Financial Services

Standing Tall

The finance sector is rising to the challenge of sustaining the growth of recent years while sending the clear message that Malta is no place for financial secrecy.

Asset, wealth and insurance management have become the power bases of Malta’s financial services sector, which has not only expanded in recent years but also internationalised like never before. Malta today can stand tall among Europe’s financial hubs and is developing new credentials in a range of sectors such as fintech, securitisation and payments. Viewed as a particularly business friendly location, the Mediterranean island is a favoured entry point to the European Union because of its robust, EU-compliant regulatory framework, diverse financial ecosystem and deep talent pool. Yet, despite its past successes, the island is taking a fresh look at its finance sector, which has felt the spotlight of international attention in recent months. Media reports accused a few foreign subsidiaries of not having sufficient substance and economic activity on the island to claim tax treaty benefits. The island is also facing the task of maintaining its reputation as a robust jurisdiction that has nothing to hide as data leaks and journalistic investigations are shaking finance sectors around the world, including those in Ireland, Luxembourg, Switzerland and, more recently, Malta.


"We are pushing hard to become a leader in the blockchain space, and we want Malta to be among the first countries to implement blockchain technology. We are also aiming to create one of the world’s best environments for the commercialisation of Fintech models. Start-ups in this sector should definitely look at Malta."

Silvio Schembri, Parliamentary Secretary for Financial Services, Digital Economy and Innovation

Fully Onshore

Malta’s development as an International Financial Centre has its foundations in sound economic principles, a pro-business environment and responsive regulations. In 1988, Malta passed legislation to facilitate the establishment of an offshore financial framework. However, the government soon recognised that the future lay in the provision of a well regulated, transparent financial sector and decided to move its financial services onshore. At this time Malta was also seeking membership of the EU and began to harmonise its legislation, incorporating best practices from comparable centres. EU membership provided Malta with the spur it needed to catapult it from relative obscurity to one of Europe’s most dynamic and fastest growing finance centres. By introducing a strong supervisory framework as well as a competitive, transparent regime approved by both the EU and the Organisation for Economic Co-operation and Development (OECD), Malta sought to distance itself from secrecy jurisdictions, tax havens and shell company structures. The island has continuously ensured that its laws, including anti-money laundering rules, are fully aligned with European rules and best global practices.

Over the years, Malta has accelerated its efforts to increase the depth and breadth of its finance industry. The finance sector has expanded by around 25% annually in recent years and accounts for 13% of the country’s GDP, providing almost 10,000 jobs. The scale of this transformation has been enough to help Malta become an alternative to established European finance hubs such as Dublin, London and Luxembourg. The government believes there is still scope for expansion and has made sustainable growth of the sector a top priority.


"There is a positive outlook for the industry overall, and through speaking with various practitioners and operators in the industry, it is apparent that there is a healthy conduit of business across the key financial sectors."

Kenneth Farrugia, Chairman of FinanceMalta


Specialist Services

From the onset, Malta has positioned its financial services sector to serve as a European hub for many specialised services. For an island nation of just 430,000 people, Malta has built up a remarkably diverse financial services portfolio. The country’s banking sector was one of the first to embrace an international approach. Today, 27 banks have established operations in Malta, although only a handful of these are active in the local market. Most use the island as a platform from which to conduct specialised asset financing, corporate banking and trade finance services. The insurance sector has experienced an upsurge due to the presence of expert insurance management services and EU passporting rights, and Malta is now regarded as one of the leading captive insurance domiciles.

The fund sector began to expand soon after the introduction of a specialist regime for alternative important area of activity, and the island’s open and publicly available company register today lists around 70,000 companies. Malta has also developed into an important wealth management location. High-net-worth individuals, wealth managers and family offices increasingly avail of the country’s wide range of investment vehicles, including trusts and foundations.

Key Players

Traditionally, Malta had been chosen as a base by smaller financial services companies and start-ups, which offer clients more personalised services than those provided by the bigger firms. However, as Malta’s status as a financial centre has grown, the island has also attracted international credit institutions such as HSBC, Banif Bank and trade finance specialist FIMBank. Today, Malta hosts some 30 fund administrators and 60 insurance companies, ranging from well-known international names to smaller, niche establishments. Fund administrators such as Apex, TMF and Citco all have a presence in Malta, along with insurance specialists such as Munich Re, Aon and Marsh. In addition, multinationals such as BMW, Peugeot, Citroen and Vodafone have set up captives on the island. Malta also boasts considerable expertise in the field of trusts and foundations, including many legal firms with in-house trust companies, along with international organisations.


