Taxation of trusts : a comparative approach

Abstract

In writing this thesis I have had in mind a number of objectives which have hopefully been satisfied. The overall aim of this thesis was primarily to examine the taxation of the trust concept in Malta, inclusive of settlor, trustee and beneficiary taxation. First and foremost, given that this concept is a new entity in our legislation, it was worthwhile to make a brief preliminary investigation of the evolution of the trust concept in itself. With such statement is must be pointed out that the aim of this thesis was not to provide an in depth examination of the evolution of the trust, and appropriately, a superficial historical report was made in the First Chapter of this Thesis. Further, with regard to the Maltese aspect, limited information can be given since the concept in itself is less than thirty years old in its most primitive form and stature. It must be further stated that the recent two thousand and four developments were the most accomplished amendments in regard to this concept, and due to such fact, the local scenario is still in the process of developing its concept of the trust. The second point which must be asserted is that the title for this thesis must not be interpreted literally - rather, the main impetus for this thesis was to examine the taxation regime of Malta vis-avis the trust. For this purpose, the Second Chapter is the heart and soul of this thesis, in the fact that it examines in acritical manner how the local taxation regime has adapted itself to this new concept. In as much as possible I have tried to cover this Chapter in an innovative and logical manner, wherein I subdivided it into five main segments and which are directly concerned with the Trust from its creation up and until its dissolution. During the course of such examination I tried to apply certain taxation principles which would explain the reason as to why such regime was applied. The real challenge was to concretely and most importantly comprehensively examine all matters which are concerned with trust taxation. I felt it necessary that on some issues an internal discussion was pertinent and did not hesitate to do so when required. The most extensive limitation which I encountered in connection with such examination, was the issue of length, because for all intents and purposes it must be held that each and every tax applicable to the trust concept in itself deserves a thesis on its own. Further, due to length issues, certain ancillary aspects, most importantly of all double taxation issues and international tax could not be examined, as these two elements on their own merit much more discussion than what could have been herein offered, and subjecting them to scrutiny within such a limited word span would lead me and the reader of this thesis into an abyss of simple statements which would be unprofessional and would tend to verge on incorrectness.