Malta Citizenship by Investment Programme
A novel legal framework was enacted to the Maltese Citizenship Act, allowing for the introduction of the Malta Individual Investor Programme (MIIP). The MIIP makes it possible for successful applications, and their immediate families, who pass a thorough due diligence test of the utmost rigour and who have contributed to the Maltese economy, to be eligible for Maltese citizenship.
Citizenship is the most stable enduring link that an individual can have vis-à-vis a jurisdiction. Whereas residence may be transient and temporary, citizenship allows the subject to access a series of inderogable rights and freedoms. Furthermore residence is personal, whereas citizenship assigns rights that may be passed over to future generations. Descendants of passport holders, and eligible to claim citizenship.
Successful applicants may therefore benefit from the following benefits:
- Maltese passport allows travel to over 180 countries without Visa – by far the most extensive of any citizenship by investment programme;
- Full access to EU Regulations and Directives – Malta is a member of the EU since 2004 – thereby allowing successful applicants to exercise full freedom of movement within the whole EU Member States;
- Full access to the Schengen zone – Malta has been a member of the Schengen area since 2007;
- Citizenship rights to them and their immediate family;
- Legal certainty – Citizenship regime vetted and approved by EU Commission;
- Bilingual population (English official language) – French, German and Italian widely spoken;
- Politically stable – Extraordinarily low crime rate;
- Economically sound – solid and regular economic growth (approx. 4% annual growth in GDP for 2013 – 2017);
- Thriving economy allows access to a robust local market, as well as unfettered access within Schengen areas.
Applicants must be at least eighteen (18) years of age, and must undertake a thorough due diligence in terms of probity. Dependents of the applicants, such as spouse, underage children, parents, may also be eligible to the citizenship programme, but their application is entirely dependent on the success of the main applicant’s application.
In other words, although dependants are subject to the same degree of scrutiny and probity as the main applicant (they are however spared the need to contribute directly to the programme), their success hinges directly on the main application submitted by the applicant. If the applicant’s application is rejected on any ground, then the application of the dependants shall automatically not be entertained, irrespective of whether or not the dependants had satisfied the ‘fit and proper’ test.
Fitness and Propriety
Only applicants that are in good standing and repute shall be considered for citizenship. The rationale is that whilst residence is transient and potentially easy to change, citizenship is the highest privilege bestowed upon an individual, and naturalisation to the Maltese citizenship, and unlocking of the aforesaid rights to EU directives and regulations and free movement within the Schengen area, may only be bestowed upon those individuals who have proved worthy of consideration, and whose integrity is beyond debate.
Applicants must therefore be subject to a thorough due diligence check, in which their history, personal and professional is subject to severe scrutiny. Due diligence checks shall include checks conducted by various authorities and sources, including the Europol and Interpol databases.
Applicants or descendants who have been convicted of any of the following crimes shall be automatically disqualified from the attainment of the citizenship programme:
- Any offence which disturbs the good order of families, including but not limited to (a) paedophilia; (b) defilement of minors; (c) rape; (d) violent indecent assault; (e) the inducement of persons into prostitution; and (f) abduction;
- Any charge which is punishable to imprisonment for more than one (1) year;
- The applicant or any of his dependants were not indicted before an International Criminal Court or has appeared at any time before the International Criminal Court, irrespective of whether such person has been found guilty or otherwise by such Court;
- The applicant or any of his dependants, shall not be persons listed with the International Criminal Police Organisation (INTERPOL) at the time of application;
- The applicant or any of his dependants is not or may not be potential threat to national security, public policy or public health;
- In respect to public health a bespoke application must be fulfilled whereby the applicant or dependants must attest, corroborated by medical certificates, that they do not suffer from any infectious or contagious diseases;
- The applicant or any of his dependants shall not be individuals who, have pending charges related to crimes of terrorism, money laundering, funding of terrorism, crimes against humanity, war crimes or crimes that infringe upon the Protection of Human Rights and Fundamental Freedoms as established by the European Convention on Human Rights. Applicants from the Islamic Republic of Iran, Islamic Republic of Afghanistan and the Democratic People’s Republic of Korea shall be automatically disqualified.
