Table of Contents What is a Family Office and why Malta? Family Office Malta: Why the Mediterranean Island Became a Hotspot Multi-Family Office vs. Single Family Office: Which Is Right for You? Family Office License Malta: Navigating the Bureaucratic Jungle Tax Advantages and Legal Framework Costs and Ongoing Expenses: What a Family Office Really Costs The Most Important Local Service Providers and Partners Common Pitfalls and How to Avoid Them Frequently Asked Questions What is a Family Office and Why Malta? I still remember my very first conversation with Dr. Elisabeth, a retired entrepreneur from Munich. She was sitting in a café in Valletta, sipping her cappuccino, and asked me: “What exactly is a Family Office?” A fair question, as the term gets thrown around a lot without anyone really explaining what it actually means. A Family Office is basically your personal financial command center. Imagine you’ve accumulated so much wealth that you need an entire team to manage it—that’s exactly what a Family Office does. They handle investments, tax planning, estate planning, philanthropy, and sometimes even yacht maintenance or the grandchildren’s private school logistics. The Two Main Types: Single vs. Multi-Family Office Single Family Office (SFO): This is the Rolls-Royce of wealth management. A family sets up its own company exclusively to manage its assets. You typically need at least 100–250 million euros for this to make financial sense. Multi-Family Office (MFO): Here, several affluent families share costs and services. Even starting at 10–25 million euros this can be practical. You get professional asset management but don’t have to fund an entire team yourself. Malta as a Family Office Location: More Than Just Sunshine Over the last ten years, Malta has gone from a sleepy Mediterranean island to a serious financial hub. That’s not just because of the year-round mild climate—though I will admit, financial planning at 25°C is much nicer than in a rainy Frankfurt. The Malta Financial Services Authority (MFSA) has put in place dedicated regulations that make Malta highly attractive for Family Offices. English is an official language, EU membership, and a stable legal system based on the British model make the island particularly interesting for international families. Family Office Malta: Why the Mediterranean Island Became a Hotspot When I came to Malta in 2019, there were maybe a handful of Family Offices here. Today, I count over 40 licensed providers. So, what changed? Tax Attractiveness Without Tricks Malta offers legal tax advantages rarely found in other EU countries. The Malta Tax Refund System lets you reduce effective corporate tax down to 5%—fully legal and EU-compliant. For Family Offices, that means significant savings in managing large estates. On top of that, there’s the Participation Exemption: under certain conditions, profits and dividends from shareholdings can be received tax-free. This is a huge advantage for families with diversified portfolios. EU Passport for Financial Services A Maltese-licensed Family Office can offer its services throughout the EU—without needing extra licenses. This EU Passporting is especially valuable for families with assets across multiple member states. Everyday Practical Advantages Time Zone: Malta sits perfectly between London and Dubai—ideal for international investments Infrastructure: Direct flights to all major financial centers, fast internet, modern offices Quality of Life: Where else can you unwind on the beach after a day of due diligence? Language: All authorities speak English—no translation chaos Regulatory Stability The MFSA has learned from the mistakes of other offshore centers. Instead of quick license deals, they focus on sustainable compliance. That means more work up front, but fewer unpleasant surprises later. “Malta feels like the Switzerland of the South—just with better weather and less bureaucracy,” as Marcus, a German entrepreneur who relocated his Family Office from Zurich to Valletta, recently described to me. Multi-Family Office vs. Single Family Office: Which Is Right for You? This is a bit like choosing between a private jet and first class: both get you there, but costs and service can be worlds apart. Single Family Office Malta: For the Really Big Players A Single Family Office (SFO) is custom-built for one family. You decide the investment strategy, pick the team, and keep tight control. SFO Advantages SFO Disadvantages 100% tailored services High minimum cost (2–5 million EUR/year) Complete privacy You bear all compliance risks Direct control over investments More difficult to diversify Flexibility to change strategy Dependence on key persons Multi-Family Office Malta: Shared Costs, Professional Service With a Multi-Family Office (MFO), you share the infrastructure with other families. Its more cost-effective—and often more professional, since established MFOs offer better systems and greater