"Malta, I must say, has a lot of potential and a very entrepreneurial spirit that allows you to establish strong relationships with key decision-makers who in other countries would be difficult to meet with and discuss your business. The attitude and friendliness of the authorities very much helped our banking group launch our fund custody business in Malta."

Natacha Ebener, COO of REYL & Cie (Malta) Ltd


Supervising International Business

While financial services legislation is drawn up by the Ministry for Finance, all financial services are overseen by the Malta Financial Services Authority (MFSA). The MFSA is open-minded and approachable and offers face-to-face meetings with international companies seeking to operate from Malta – a level of access that is rare in other finance centres. Over the years, the MFSA has also worked together with the industry in developing the required capabilities, capacity and regulatory frameworks to move into new areas of business. The country has gained a reputation for striking a good commercial balance by providing an appropriate legal framework without over-regulating in a way that might inhibit growth and innovation. However, in light of the growing size of the financial sector, international institutions such as the European Commission and the IMF have called the regulator’s ability to effectively supervise internationally oriented businesses into question.





A Question of Substance

Malta’s finance community unanimously refuses to be labelled as a tax haven in the wake of recent media reports. However, many acknowledge that articles published in Germany’s Der Spiegel, Spain’s El Mundo and other news outlets highlighted certain shortcomings of international companies in fulfilling their substance requirements. The reports describe companies with offices and employees but question whether their physical presence truly reflects the size and scale of their operations on the island. Questions of substance, coupled with the moral and ethical dimension of corporate structuring, are high on the agenda of finance professionals worldwide, and the Maltese authorities are certain that the recent incidents will force a positive evolution of Malta’s product and service delivery over the longer term. Malta has always insisted that companies have more than ‘brass-plate’ operations, and the island is also fully committed to the efforts undertaken by the OECD in combatting base erosion and profit shifting in international tax structures.

"We surveyed institutional investors around the world last November and 73% of them said Malta was in a ‘strong’ or ‘extremely strong’ position to become a leading financial services centre. Malta’s geographic location and trading history means it is well positioned to benefit from growing demand for financial services internationally. This is one of the key reasons why we are here."

Jeremy Leach, Chief Executive Officer of Managing Partners Group

Proven Concepts

Malta’s finance community has long been emphasising that regulation and innovation aren’t opposites. Practitioners regularly point to the link between the strong performance of the insurance and investment fund sectors and the country’s carefully crafted, and continuously developed, regulatory frameworks. Insurance premiums have reached a new high in recent years, with €3.8 billion written in gross premiums. It is argued that Malta’s Protected Cell Company (PCC) regime offers a cost-effective way of managing the higher capital and compliance requirements of Solvency II. In the past two years, Malta has also experienced an influx of asset managers and fund service providers following the introduction of the EU’s Alternative Investment Fund Management Directive (AIFMD) that regulates both managers and promotion of alternative funds. To cement its position as a top domicile for the industry, Malta recently launched a new framework for the notification of Alternative Investment Funds (AIFs), known as Notified AIFs, as well as rules for the establishment of loan funds.

Renewed focus on the wealth management sector has also paid off. Malta has updated its trust law, bringing it in-line with the latest international developments, while the introduction of citizenship-by-investment and new residency programmes have helped promote Malta as a holistic lifestyle and wealth management location. Other sectors are also gaining importance; Malta has the largest shipping registry in Europe and is in the process of building up a diversified aviation cluster.


"Malta is currently experiencing a prolonged period of low unemployment and high GDP growth rates. This is brought about by the fact that the Maltese economy is diversified and is supported by business confidence and high consumer spending. Malta needs to continue to be nimble and efficient if it is to remain at the forefront of the market in Financial Services."

Malcolm Booker, CEO of Deloitte Malta

Financial Talent Pool

To guarantee a pipeline of talent and labour certainty for corporations, Malta has invested heavily in building up the competencies of its financial sector workforce. From home-grown talent to experienced international financial sector professionals, Malta today offers a diverse talent pool. About 60% of Maltese students continue to third-level education, with law, accountancy and management among the most popular subjects. In addition, a number of institutes offer industry-specific training. While the surge of growth in business has left a shortage of specialised skills in certain segments, the country has introduced tax incentives for highly qualified foreign professionals working in the finance centre, who can benefit from a flat income tax rate of just 15%. Its Mediterranean island flair, coupled with opportunities for career progression, mean Malta is becoming an exciting destination for people considering a move abroad.

