Establishment of a PIF in Malta (Professional Investment Fund)
The PIF (Professional Investment funds) stand out among the different types of investment funds, under Maltese law, even if they are subject to a very clear and streamlined regulation, since the managers are allowed a much wider choice of financial instruments when compared to UCITS funds. It is possible, through the Maltese PIF, to “short sell” derivative financial instruments as well as being able to invest in bonds, listed and unlisted companies without any limitation. This instrument is very well suited to Private Equity strategies, start-up funding and speculative strategies such as “High frequency Trading” on derivative financial instruments typical of American hedge funds. Consequently, the PIF, is the flagship of Maltese collective investment undertakings, in terms of set-up/management costs and benefits.
Tax regime for PIF:
- The Maltese Government does not apply any tax (TAX exempt) to PIF that have more than 85% of the underlying assets located outside Malta;
- TAX exempt on the fund’s equity value;
- TAX exempt at source on dividends paid to non-residents;
- TAX exempt on capital gains arising from the sale of shares owned by non-residents;
- No stamp duty on transfers to Malta of funds coming from other jurisdictions;
- TAX exempt on capital gains arising from the sale of shares or quotas by residents subject to the condition that they are listed on the Malta Stock Exchange (MSE).
PIF process to obtain the licence:
The process to obtain a PIF license is completed in 12/24 weeks from the date of submission of the documentation to the MFSA regulator. In order for the application to be accepted, the PIF fund must have a manager who is not a promoter and service providers belong to jurisdictions recognised by the MFSA Maltese regulator. In this case, the request is accepted within a maximum time of 7 days.
The process consists of three phases:
PHASE 1 – PREPARATORY
- Preliminary meeting with the MFSA regulator, in which the promoters are required to explain in detail the PIF’s operational dynamics.
- Submission of a specific form that includes all the required documentation and the payment receipt of the non-refundable registration fee. The regulator may send specific requests to the PIF promoters within 3 weeks from the submission of documentation.
- The regulator is required to verify the applicant’s good repute requirements even through direct contact with foreign regulatory authorities;
- The regulator, at its discretion, may determine the ability qualification to perform the investment services required by law. (Ex. Portfolio management, order transmission, etc.)
STEP TWO – PRE LICENSING
- The regulator shall express an opinion on the possibility of approving the issue of the licence;
- Submission of signed copies of the additional application form together with the attached additional or corrected documents required by the regulator;
- Resolution and completion of all the issues that emerged during the application process;
- Issue of the licence.
THIRD PHASE – POST LICENCE / BEFORE INITIATING WITH THE ACTIVITY
Before the formal start of the activities, the regulator may, at its discretion, review the documentation and if necessary request further clarification.