As more and more individuals are seeking opportunities beyond their countries of origin, Malta’s citizenship-by- investment and residency programmes are attracting increasing attention from high-net-worth investors and entrepreneurs from around the world. For professionals or business people who often conduct business on an international scale, a second residence or citizenship has become an appealing option to diversify not only their assets but also their lifestyle options and geographical ties. While living in Malta has long been popular with European nationals, and especially with people from the UK and Scandinavia, the new wave of expatriates taking advantages of Malta’s programmes includes individuals and families from South Africa, Russia, Asia, the Middle East and the Americas. Launched in 2014, Malta’s citizenship-by-investment programme has been capped at 1,800 applicants but it is very likely that it will be renewed once the current programme ends.
With Malta’s warm and sunny weather, historic charms and Mediterranean lifestyle, it is easy to see why the island has become one of Europe’s top expatriate destinations. As a small country, Malta has long considered wealth migration vehicles as an important economic tool to attract foreign investment and high-calibre people to its shores. In fact, the first measures to attract foreigners were put in place after independence from Britain in 1964, offering a special tax rate to foreign residents with an above-average income at their disposal. At that time, most individuals who relocated to Malta were British. Further residency programmes were introduced in 1972 and 1988, which built on this idea, offering foreign nationals a 15% flat tax rate and attracting expats from across the world. While this programme has been updated throughout the years, Malta has also widened its residence and citizenship portfolio for high-net-worth individuals.
The global citizenship-by-investment industry has gained prominence in recent years as affluent entrepreneurs and investors are seeking easier travel options and safe residency locations in the context of a deteriorating geopolitical climate. Wealth management firms are today increasingly catering to migrating millionaires considering an alternative passport as a hedge against political risks and market volatilities in their home countries or in pursuit of new business or lifestyle opportunities for their families. Malta’s Individual Investor Programme (IIP), offering foreign nationals the possibility to obtain Maltese citizenship, is the only one of its kind endorsed by the European Commission. A Maltese passport offers visa-free access to 173 countries, and as a stable country, Malta is being seen as a safe haven for individuals, families, business owners and investors.
The IIP requires an investor to pay €650,000 to the National Economic and Social Development Fund, purchasing property having a minimum value of €350,000 or leasing a property for a minimum annual rent of €16,000, in addition to investing €150,000 in government-approved financial instruments. Malta is aware that citizenship is a very complex and sensitive matter, and therefore has developed a four-tier due diligence system to ensure that applicants are bona fide and worthy of Maltese citizenship. Given that investment migration is exclusively the domain of high-net- worth individuals and business persons with substantial personal assets, Malta sees its IIP as an opportunity to attract highly talented people to the island, as well as to generate additional income for its economy. By 2018, 900 applications had already been approved, and the government announced its intention to extend the programme once its 1,800 application cap will be reached. However, it is considering more stringent criteria and invited stakeholders to put forward their ideas.
For those who are either not interested in, or coming from countries that don’t accept dual citizenship, Malta launched the Malta Residency and Visa Programme (MRVP) in 2016. The MRVP grants international investors residency in Malta and a visa by which they can access the Schengen area. Through this programme, Malta effectively acts as a gateway to Europe, which is an attractive feature for nationals coming from South Africa, Russia and China to name but a few. Applicants cannot be citizens of the EU, the EEA and Switzerland and are required to invest in property on the Maltese Islands. If purchased, the property needs to have a minimum value of €270,000 in Gozo or the South of Malta, or of €320,000 elsewhere in Malta. Renting property is an alternative; the annual lease must be between €10,000 and €12,000. Applicants must also commit to invest €250,000 in Government bonds, and this investment must be held for a minimum period of five years. In addition, the applicant needs to declare either an annual income of not less than €100,000 arising outside Malta, or capital of not less than €500,000.
Identity Malta, Valletta
The Identity Malta Agency is responsible for the administration of the MRVP and the IIP programmes. However, potential applicants need to make use of the services of accredited agents who are authorised and trained to guide them through the whole application process. Contact details of these agents can be found on the website of Identity Malta (www.identitymalta.com).