A Global View

Much of Malta’s success can be credited to its central location. EU membership has provided firms with access to the union’s massive internal market of over 500 million people, and unsurprisingly, Malta’s most important commercial relationship is with the European Union. However, the island has also sought to promote itself in overseas and developing markets, with special attention being paid to other financial hubs such as New York and Dubai. In addition, Malta has negotiated favourable tax treaties with powerhouse growth markets such as China, India, Hong Kong and the US, with some 70 tax treaties in total. Its geographic position in the middle of the Mediterranean, and its close proximity to North Africa, also make it a good stepping stone for financial companies wishing to target the Arab world.


"We should differentiate between tax rates and the abuse of tax regimes. We are committed to addressing tax evasion as well as identifying loopholes in our own system and closing them. We are supporting all EU and OECD initiatives, and we will looking into further defining substance requirements, which would provide guidance to companies and service providers alike."

Edward Scicluna, Minister for Finance

Support Network

Companies setting up in Malta find many helping hands. FinanceMalta, a non-profit public-private initiative set up to promote the financial sector, is the first point of contact for investors and financers who soon find that the island’s professional services firms offer a wealth of knowledge and experience. Most law firms are affiliated with international networks, and many lawyers have post-graduate degrees in finance. In addition, all of the ‘Big Four’ accountancy firms have a presence in Malta and, together with the smaller accountancy and auditing practices, service international clients. Clients can rest assured that they are dealing with professional firms. Trust and fiduciary providers need to be licensed by the MFSA, and under new legislation companies offering administrative and management services are also obliged to register with the authorities.

Pensions, Payments and Securitisation

Malta has ambitious plans for the future. The country is expanding its portfolio into profitable niche areas such as pensions and payments. The island is emerging as a base for international retirement operators, and there some 50 pension schemes licensed on the island. Concerning payments, Malta is attracting a growing number of e-money institutions and payment processors. Securitisation has also been singled out as a future growth area, and Malta has developed platform structures for securitisation transactions, introducing the Securitisation Cell Company (SCC). By the end of March 2017, there were already a dozen SCCs set up. As a politically stable and neutral country, Malta also has potential to become a centre for international arbitration, while its longstanding connections to North Africa and the Middle East make it a suitable jurisdiction from which to establish Sharia-compliant structures. Malta’s capital markets are also eyeing growth in Islamic finance, and the country’s stock exchange has launched a Sharia-compliant equity index, in addition to offering opportunities for small and medium cap companies from Europe and beyond.


"We seek to continue identifying niches for growth – whether its new products or services, for which we can develop the necessary regulation to attract business. While banking, investment and insurance services are well established, over the past years we have seen developments such as the setting up of occupational pensions and pension fund administrators. Creating a diversified sector is healthy for Malta, and we will keep moving forward on this path."

Joe Bannister, Chairman of the Malta Financial Services Authority


A Focus on Innovation

Going forward, service innovation has become the new mantra of Malta’s finance industry. All stakeholders, financial service companies, support service providers and regulators are aware that speed to market is crucial these days. Traditionally, Malta has also enjoyed strong cost advantages. However, additional regulatory and compliance requirements are driving up service providers’ fees and Malta is becoming more expensive. Nevertheless, the country’s cost base is still very competitive, with operational costs and salaries being 20 to 30% cheaper than in more established centres. Malta is also keen on finding new niches for which it can develop the necessary regulation to attract business. The island is also positioning itself as a base for finance companies seeking an EU address after Brexit. Malta, besides Ireland, is the only other English-speaking EU country, and coupled with its other advantages as a financial centre, this provides Maltese financial firms with an interesting opportunity.

Reputational Ranking

Malta’s success in attracting new companies will depend on the island’s ability to communicate and demonstrate the high standards that the finance sector applies. The industry does not deny that it has felt the effects of recent media reports. While there is widespread agreement that the financial services regulator could do well with additional resources to oversee the growing sector, many in Malta and abroad believe that the recent accusations served as a wake-up call. Tax planning and corporate structuring have ethical dimensions these days, and even though certain business models are perfectly legal, they might fall foul of public opinion. Going forward, affected companies will certainly pay greater attention that they do not only conform to the letter of the law but also to the spirit of the law.

Future Outlook

Pragmatic regulation, creative innovation and service diversification are just some of the strings in Malta’s bow which have helped financial services become one of the country’s most important economic generators. These features will help Malta to reinforce its position in the years ahead. The country is also determined to provide leadership in ongoing international discussions on financial regulation. Malta’s government emphasises that it strives to achieve a balance between enhanced financial stability and a competitive tax and regulatory framework that will make the finance centre’s future ever brighter.


"We believe that 2018 will be the breakthrough year for blockchain technology. We set up BitMalta to foster dialogue between industry players as Malta seeks to put itself on the global blockchain map."

Jonathan Galea, Founder and President of BitMalta




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