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Safeguarding Your Wealth: Using a Malta Trust to Own Shares in a South African Company

In today’s globalized world, protecting and managing your assets across different jurisdictions can be complex yet rewarding. Establishing a Malta trust to own shares in a South African company offers both safety and security for your South African assets and carries specific tax implications that need careful consideration. This blog post will guide you through the key considerations, benefits, and tax implications of this arrangement.

Key Considerations for Using a Malta Trust

1. Legal and Regulatory Framework:

  • Robust Legal Structure: Malta is renowned for its strong legal framework, particularly for trusts. The Trusts and Trustees Act provides flexibility and robust protection for beneficiaries, making it an ideal jurisdiction for establishing trusts.
  • Regulatory Oversight: The Malta Financial Services Authority (MFSA) ensures high standards of compliance and governance in the trust industry.

2. Asset Protection:

  • Protection from Political and Economic Instability: Using a Malta trust to hold shares in a South African company can safeguard against political and economic instability in South Africa. Malta’s stable political environment and robust financial regulations offer a secure jurisdiction for holding assets.
  • Legal Protection: Trust assets are legally separate from the personal assets of the settlor, providing an extra layer of protection against personal creditors and legal disputes.

3. Confidentiality:

  • Privacy Benefits: Malta offers confidentiality for trust arrangements, which can be crucial for individuals who value privacy. The details of the trust and its assets are not publicly disclosed, providing an added layer of discretion.

Tax Implications of a Malta Trust Owning Shares in a South African Company

1. Tax Transparency and Conduit Principle:

  • Tax Transparency: Malta trusts are typically treated as tax-transparent entities. This means that the income and gains of the trust are taxed in the hands of the beneficiaries, not the trust itself. This includes dividends, interest, and capital gains, which retain their nature when passed to the beneficiaries.
  • Capital distributed by way of any award to South Africa resident beneficiaries are not subject to South Africa tax and are therefore tax free in the hands of the South Africa resident beneficiary.
  • Under South African law, income and capital gains received by the Trust may be attributed to a South Africa resident settlor of the Trust.
  • Under South African tax law, the conduit principle applies, so that income or gains distributed from the trust to South African resident beneficiaries are taxed in their hands. The income retains its character, meaning dividends are taxed as dividends, interest as interest, and capital gains as capital gains​. 
  • There are circumstances the so-called Participation Exemption may apply where the dividends received by a foreign trust that distributed to a South African resident beneficiary.

2. Donations Tax:

  • Implications: If shares of the South African company are transferred to the Malta trust, the value of the shares exceeding ZAR 100,000 but below ZAR30 million will be subject to a 20% donations tax, and shares valued at more than ZAR30 million are subject to 25% donations tax. This can be managed effectively with proper tax planning, making the transfer more tax efficient.

3. Capital Gains Tax:

  • Disposal of Shares: The disposal of shares held by the Malta trust can trigger capital gains tax in South Africa. However, the favourable tax regime in Malta can help offset some of these liabilities, especially when gains are realized within the trust.
  • Mitigation Strategies: Various strategies can be employed to mitigate capital gains tax, such as utilizing Malta’s double tax treaties and effective tax planning to reduce the taxable amount.


Using a Malta trust to own shares in a South African company offers significant benefits in terms of asset protection, confidentiality, and potentially favourable tax treatment. With the right planning and advice, you can leverage these advantages to secure and grow your wealth effectively. By understanding the key considerations and implications, you can make informed decisions to optimize your investment strategy.

For more detailed information, please contact our team of experts at Capricorn Trustees Ltd. 

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