Other Residency Options
While the high financial benchmark and investment of these two programmes might not appeal to those of more modest means, Malta offers a number of other residency options.
Non-EU foreigners can take advantage of the country’s Global Residence Programme, which offers a 15% flat tax rate on income remitted to Malta. The programme is linked to the purchase of property; however, investment can be as low as €220,000 for property in the south of Malta or in Gozo. The value of property bought in the remaining parts of Malta has to be at least €275,000. Alternatively, they can rent property for €9,600 per year in Malta and €8,750 per year in Gozo or the South of Malta. Industry professionals point to the benefits derived from this scheme for foreign entrepreneurs, international consultants, intellectuals, authors, musicians or athletes who can establish a second residence in Malta that suits their lifestyle and tax profile. A similar programme for EU/EEA/ Swiss Nationals, the Residence Programme, is also in place, offering individuals from those countries the same tax status.
Pensioners can benefit from the Malta Retirement Programme, which has been designed to attract nationals of the EU, EEA and Switzerland, offering a 15% tax rate for individuals. Retirees can also make use of Malta’s wide network of double taxation agreements. Under most tax treaties that Malta is party to, pensions are tax-exempt from the country in which they are sourced, as long as the person is residing and receiving the pension in Malta. This means pensioners can remit their pensions to Malta and have them taxed at only 15% if they apply for the Malta Retirement Programme.
Applications for the Global Residence Programme, Residence Programme and the Malta Retirement Programme must be made to the Commissioner of Inland Revenue through an Authorised Registered Mandatory (for example, practitioners which are members of Malta’s finance institutes, such as the Institute of Accountants, the Institute of Taxation, the Institute of Financial Service Practitioners or legal practitioners, in any case, duly authorised to act as such).
Malta’s economic growth and investments from international companies have also caught the attention of high-flying foreign professionals. Malta is fast becoming an all-round top expat destination that ranks well as a place for career progression and financial gain, as well as for a lifestyle change, demonstrating that the country delivers across numerous elements of expat life. To fill gaps in its labour market, Malta introduced a scheme that offers highly qualified professionals in a range of executive positions and sectors a flat tax rate of 15%, provided they have an annual income of at least €84,016 (basis year 2018). Any income over €5 million is tax-free. Conveniently located at the centre of the Mediterranean within a few hours flying time from major European cities, the country is also the ideal location for professionals working in Europe, Africa or Asia.
The Mediterranean Ideal
Despite the country’s size, expatriates can always enjoy new experiences in Malta ranging from scuba diving and jet skiing to exploring Malta’s vast and engrossing history first-hand in its preserved medieval cities. Along with a rich legacy of historical buildings and magnificent architecture, Malta offers an abundance of lifestyle properties, ranging from sea-front apartments to exclusive villas with private pools. Many expats also report enjoying a better standard of living and more luxurious life since relocating due to the island’s lower cost of living. In addition, exclusive five-star restaurants combining the finest seasonal produce with innovation and expertise can be found all over the island. While some of the high fashion brand names, designers and up- market services present in Monaco or Milan are not as common on the island, this merely serves to accentuate the unpretentious and genuine nature of Malta and its people.
A Network of Support
This influx of affluent foreigners to the island is supported by a large and experienced network of professionals, including estate agents, lawyers and other service providers, as well as several relocation specialists. They advise on all administrative matters such as applying for the respective permits, taxation, the sourcing of property and schooling for children to help expats settle in to life on the island.
Additionally, as a testament to Malta’s business-friendly framework and world-class citizenship programme, the Swiss-based world governing body of investor migration – the Investment Migration Council (IMC) has chosen Malta to host its Secretariat. The IMC helps to improve public understanding of the issues faced by clients and governments in this area and promotes education and high professional standards among its members.
Reasons to Relocate
A country full of history, passionate people, excellent weather and crystal clear seas, Malta is a place that expats like to call home. While the country’s residency and citizenship programmes provide additional income for the country, which in turn can be used for economic development purposes, foreign nationals can benefit from improved quality of life in a Mediterranean island setting. Depending on someone’s current location and nationality, relocating to Malta can also offer the added benefit of international tax planning opportunities, better education for children, visa-free travel and much more.