In addition to the aforesaid disqualification criteria, any applicant or his dependants who:
- provide false information on their application;
- has a criminal record;
- are the subject of a criminal investigation;
- are a potential national security threat to Malta;
- are, or is likely to be, involved in any activity likely to cause disrepute to Malta; or
- have been denied a visa to a country with which Malta has visa-free travel arrangements and has not subsequently obtained a visa to the country that issued the denial, shall not be approved for citizenship under the programme.
However, where special circumstances so warrant, it is possible, subject to the submission of a reasoned opinion of why such application should be considered, notwithstanding the aforesaid factors, may be lodged for the consideration of the local authorities. Overwhelmingly good reasons must be provided by the applicant to justify the reasons behind such factors, and why they should be disregarded. The decision of the Maltese authorities whether or not to entertain such application, following the disclosure of such information, shall be final
Conditional to and subsequent to a clean due diligence exercise by the applicant and his dependents, the main applicant is required to contribute a monetary contribution to a consolidated fund set up the Government of Malta, which proceeds shall be used to finance projects linked to education, public health, innovation, employment creation and projects for social advancement.
The minimum contribution of the main applicant shall be of EUR 650,000. Provided that in addition to the aforesaid, the following contributions shall also be payable:
- EUR 25,000 for each spouse and underage child;
- EUR 50,000 for unmarried children between the ages of 18 and 26 (insofar that they are wholly maintained by the applicant);
- EUR 50,000 for each parent and grandparent of the applicant.
At the outset, it is important to make the following considerations:
- Whilst the government of Malta will recognise non-monogamous family units – for the purpose of the MIIP, based on public policy considerations, only one spouse shall be eligible as a dependent. Thereby, other spouses will only be considered insofar that they can satisfy the criteria, not as dependents, but as applicants, in their own rights;
- Although the applicant process speaks of spouses, any other relationship having an equivalent or similar status to marriage – such as civil unions – shall also be favourably considered;
- Child shall include adopted child of the main applicant or of his spouse;
- Parents or grandparents of the main applicant or of his spouse above the age of fifty-five years, insofar that they are wholly maintained or supported by the main applicant and form part of the household of the main applicant;
- Children of the applicant or of the spouse of the main applicant, who albeit over the age of eighteen is subject to a mental or physical disability and who is living with and is fully supported by the main applicant.
It follows therefore, that the scheme seeks to cement and maintain a family unit and household, and not disrupting through bureaucratic considerations. Special concessions are made with regard to vulnerable individuals such as persons with disabilities, minors, and elderly individuals, whose economic viability may be entirely hinged to that of the applicant.
The MIIP has a wider scope than residence which is personal to the applicant. The MIIP extends citizenship not just to one individual but to eligible members within his household, thereby allowing these individuals, as a unit, to enjoy the privileges of Maltese citizenship, access to EU directives and regulations and freedom of movement within Schengen.
The Maltese real estate industry offers a plethora of exquisite properties, from apartments, villas, bungalows to historical buildings steeped in history such as palazzos and houses of character. Applicants must make an investment in property of at least EUR 350,000.
Alternatively, applicants shall be required to enter into a property rental contract for at least EUR 16,000 per annum. It is worth noting that in the past years, there is an advent of special designated areas – high-end real estate properties designed to include not only top finishings and material but also a very flexible legal regime, incentivising investors to acquire or lease out such properties.
For maximum probity, an expert’s valuation – such as one provided by a warranted architect must attest fair value of the property – irrespective of whether the property is acquired or leased.
As a general legal precept, immovable property acquired in Malta, and used as a sole ordinary residence shall be completely exempt from capital gains considerations if such property is held uninterruptedly for three (3) years. If the property is transferred prior to the aforesaid lapse of three (3) years, then the capital gains dues shall be equivalent to 12% of the selling price.
Furthermore, there are no inheritance or death taxes, and no equivalent to municipal taxes. Further complementing this fiscal incentive, is the fact that there are no net worth or wealth taxes payable in Malta – thereby rending the residence of Malta a pleasant, and fiscally efficient jurisdiction.