expertise. Decision Guide: What’s Your Type? You should set up an SFO if: Your liquid assets exceed 100 million euros You pursue very specialized investment strategies Absolute privacy is your top priority You need to manage complex family structures An MFO makes sense if: Your assets range from 10–100 million euros You want professional services without full-cost coverage You want to learn best practices from other families You want to spread risk Hybrid Models: The Best of Both Worlds More and more families are opting for hybrid approaches. For example, you can use an MFO for standard services, and for special investments (private equity, art collections, family businesses) set up your own structures. Sarah, an entrepreneur from Hamburg, does just that: “My MFO handles portfolio management and reporting. For my tech investments, I have my own holding company in Malta—this way I save on costs but still have control over what matters to me.” Family Office License Malta: Navigating the Bureaucratic Jungle Let’s get practical. The MFSA has clear rules for Family Office licenses, but the devil’s in the details. I’ll walk you through the entire process—from your initial idea to the finished license. Step 1: Choose the Right License Category Malta offers several options for establishing a Family Office: Category 2 Investment Services License: The full package for professional Family Offices. You can offer portfolio management, investment advice, and administrative services. Alternative Investment Fund Manager (AIFM) License: For those mainly managing private equity or other alternative investments. Notified AIF: For smaller Family Offices under certain limits. Less regulatory hassle, but also more limited services. Step 2: Prepare the Application Dossier The MFSA doesn’t do things by halves. Your application must include: Business Plan: Detailed description of services, target clients, and business strategy Programme of Operations: How will you actually operate? Compliance Manual: Your internal guidelines and processes Financial Projections: Budget plan for the first three years Key Persons Documentation: CVs and certificates of all relevant staff Main Requirements Requirement Details Minimum Capital 730,000 EUR for Cat 2 License Qualified Persons At least 2 with relevant experience Malta Presence Office in Malta with operational staff Compliance Officer Must be Malta-resident Money Laundering Reporting Officer Different individual, Malta-resident Step 3: The Application Process Allow 6–12 months from application to license. The MFSA is thorough, but fair. Here’s the usual process: Pre-Application Meeting: Informal exchange with the MFSA (not mandatory, but highly recommended) Application Submission: Full dossier plus 25,000 EUR application fee Completeness Review: MFSA checks completeness (4–6 weeks) Substantive Review: In-depth review of all documents (3–6 months) On-site Visit: MFSA team visits your Malta office License Decision: Approval or rejection What Can Go Wrong? In my experience, most applications fail for three main reasons: Insufficient Malta Substance: A mailbox office isn’t enough. You need real staff on the ground Weak Key Persons: The MFSA wants proven experience. A CV listing only German banks won’t automatically impress Unrealistic Financial Plan: If you claim to build a profitable Family Office with 500,000 EUR starting capital, expect tough scrutiny My Tip: Use Local Expertise I’ve yet to see anyone master the licensing process completely alone. MFSA rules are complex and change frequently. An experienced local adviser may charge 50,000–100,000 EUR, but will save you months of delay. Tax Advantages and Legal Framework This is where it gets interesting for your tax adviser. Malta offers legal opportunities that are unthinkable in Germany or Switzerland. But don’t be fooled: legal doesn’t always mean simple. Understanding the Malta Tax Refund System The heart of Malta’s tax advantage is the Tax Refund System. In simple terms: you first pay 35% corporate tax, but get much of that refunded if you distribute profits. On foreign-sourced income (which covers most Family Office activities), you get 6/7 back. Effective tax burden: 5%. On domestic income, you get 5/7 back. Effective rate: 10%. On passive interest income from abroad: Full refund possible. Effective rate: 0%. Participation Exemption: Tax-Free on Shareholdings If your Family Office holds equity stakes, it gets even better. The Participation Exemption exempts dividends and capital gains from tax if: You hold at least 10% of the shares; or The holding is worth at least 1.2 million EUR; or You hold the shares for more than 183 days So, if you sell your shares in a family business via your Maltese Family Office, there’s no tax at all. In Germany, you’d pay at least 26% capital gains tax. Double Taxation Treaties: Over 70 Agreements Malta has double taxation treaties with more than 70 countries. That helps