The Malta Financial Services Authority (MFSA) is responsible for the licensing, regulation and supervision of all collective investment schemes, including PIFs. In this respect, Maltese financial services and tax laws are up to date with EU directives and in line with EU requirements.

What are the Professional Investor Fund structures in existence in Malta?

The Maltese legislation provides a flexible mechanism via which a Maltese Professional Investor Fund may be structured appropriately. The following types of PIF structures exist:

• An open ended investment company with variable share capital (SICAV);
• {C}A close ended investment company;
• {C}A limited partnership;
• {C}A unit trust;
• A mutual fund.

Who are the Investors?

The Professional Investor Fund framework targets three classes of investors, and briefly, these are the following:

• PIFs promoted to EXPERIENCED INVESTORS:

The main eligibility criterion in this case is that the person must prove past relevant experience. An experienced investor is a person who has the expertise to be in a position to make his own investment decisions, while being fully aware of all the risks and implications involved. The minimum investment in an Experienced Investor Fund is of Euro 10,000.

• PIFs promoted to QUALIFYING INVESTORS:

The main eligibility criterion in this case is that the investor, being a body corporate (single or group) must prove that they have the appropriate experience (ex: experience in the acquisition/disposal of similar funds) or a net worth of at least Euro 750,000. The minimum investment in a Qualifying Investor Fund is of Euro 75,000.

• PIFs promoted to EXTRAORDINARY INVESTORS:

The main eligibility criterion in this case is that the investor, being a body corporate (single or group) must prove a net worth of at least Euro 7,500,000. The minimum investment in an Extraordinary Investment Fund is of Euro 750,000.

None of the abovementioned PIFs are subject to any investment restrictions unless such are specified in the Offering Memorandum. Every Experienced and Qualifying Investor Fund must have an Offering Memorandum, while no such requirement exists for the Extraordinary Investment Fund.

Are there any restrictions on the location of the service providers?

In all the three types of funds, the service provider (such as Managers, Administrators, Custodian, etc.) may be established outside Malta, as long as the MFSA is satisfied that the person is of a sufficient good standing repute, and that they are regulated in a jurisdiction which is considered acceptable to the MFSA.

What are the tax benefits in existence for a Professional Investor Fund?

The initial premise is that if a fund has more than 15% of its underlying assets situated in Malta, it is referred to as a Prescribed Fund, while if a fund has less than 15% of its underlying assets situated in Malta it is referred to as a Non-Prescribed Fund.

If a PIF is set up for a non-resident investor and it qualifies as a non-prescribed fund, then the following tax implications apply:

• Any income received would be exempt from tax (with the exception of income received from immovable property situated in Malta);
• No tax on any capital gains realized from the disposal of shares/units in other schemes;
• Any profits distributed by the PIF to non-resident investors are not subject to tax in Malta.

How long is the licensing process for a Professional Investor Fund?

Subject to the required documents and information being complete and in order, licensing of a Maltese Professional Investor Fund may take anywhere between four to five weeks. Maltese Professional Investor Fund‘s promoted to Extraordinary Investors may be licensed much quicker, having most due diligence provided after licensing.