In Malta, diverse types of nonprofits and foundations have been in existence for a while. However, the sector was given legal protection under the Civil Code by the Act XIII of 2007. In general, the Foundations Regulations and the Voluntary Organizations Act both regulate nonprofit entities.
The work done by Roman Catholic Church organizations played a major role in the formation of the voluntary sector in Malta. Presently, it has expanded through time to encompass organizations that support the social, economic, political, and environmental growth of the nation.
In this article, we will consider the types of nonprofits in Malta and their functions.
- The various types of nonprofits in Malta have become essential delivery systems for social services
- NGOs are also channels for the implementation of several development initiatives
What are the types of nonprofits in Malta?
Malta recognizes three classes of nonprofits in the country. We will provide a brief overview of the various classes.
A foundation’s purposes may be benevolent or not-so-charitable and may benefit a single person, a group of individuals, or both. However, the goals of these types of nonprofits must be worthwhile. A foundation is not allowed to trade or engage in commercial activity. Nonetheless, it is can acquire commercial property or stock in a profitable firm.
Previously, case law and legal practice were used in Malta for almost 200 years to recognize and manage foundations. However, formal legislation was passed in 2008 to establish a clearly defined legal framework. As a result, Maltese foundations are now governed by the Second Schedule of the Civil Code (Chapter 16 of the Laws of Malta). This code permits the establishment of two different foundation types: “Private” and “Purpose” foundations.
2. Voluntary organizations
The Voluntary Organizations Act of 2007 established the Office of the Commissioner for Voluntary Organizations. The duty of the office is to strengthen the voluntary sector through a variety of initiatives. The specific goal is to promote VOs’ work and encourage their role as partners with the government in a variety of initiatives.
In addition, any nonprofit organization may apply for enrolment under the Voluntary Organisations Act. However, the nonprofit must meet the requirements of Article 3 of the Voluntary Organizations Act to be enrolled. Afterward, the organization is subject to several conditions. This includes the production of yearly accounts and the identification of its members.
The Trusts and Trustees Act governs the creation of trusts in Malta. For these types of nonprofits, the Act allows for the establishment of trusts as well as the appointment, control, and oversight of trustees.
Also, there are three types of trusts in Malta: Express trusts, Implied or Resulting trusts, and Constructive trusts.
For tax reasons, trusts are regarded as transparent. Hence, when income attributable to a trust is given to a beneficiary, the trustee is not subject to tax on that income. Additionally, there is no tax consequence under Maltese tax law where all beneficiaries of a trust do not reside in Malta. This is also the same for all attributable income of a trust that does not originate in Malta.
What are the rules that guide the establishment of nonprofits?
Whoever chooses to establish a foundation or any of the types of nonprofits in Malta must register with the Legal Persons Register. However, this is a separate organization from the Commercial Registrar.
In the case of public NGOs or a testament in the case of a private foundation, the foundation will be established based on a public deed and will have a legal personality, much like a Maltese corporation.
Also, according to Article 29 of the Civil Code, a foundation may only be created through a public deed or a will. The foundation must, first and foremost, have an endowment of cash or property worth at least €1164.6. In the case of a non-profit organization, the endowment must be worth at least €232.94.
Malta is a popular location for establishing nonprofits since it has some of the lowest foundational cost requirements compared to other European nations. Additionally, a foundation in Malta lasts for 100 years.
The various types of nonprofits in Malta have become essential delivery systems for social services. NGOs are also channels for the implementation of several development initiatives. Without a doubt, a few organizations could compete with or even outperform the capabilities of the public or private sectors in certain fields. This is especially true given the non-profit sector’s growing capability and knowledge expansion.
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