The island of Malta consists of two land masses that sit south of Sicily in the Mediterranean Sea. The location has long been known as a midpoint port between North Africa and Southern Europe. However, in modern financial times, Malta is now known as the Mediterranean capital for European hedge funds as well.
As a poorly kept secret, Malta has increased the number of hedge funds that have moved to its island over the years, now being home to over 578 offices and funds as of September 2013. This growth in the country’s operating hedge funds, according to the Malta Financial Services Authority, has increased almost 400 percent from 130 offices in 2004. In just one year, 2011, the number of new registrations jumped over 100 new licenses alone.
The explosion in hedge fund growth is due to a number of factors:
- Malta became a member of the European Union in 2011; it has access to EU financial markets as a result.
- Access to non-EU countries as well as its own trade agreements with a variety of non-EU neighbors.
- Easy targeting access to business in North Africa, as well as Southern Europe.
- Malta also allows alternative Professional Investor Funds or PIFs which allow greater flexibility in investment options. That said, the Malta authorities still keep a watchful eye on PIFs, preventing exotic investment options that can get out of hand.
- Flexibility to recognize affiliate offices elsewhere in the world despite not actually being physically based in Malta.
Given the above benefits and features, it’s no surprise that Malta has become a target du jour of the international hedge fund set to service Europe. By comparison, the Maltese environment is far more comfortable and finance-friendly than markets in England or Germany, for example.
For those interested in international investing in the Southern Europe/North Africa hub, Malta may be the place to go. With the number of offices currently in play, and more attention being thrown at international investing in a global market, Malta job opportunities in fund offices are becoming more and more attractive. Even the big players like HSBC and Legg Mason have taken notice and set down roots on the island.
That said, there are personal benefits to working in Malta as well. Aside from the work opportunities, fund employees get to enjoy an income tax rate capped at 15 percent versus the normal 35 percent in other EU markets. That’s serious savings for fund employees who earn over 75,000 Euros annually. Further, there are plenty of transportation routes to both North Africa for quick vacations and fast returns back to Europe. So expatriates are well served and encouraged to set down roots.