How to Start a Hedge Fund in Malta

Updated on Tuesday 21st February 2023

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Although Malta is a small country, it provides numerous advantages for investment opportunities. The Maltese regulatory framework for the investment field is highly attractive for numerous types of financial companies. At the same time, investors must know that the Maltese state is a member of the European Union and thus, the hedge fund startups registered here benefit from the flexible legislation applicable in the Community. Also, the investment funds opened in Malta are exempted from numerous taxes, which are presented below. 

Regulatory framework for hedge funds in Malta 

The main rule of law regulating how to start a fund in Malta is the Investment Services Act (ISA). The Act offers the regulatory framework applicable to hedge funds and, at the same time, it includes numerous provisions for the protection of investors

ISA establishes the manner in which hedge fund startups can be registered, authorized and supervised in this country. Regarding the supervision of hedge funds in Malta, we mention that the main institution entitled to regulate the activities of all the investment funds registered here is the Malta Financial Services Authority (MFSA)

The video below offers a short presentation on how to start a hedge fund in Malta:

A particularity of the Maltese investment legislation refers to the registration of hedge funds established as professional investors funds (PIFs), which offer the advantage of a more flexible regulatory framework. 

Those interested in how to start an investment fund in Malta as a PIF can operate the fund for activities such as: 

•    private equity;
•    real estate;
•    financial derivatives. 

If you decide to establish an investment fund in the Cayman Islands, you can benefit from several advantages because the SPC there is highly distinctive and does not resemble other legal companies. Please feel free to speak with our consultants about how to open a segregated portfolio company in the Caymans.

Tax exemptions for hedge funds in Malta

As mentioned above, the hedge funds registered in Malta enjoy an attractive taxation scheme. The funds will not be taxed on their income as long as 85% of the fund’s underlying assets are domiciled outside the country. 

Malta does not apply the following taxes: 

•    net asset value tax;
•    withholding tax on dividends (in the case of the transfer applicable to non-residents);
•    stamp duty;
•    capital gains tax is not applicable on the sale of shares, but only in the situation in which the shares are listed on the local exchange market – the Malta Stock Exchange

Businessmen are invited to contact our team of partners for more details on the registration of a hedge fund in Malta. At the same time, we invite you to study other related topics presented in our investment magazine