optimize withholding tax. Instead of 35% withholding in some countries, you usually only pay 5–15%. ATAD Compliance: Stay EU-Compliant The EU’s Anti-Tax Avoidance Directive (ATAD) has tightened the rules. Malta has adopted all requirements. That means purely paper companies no longer work. You need genuine substance in Malta: Real staff on the ground Genuine business operations Local decision making Sufficient office space What Does That Mean for Your Tax Strategy? A real-world example: The Weber family from Stuttgart has assets of 50 million EUR. They set up an MFO in Malta and move their investments there. Scenario Germany Malta Family Office Savings Capital gains 2 million EUR/year 520,000 EUR tax 100,000 EUR tax 420,000 EUR Sale of holding 10 million EUR 2,600,000 EUR tax 0 EUR tax 2,600,000 EUR Foreign stock dividends 26-28% tax 5–10% tax Significant But Beware: CFC Rules Apply As a German tax resident, you need to be careful. If you own more than 50% of the Family Office and it invests mainly passively, Germany’s Controlled Foreign Corporation (CFC) rules may kick in. The solution: Make sure your Family Office is actively managed. Portfolio management, investment advice, and other operational activities are usually not affected by CFC rules. Costs and Ongoing Expenses: What a Family Office Really Costs I remember Thomas, an entrepreneur from Munich, who was absolutely shocked: “What, a million a year just for management?” Yes, Family Offices aren’t cheap. But the cost structure is predictable if you know where to look. One-Off Setup Costs Before your Family Office goes live, expect these expenses: Item Single Family Office Multi-Family Office MFSA license fee 25,000 EUR – Legal advice 75,000–150,000 EUR 25,000–50,000 EUR Regulatory advice 50,000–100,000 EUR – IT setup and compliance systems 100,000–200,000 EUR – Office fit-out Malta 25,000–75,000 EUR – Total 275,000–550,000 EUR 25,000–50,000 EUR Annual Operating Costs Here’s where the wheat gets separated from the chaff—the ongoing expenses will determine whether your Family Office pays off: Staff: The Biggest Expense A professional Family Office needs qualified staff. In Malta, salaries are lower than Zurich or London, but higher than Eastern European financial centers: Chief Investment Officer: 120,000–200,000 EUR/year Compliance Officer: 80,000–120,000 EUR/year Relationship Manager: 60,000–100,000 EUR/year Back Office: 35,000–55,000 EUR/year A small SFO with 4–5 staff will cost at least 400,000 EUR a year for personnel alone. Regulatory Costs MFSA supervisory fees: 15,000–50,000 EUR/year (depending on license type) External auditor: 25,000–75,000 EUR/year Compliance consultant: 50,000–100,000 EUR/year Legal services: 25,000–100,000 EUR/year Operating Costs Malta office space: 50,000–150,000 EUR/year (depends on size & location) IT and systems: 100,000–300,000 EUR/year Insurance: 25,000–75,000 EUR/year Other admin: 50,000–100,000 EUR/year Management Fees for Multi-Family Offices MFOs usually use a two-part fee structure: Management fee: 0.5–1.5% of assets under management per year Performance fee: 10–20% of outperformance (above a set benchmark) On 25 million EUR in assets under management, that’s 125,000–375,000 EUR per year in management fees, plus possible performance fees. Break-Even Analysis: When Does a Family Office Pay Off? Here’s a realistic calculation: Single Family Office: Minimum running costs: 800,000–1,500,000 EUR/year Break-even at tax savings of 2–3% on assets under management Conclusion: Makes sense starting at approx. 50–75 million EUR Multi-Family Office: Typical total cost: 1–2% p.a. of assets under management Break-even at tax savings of 2–4% on assets under management Conclusion: Can pay off starting at 10–15 million EUR Hidden Costs Often Overlooked Travel costs: Regular visits to Malta for board meetings and compliance Currency risk: EUR/USD fluctuations for international investments Opportunity costs: Time spent on building and managing the Family Office Exit costs: If you ever want to close the Family Office “The real costs only become apparent after two or three years,” Robert told me, after giving up his SFO in Malta. “On paper, everything looked perfect. But all the travel, complex reports, and dependence on Maltese service providers annoyed me far more than the money I saved.” The Most Important Local Service Providers and Partners Malta is small—if you run a Family Office here, you’ll hear the same names over and over. That’s both a blessing and a curse. On the plus side, everyone knows everyone else; on the minus side, there’s only a handful of real alternatives when things go wrong. Regulatory Advice: The Door Openers You won’t get far in Malta without experienced regulatory advisers. MFSA regulations are complex and constantly evolving. What to look for: At least 10 years’ experience with MFSA licenses Proven track record with Family Office licenses Good relationships with the MFSA (yes, that matters) Transparent fee structure Most established consultancies charge 1,500–2,500 EUR per day. For a full license process, budget 50,000–150,000 EUR. Legal Services: More Than Just Contracts Maltese law blends British common law and continental European civil law. You need lawyers who understand both systems. Key legal areas for Family Offices: Corporate law Investment services law Tax law (local tax regime) Trust and foundations law Data protection (GDPR compliance) Audit: MFSA-Approved Auditors Not every auditor can audit Family Offices. MFSA maintains a list of approved auditors. The Big Four (PwC, KPMG, EY, Deloitte) are all there, but local firms also offer excellent services at better rates. IT and Compliance Systems A modern Family Office can’t function without solid IT systems. You’ll need: Portfolio management system: For investments and reporting CRM system: For client relationships (also vital for SFOs) Compliance monitoring: Automated controls for limits/regulation Risk management tools: For risk measurement and control Reporting engine: For regulatory and internal reports Malta has developed into a tech hub, with many fintech companies offering specialized Family Office solutions. Banks: Spoiled for Choice Malta has over 20 licensed banks. For Family Offices, the following are particularly relevant: International banks with Maltese branches: HSBC Malta Bank of Valletta (largest local bank) APS Bank Specialized private banks: Calamatta Cuschieri Jesmond Mizzi Financial Advisors Various smaller boutique banks Opening an account typically takes 4–8 weeks. The banks are strict with due diligence, but fair and professional. Fund Administration: Outsourcing vs In-house Many Family Offices outsource administrative activities: NAV calculation: Daily valuation of investments Transfer agency: Handling shareholder registers Regulatory reporting: AIFMD, MIFID II, and other EU requirements Tax reporting: Local and international returns Malta counts over 15 specialized fund administrators. Costs: 50,000–200,000 EUR per year, depending on complexity. Property: Offices and Homes You will need a representative office in Malta—the MFSA insists on it. Top locations: Valletta: Prestigious, but expensive (80–150 EUR/sqm/month) Sliema/St. Julian’s: Modern offices, great infrastructure (60–120 EUR/sqm/month) Ta Xbiex: Financial district, many Family Offices (70–130 EUR/sqm/month) If you move to Malta (which many Family Office founders do), living costs are moderate by EU standards. A nice 3-bedroom apartment with sea view rents for 2,000–4,000 EUR a month. Networking: The Malta Finance Community Malta is small, its finance scene even smaller. Regular events include: Malta Finance Forum: Annual event for all major players MFSA Events: Regulatory updates and networking Chamber of Commerce: Business networking Various private events: Yacht parties, golf tournaments, etc. My tip: Invest time in networking. In Malta, personal relationships often determine success or failure. Common Pitfalls and How to Avoid Them After five years in Malta, I’ve seen plenty of Family Office projects fail. Rarely because of big strategic mistakes—usually because of preventable operational errors. Here are the most common pitfalls and how to sidestep them. Pitfall 1: Insufficient Malta Substance The Issue: Many people think a mailbox office and local nominee director are enough. That may have worked in 2015, but since ATAD and MFSA’s tougher requirements, that’s history. What goes wrong: The MFSA carries out surprise inspections. If they find an empty office or employees with no understanding of the business, it gets expensive. Worst case: you lose your license. My Solution: At least 2–3 qualified full-time staff in Malta Genuine business operations locally Board meetings at least quarterly in Malta Document everything: staff attendance, meeting minutes, local decisions Pitfall 2: Underestimating Compliance Requirements The Issue: Family Offices in Malta are held to the same regulatory standards as other licensed financial services providers. MiFID II, AIFMD, GDPR, AML—the list is long and complex. What goes wrong: Compliance violations can result in fines of hundreds of thousands of euros. I’ve seen cases where offices paid more in penalties than they saved in taxes. My Solution: Hire an experienced compliance officer (budget: 100,000+ EUR/year) Use professional compliance software Regular compliance reviews by external advisers Err on the side of caution Pitfall 3: Poor Staff Choices The Issue: Malta’s talent pool for financial services is small. Good people are rare and expensive. Many Family Offices hire cheap, inexperienced staff. What goes wrong: Investment mistakes, compliance breaches, unhappy family members. A bad portfolio manager can do more damage in a year than you’ll save in tax in ten. My Solution: Pay the going rate for top talent Work with headhunters who know Malta Consider remote