Maltese hedge funds are licensed as “Professional Investor Funds” or “PIFs”, most commonly set up as an investment company with variable or fixed share capital with a multi-fund or umbrella fund structure.

Who can invest?

PIFs may be sold only to investors who satisfy certain minimum investment thresholds and other criteria:

• PIFs promoted to ‘Experienced Investors’ - with a minimum investment of €15k or equivalent - are not subject to regulatory investment restrictions (other than in the case of property funds), may be leveraged up to 100%, must appoint a Custodian and issue an Offering Document;

• PIFs promoted to ‘Qualifying Investors’ - with a minimum investment of €75k or equivalent – are not subject to any regulatory investment restrictions (other than in the case of property funds) and can have unlimited leverage. While appointment of a Custodian is not mandatory (provided assets are subject to adequate safekeeping arrangements), the PIF must issue an Offering Document;

• PIFs promoted to ‘Extraordinary Investors’ - with a minimum investment of €750k or equivalent – similarly have no regulatory investment restrictions and can have unlimited leverage. Appointment of a Custodian is not mandatory (provided assets are subject to adequate safekeeping arrangements). The PIF can issue a simplified Marketing Document in lieu of a more detailed Offering Document.

Management and Structure

PIFs can be self-managed, usually through an ad hoc Investment Committee of the Board of Directors of the fund, or on the other hand, a professional Manager may be appointed. PIFs may also be structured as limited partnerships or unit trusts. 

Taxation

Other than in respect of income from immovable property in Malta, PIFs and retail collective investment schemes are exempt from Malta tax. Withholding tax at source ranging from 10% to 15% may be payable on certain categories of investment income received from local sources if 85% or more of the PIF assets are situated in Malta. There is no application of Malta tax to dividend distributions or redemption of units in PIFs by non-resident investors.

Choose Malta

With more hedge funds domiciling or re-domiciling to Malta, the jurisdiction is also becoming increasingly more attractive to fund Managers and Administrators since they are able to find a highly trained English-speaking workforce, low operational costs and an attractive fiscal regime.

If you are scouting for jurisdictions, look no further. Contact Fenlex to learn about why more hedge funds, Managers and Administrators are choosing Malta.