For many, Malta will always be a sun drenched tourist destination at the heart of the Mediterranean, steeped in culture and history.
However, this vibrant captivating Island, with a population of around 420,000, is now firmly in the sights of many numerous different reasons for travelling to a foreign clime.
For those with wealth at their disposal, Malta is now, quite simply, one of the most attractive places on earth to secure a second citizenship.
Quite apart from its wonderful year round climate and the fact that it boasts no fewer than seven UNESCO World Heritage sites, Malta represents a gateway into Europe, allowing freedom to travel throughout the rest of the world and a location to secure a permanent residency.
Easily accessible from most European countries, Malta has been a member of the European Union since 2004 and a member of the Schengen Area of Europe since 2007, allowing Maltese citizens to travel to all 27 European countries without any border control.
At the beginning of 2014, the Island introduced an Individual Investor Programme (IIP) – the first such programme recognised by the European Commission – offering high and ultra-high net worth individuals and families the opportunity not just for EU citizenship, but also access to the ninth best passport anywhere in the world, according a well-known Visa Restrictions Index. The index credits a Maltese passport with providing visa free travel to at least 166 countries worldwide.
Available for non-EU, EEA and Swiss residents, the Maltese IIP programme is safe and transparent and considered to be one of the most reputable economic passport programmes in the industry.
A second, more recently introduced Malta Residency and VISA Programme (MRVP) has also been established for foreign investors. Whilst the latter scheme is an excellent way for non-EU investors to obtain a European Residence Permit and thereby facilitating easy access to all Schengen area countries, the only way to actually obtaining a permanent, second passport in Malta is through the IIP.
Malta – A viable proposition
Malta is a republic with a democratic parliamentary system, highly respected and considered neutral on the international stage. The nation’s banks have total assets worth more than seven times the country’s gross domestic product (GDP), making it very economically secure. The Island has an excellent credit rating (BBB+/A-2) and government bonds are in high demand amongst both professional and retail bond investors. Furthermore, economists are currently predicting impressive 2016 GDP growth of 4.1%.
In addition to its flourishing economy, Malta’s laid back lifestyle, low crime rate and excellent education system, and the fact that English is widely spoken, are all compelling reasons why growing numbers of high net worth individuals see Malta’s IIP as a secure and strategic investment for them and their families.
There’s also Malta’s advantageous tax system. Malta has no municipal taxes, no estate duty, no death or inheritance taxes, and no wealth or net worth taxes. The Island has double taxation treaties with approximately 70 countries around the world. The corporate tax rate in Malta is 35%, but special tax concessions apply to non-resident or non-domiciled company owners.
Obtaining European citizenship by investment through Malta’s IIP can provide significant tax savings. By moving their primary residence to Malta, individuals may enjoy beneficial tax arrangements under the status of being a non-domiciled person, paying tax on a remittance only basis (i.e. taxed only on income earned or received in Malta).
For all these reasons, unsurprisingly, demand is high for the IIP and the Government has capped the programme at 1800 applications. To date, just over 1100 have been made.
The application procedure is extremely efficient, with an investor, someone who isn’t Maltese, EU, EEA or Swiss, typically investing around €1.2 million to obtain Maltese citizenship.
Once an applicant is awarded Maltese citizenship, he and his family can legitimately set up business in the country and carry a Maltese passport, enabling them to enjoy visa-free travel to more than 160 countries across the world, including the United States. They would also have the right to live in other EU countries and Switzerland.
An applicant must initially invest at least €150,000 in government approved financial instruments (bonds, stocks, and debentures that benefit the nation) and commit to keeping the investment for at least five years.
Within four months of being accepted onto the programme the investor must also make a non-refundable contribution of €650,000 to the National Development and Social Fund (NDSF) which has been set up by the Government of Malta and is run by a board of trustees. The fund, on a par with the central bank, finances projects in the country linked to public health, education, job creation, social improvement and innovation.
Contributions are also required in respect of dependants and are levied as follows: spouse – €25,000; minor children – €25,000 each; unmarried children (18-26) €50,000 each; dependent parents & grandparents – €50,000 each.
For a minimum period of five years, applicants must also commit to either buying a property in Malta for a minimum of €350,000, or rent a property for at least €16,000 per annum.
The Malta citizenship investment program requires all entrants to hold a valid comprehensive health insurance policy that covers all worldwide medical expenses of at least €50,000 per family member.
Significantly, candidates who have been a resident of Malta for at least one year prior to IIP approval can subsequently become a citizen of Malta much faster – possibly within six months.
Even so, without the Maltese residency in place, the whole process is still fast efficient and can completed within 12 months (with the maximum timeframe at 24 months). This timeframe compares very favourably with other EU citizen programmes which can take anything up to five years to complete.
The MVRP alternative route into Malta
For those not in a position to invest in a Maltese passport but wanting to live in a warm Mediterranean location whilst at the same time benefiting from being located within the EU, the MRVP is a lower cost and potentially more attractive immigration option. Above all, it enables economically self-sufficient individuals who rent or own a permanent address in Malta to be formally recognized as a resident for tax purposes.
The MVRP provides international investors and their dependants with residency rights in Malta for those who are currently a third country national (i.e. non-EU, EEA or Swiss nationals).
An MRVP applicant must own a property priced at a minimum of €270,000, if in Gozo or the south of Malta, or at €320,000 for a property elsewhere in Malta. Alternatively, the applicant would need to rent a property for at least €10,000 per annum in Gozo or the south of Malta, rising to €12,000 per annum in other parts of Malta. In either situation the property must be rented or owned for a minimum of five years.
Additionally, the investor must commit to a qualifying investment of €250,000 for a minimum five year period. Other stipulations include proving income of not less than €100,000 from outside Malta, or having capital of at least €500,000.
The MRVP has been described as a “European Golden Visa”. If you are interested in an EU Residence Permit as opposed to European citizenship, then the MRVP route is probably the right one to take. However, the IIP is the only recognised citizenship by investment programme, requiring applicants to establish residency on the islands and build a genuine link with the country. There is no quick fix.
It isn’t possible to apply for Maltese citizenship on your own. Under the requirements of the Malta IIP, a prospective applicant must use an accredited agent, such as Abacus Malta, to start the application process.
As one of the Island’s leading and best resourced offshore trust and corporate service advisors, we can readily assist high net worth individuals and entrepreneurs. We can explain the benefits of considering Malta as a viable jurisdiction in which to live, work and thrive, appreciating that family considerations are often a prime concern.
As well as assisting with the application procedure, Abacus Malta offers a full range of corporate structuring services and options along with comprehensive business support services for those looking to apply for IIP or MVRP. In all cases, we can establish the most appropriate asset protection and investment vehicle from the outset, for as long as it will be required.
If you are from outside the EU and considering Malta as a place to start a new life, then talk to us today.