options for specialists Invest in training and retention Pitfall 4: Overestimating Tax Savings The Issue: Many founders calculate only with Malta’s low tax rates and forget about source country taxes, CFC rules, and other effects. What goes wrong: The expected savings never materialize, but costs are ongoing. Especially problematic for German residents due to the CFC rules. My Solution: Have your tax structure reviewed by an international tax adviser Be conservative: calculate with 50% of theoretical savings Review annually for legal changes Have a plan B in case the rules change Pitfall 5: Neglecting Operational Efficiency The Issue: Many Family Offices focus solely on tax and forget that operational inefficiency can quickly eat up any savings. What goes wrong: High transaction costs, poor investment performance, overpriced service providers. I know an office paying 200,000 EUR per year for IT services worth 50,000 EUR in Germany. My Solution: Benchmark all service providers regularly Leverage synergies by collaborating with other Family Offices Automate as much as possible Measure and optimize your total cost of ownership Pitfall 6: Underestimated Exit Costs The Issue: No one plans for failure, but sometimes a Family Office just doesn’t work out. Exiting can be complicated and costly. What goes wrong: Long-term commitments with service providers, tricky asset transfers, regulatory hurdles. I’ve seen office closures take longer than the original setup. My Solution: Plan exit scenarios from the very beginning Avoid long-term contracts without exit clauses Keep asset structures simple and transferable Have a local partner who can step in if needed My Personal Tip: The Malta Reality Check Before committing to a Family Office in Malta, do a reality check: spend at least a month on the island. Not in a five-star resort—rent a regular apartment and live like a local. Go to meetings at the MFSA, visit local service providers, ride the bus (yes, really!), shop at the local supermarket. Malta is beautiful, but it’s also small, sometimes chaotic, and definitely different from Germany or Switzerland. If after four weeks you’re still convinced—go for it. If not, you’ve saved yourself 10,000 EUR in travel and rent, rather than 500,000 EUR for a Family Office you’ll shut down in two years. Frequently Asked Questions How long does it take to set up a Family Office in Malta? For a Single Family Office, you should allow 12–18 months. The MFSA license itself takes 6–12 months, plus office search, staff recruitment, and IT setup. Multi-Family Offices are quicker—often operational within 3–6 months. Can I run a Family Office in Malta as a German citizen? Yes, but beware of the German CFC rules. If you own more than 50% and the Family Office mainly invests passively, German tax authorities may attribute the profits directly to you. Active asset management is usually unproblematic. What’s the minimum investment for a sensible Family Office setup? For a Single Family Office, you should have at least 50–100 million EUR. With Multi-Family Offices, it can be worthwhile from 10–25 million EUR. Any less rarely makes sense since the fixed costs are too high. Do I have to move to Malta personally? No, but it does help for tax transparency. Moving your tax residency to Malta makes the structure more credible. Alternatively, regular business trips and real local operations are usually sufficient. How much tax will I really save with a Malta Family Office? That depends on your individual situation. With the optimal structure, 0–5% corporate tax on foreign income is possible. But be conservative—and get advice from an international tax expert. What if EU tax laws change? Malta regularly updates its laws to align with the EU. So far, the changes have mostly been moderate. The key is that your Family Office has genuine economic substance in Malta—then you’re typically safe even if the rules shift. Can I relocate my existing Swiss Family Office to Malta? In principle, yes—but it’s complex. You’ll need to transfer all assets, set up new contracts, and often change staff. Allow 12–24 months for a full migration, and check every tax implication in advance. How do I find trustworthy service providers in Malta? Malta is small—references are key. Ask other Family Office operators about their experiences. The Malta Financial Services Authority also keeps lists of licensed service providers. Invest time in face-to-face meetings locally. What is the ongoing compliance cost for a Family Office? Budget 150,000–400,000 EUR per year for proper compliance. This covers the compliance officer, external advisers, audit, regulatory fees, and IT systems. Not a place to cut corners. Can I close my Family Office if it doesn’t work out? Yes, but plan for it from the start. Closing usually takes 6–12 months and costs 100,000–300,000 EUR. Important: Avoid long contracts without termination clauses, and keep asset structures simple.
