to have before the deed is signed. Book a private consultation to work out which of the two suits your family's plan.