In any case, the acquisition or rental agreement must be held of a minimum of five (5) years.
Malta enjoys over 300 days of sunshine a year, excellent healthcare facilities, excellent connections by air to major capital cities, and consistently one of the safest places worldwide – with no major crime spots and quasi-negligible incidence of violent crime.
Through our collaboration with reputable real estate agents, we can assist you in all matters relating to real estate – whether it is acquisition or rental. Services include side-visits, assistance in the vetting of rental agreements and promises of sale (final deeds).
Investment in Bonds / Shares
Applicants are, in addition to the aforesaid investment in immovable properties, applicants are required to invest at least EUR 150,000 in bonds or shares that are approved by the Maltese government – and sanctioned as beneficial to the development of Malta.
This investment must be retained for a minimum of five (5) years from acquisition thereof.
As of Q1 2017, Malta can boast an ‘A’ Credit rating bestowed to it by Fitch Ratings Inc. as well as other major rating agencies. Forecast is stable, with the debt to GDP at less than 60% (well below other EU peers). This makes for a stable investment plan
We can assist you by introducing you to licensed asset managers who shall advise the best portfolio best geared towards your exigencies.
Furthermore, the applicant and dependent must retain at all times a comprehensive healthcare cover of at least EUR 50,000 for himself and for each of his dependents. This ensures that whilst the applicant and/or his dependents may, if need be, benefit from the sterling healthcare facilities, available in Malta – the costs of such healthcare would be absorbed by an insurance policy rather than through the applicant himself or by the government of Malta.
Once again, we can help you through the introduction of licensed insurance brokers for the undertaking of plans best suited towards the care of your family.
The MIIP shall at the end of the process require that the applicant and the dependants be eligible to an oath of allegiance to the government of Malta. The applicant must therefore show that he has developed, over the course of the programme, a genuine link with Malta, and shall be eligible for such oath one year from the effective date of commencement of such link with Malta.
It is not the scope of the MIIP to render a continuous presence in Malta for 365 days a year. This would be self-defeating as it is acknowledged that investors have several interests outside Malta. However, the MIIP is not about bestowing privileges such as citizenship to applicants who have shown no genuine allegiance or affinity to Malta. Therefore applicants must show, with the onus of evidence being on them, that they have developed an allegiance to the island, by having established genuine ties, economic and social within the island, as well as a well-document residence footprint in Malta.
Applicants who have already established their residence in Malta, such as through alternative residence programmes, may naturally be dispensed from such obligation, insofar that evidence thereof be provided to the Maltese authorities.
For this reason, we strongly encourage applicants to cultivate and deepen their ties in Malta via the enrolment to cultural centres, gym, yacht, golf memberships, donations to philanthropic societies etc;
Please do not hesitate to contact us – we can introduce you and facilitate memberships in the clubs and organisations of your choosing.
Time Frames of the Application Process
The application process is a thorough yet linear process. Insofar that the application is completed and all supporting documentation is provided, in the manner set forth by the Immigration Act – apostilled copies of documentations etc; then the time frames of the application maybe summarised as follows:
- Preliminary meetings and discussion with Focus Business Services, as an accredited agent. The details of the application, including the number of dependents should be disclosed, and special emphasis should be placed on the eligibility criteria. All information and discussion are governed by legal privilege and shall be subject to strict confidentiality rules.
Discussions regarding the residence criteria are also of particular importance as the acquisition of residence shall set the time-frames of when the residential footprint shall have been initiated
- Following this discussions, it is possible to start the collation of all necessary forms and supporting documentation for the applicant and dependents. It is important that such collection of documentation is undertaken in the most thorough manner possible. Applicants are reminded that incomplete and inaccurate information shall not only delay the application process, but such omissions may be fatal to the application process. Once the application process has been completed to the full satisfaction of Focus Business Services, then it shall be submitted to the Maltese authorities for evaluation.
