Malta has established itself as a leading financial hub for investment funds and asset management in Europe, with the net asset value of locally based collective investment schemes amounting to over €22 billion as of June 2024, according to a KPMG report. This has been achieved by virtue of the country’s strong fundamentals, that make it an attractive place to do business, and a combination of regulatory innovation together with the development of a unique legislative framework.
As highlighted during the Malta Financial Services Authority (MFSA) conference on “Current Developments in Asset Management – Challenges and Opportunities” recently, it is our intention to protect and further enhance Malta’s standing on this front with ambitions for the sector to continue serving as a key driver of economic growth for many years to come. With rapid advances in financial technology, changing market dynamics, and a shifting regulatory environment across the EU, the event brought together both local and international experts and provided a timely platform to assess how the asset management industry can innovate responsibly while maintaining investor protection and market stability.
Cost efficiencies and operational benefits
Malta already offers various fund structures including Ucits, Alternative Investment Funds, Professional Investor Funds, Notified Alternative Investment Funds and Notified Professional Investor Funds (NPIF). However, recent developments designed to further enhance the country’s competitive edge include the introduction of Special Limited Partnership Funds regulations in February 2025, which provide for a new structure for investment funds to be structured as a limited partnership without separate legal personality, as well as the extension of the NPIF Framework to also allow self-managed funds.
We have also taken a leading role in developing regulation for fast growing industries such as digital assets, launching the Virtual Financial Assets Framework in 2018, well ahead of the Markets in Crypto-Assets Regulation – or MiCA – being implemented across the EU
These measures form part of the MFSA’s ongoing efforts to foster innovation and support evolving needs in the asset management industry. They are expected to provide cost efficiencies and operational benefits, making Malta even more attractive for asset managers.
As the sole regulator for the financial services sector in the country, it is the MFSA’s responsibility to ensure that, as the industry continues to evolve, innovation is matched with appropriate oversight. Our focus is on ensuring a stable regulatory environment that encourages growth through sound governance in adherence with EU frameworks and the recommendations of international standard setters. In this respect, we place a high value on direct engagement and dialogue with licensees, both potential and existing, to ensure that regulation supports and enhances, rather than undermines, both efficiency and innovation. This is one of the ways in which we ensure that Malta’s relatively small size is considered a competitive advantage by fund managers, enabling accessibility and supporting constant constructive dialogue.
We have also taken a leading role in developing regulation for fast growing industries such as digital assets, launching the Virtual Financial Assets Framework in 2018, well ahead of the Markets in Crypto-Assets Regulation – or MiCA – being implemented across the EU.
Through a process of extensive reform and innovation Malta has matured into a robust and attractive regulatory environment with a strong focus on supporting compliance and rigorous, forward-looking initiatives. At the same time, it has maintained its agile and accessible business-friendly environment, with ongoing efforts to drive efficiency by reducing regulatory complexity, simplifying processes, and unlocking the benefits of digitalisation.
A bridge between continents
Beyond this, there are many reasons why funds are attracted to Malta, including EU membership and English being an official language. With the strongest growth in the EU, Malta is strategically located and serves as a bridge between continents, and funds authorised in Malta can be marketed across the EU.
Tax efficiency is another key factor with no withholding taxes on distributions to non-resident investors and an extensive network of more than 70 double taxation treaties. Meanwhile Malta’s legal system, which is a civil law system with strong British common law influences, helps provide stability and predictability for fund managers. There is also a strong culture of innovation and the country benefits from the presence of a talented professional cohort and use of English as an official language. Political stability and quality of life serve as additional incentives for those weighing up the benefits of a presence in the jurisdiction.
In recent years Malta’s financial services sector has emerged as a major player in the country’s impressive economic growth. Between 2023 and 2024, the financial services sector witnessed a robust growth of 3.8%, contributing further to the country’s gross value added (GVA). In line with the recently announced Vision 2050, financial services will continue to play an important role in driving future growth. As the regulator, the MFSA’s priority is to ensure that Malta remains a well-regulated, forward-looking jurisdiction at the heart of the global investment landscape.
*Kenneth Farrugia is CEO of the Malta Financial Services Authority (MFSA).