The application shall only be considered upon payment of (i) EUR 10,000 on account of the EUR 650,000 contribution; (ii) due diligence fees calculated as follows:- (a) main applicant – EUR 7,500; (b) spouse – EUR 5,000; (c) children between the age of 13 and 18 – EUR 3,000; (d) children aged 18 to 26 – EUR 5,000; (e) parents and grandparents over the age of 55 years of age – EUR 5,000
- Following submission of the application form and supporting documentation in the complete form, the complete set of documents shall be submitted to the Maltese authorities, which is minded to undertake a complete and thorough due diligence within ninety days from date of submission, subject to an additional 30 days of further verification, if need be.
- Following the aforesaid verification, the Maltese authorities, shall, insofar that the due diligence is complete issue an in principle approval. This is a very important milestone, in that the applicant has been provided with an official seal of approval, which shall not be withdrawn insofar that the applicant complies with the conditions of the MIIP – notably by undertaking the payment of the consideration and aforesaid investments;
- Applicant must pay remaining balance of contribution – EUR 640,000 for the main applicant and the individual contributions for each dependent. Furthermore, the applicant must also furnish evidence of acquisition or rental of immovable property as well as subscription of bonds / equities in accordance to the parameters set forth above.
- Following issue of certificate of naturalisation (upon evidence of residence in Malta), the applicant and the dependents shall be eligible for the oath of allegiance and entitled to Maltese citizenship. The issuance of a Maltese biometric passport is henceforth possible upon payment of EUR 500 for each passport and EUR 200 bank charges per applicant.
Revocation of Maltese Citizenship
No commentary would be complete without a mention to the negative aspects of any application. Citizenship is a privilege and cannot be abused. Applicants are well minded that the bestowing of such a privilege brings with it responsibilities of a continuous and enduring nature. Applicants should not have a short-term view of citizenship but be fully aware that a monitoring process shall be in place to ensure that the conditions of the programme shall continue well past approval stage.
The attainment of Maltese Citizenship under the MIIP is a revocable privilege and the Maltese authorities are empowered to deprive Maltese citizenship upon the emergence of especially grave grounds, which include any of the following:
- citizenship was acquired by means of fraudulent means or false representations or through the deliberate non-disclosure of material facts which may or may not have disqualified the applicant at the moment of submission of the application;
- the citizen has shown himself by act or speech to be disloyal or disaffected towards the President of the Republic of Malta or the Government of Malta;
- the citizen has engaged, unlawfully traded or communicated with an enemy of the Republic of Malta or been engaged in or associated with any business that was motivated by a willingness to assist an enemy of the Republic of Malta during war time.
These are far-reaching provisions which are not exercised lightly, yet it shows once again that not only is citizenship a privilege, but the maintenance thereof is subject to ongoing obligations are the applicant should not abuse of these provisions by carrying out conduct that are hostile or otherwise endanger the well-being and integrity of the Republic of Malta.
Taxation of Applicants
Undoubtedly one of the most important aspects to consider when enrolling in the MIIP is the effect that this may have on the tax residence of the applicant and his immediate family. Once again, Malta scores highly.
The basis of taxation under Maltese law are based on a two-tier test – residence and domicile. Citizenship may be an indication for either connecting factors, but not in itself decisive. The granting of citizenship and the consequential passport, does not necessarily equate to the applicant being deemed domiciled in Malta.
Whilst residence is an objective test (ordinary resident is equated to 183 days a year), domicile is subjective. If the applicant is not domiciled in Malta, he shall be taxable on two grounds:
- Local source income generated in Malta;
- Foreign source income remitted to Malta.
It follows that non-domiciled applicants who are resident in Malta would be taxable only on foreign source income only insofar that it is remitted to Malta.
Under pain of nullity applications to Identity Malta, the government organ that evaluates and processes citizenship programmes, must be under via an accredited agent. Our in-house firm – Focus Business Services (Malta) Limited – is an accredited agent, who has been approved, via a thorough and rigorous due diligence selection. This allows the applicant to have the peace of mind that he is entrusting his application of a highly sensitive matter like citizenship to a reputable firm.
Our highly experienced and professional officers can assist you in all matters ancillary, pursuant or related to the MIIP. We pride ourselves in providing a one-stop shop and can assist you in all the facets of this application. Do not hesitate to contact us. All queries shall be treated in utmost