ACQUIRING MALTESE CITIZENSHIP
Malta Citizenship Programme by Investment
Malta has launched its own economic passport as a Malta Citizenship Programme. The new Individual Investor Programme will be a good opportunity for investors to contribute to the local Maltese economy whilst at the same time benefiting from a citizenship in Malta and European Union member states. The IIP is regulated by Identity Malta Agency working in line with the Malta Financial Services Authority (MFSA) regulations. The Programme is fully compliant with the European Union Commission. Malta Citizenship by Investment will be granted under an amendment to the Maltese Citizenship Act, Chapter 188 of the Laws of Malta, by a bill presented in October 2013. Under the new Malta citizenship by investment programme, defined in the Citizenship bill as the “Individual Investor Programme” (IIP) affluent persons of impeccable standing and repute are able to apply to be naturalised and to receive a Maltese passport on the basis of a contribution to be made to a National Development Fund, to be applied for use in the national interest. The Maltese Passport is recognized for Visa-free travel to more than 160 countries in the world. This also gives the right of establishment in all 28 countries of the European Union.
Malta Citizenship: Eligibility
To access the Malta Citizenship Program, main applicants must be represented by Authorised Registered Mandatory’s and are required to contribute €650,000 to an independently managed National Development Fund to be set up by the Government of Malta for the purpose. Spouses and children of applicants for Malta citizenship are required to contribute €25,000 while unmarried children between the ages of 18 and 27 and dependant parents will also be granted citizenship on the basis of a contribution of €50,000 each. To qualify under the regulations of this programme, a Main Applicant for citizenship must be at least 18 years of age and must meet the follow requirements:
Contribution to the National Development & Social Fund
To access the Maltese citizenship program, main applicants must be represented by Authorised Registered Mandataries and are required to contribute €650,000 to Malta. Of this contribution, 70 per cent will go into a National Development and Social Fund to be set up by the Government of Malta and to be run by a board of trustees on the lines of the Sovereign Wealth Fund in Norway. The rest will go to the consolidated fund. The CNDSF's scope will be to carry out projects linked to education, innovation, job creation and the implementation of the jobs plus strategy, social projects and projects in the public health sector. The fund will be on the same level as the Central Bank. Spouses and children of applicants for Malta citizenship are required to contribute €25,000 while unmarried children between the ages of 18 and 27 and dependent parents will also be granted citizenship on the basis of a contribution of €50,000 each.
Property Purchase or Rental
Applicants are required to make an investment in property of at least €350,000 or enter a property rental contract for at least €16,000 p.a. both on five-year contracts.
Investment in Bonds/Shares
Applicants are required to invest at least €150,000 in bonds or shares in Malta to be kept for five years. This investments will need to be made in stocks sanctioned by the government as beneficial to the Island. The total investment to be made by applicants for Citizenship by Investment would be of €1.15m.
The residence requirement is satisfied on showing a “genuine link” with the Island of Malta. Approved Agents are able to seek advance written approval from Identity Malta that their clients' proposed links satisfy Identity Malta. Citizenship is granted after 12 months from effective date of commencement of the genuine link with the Maltese Islands. This is not to mean that candidates need to spend 365 days in Malta before citizenship is granted. In practice, all the client needs to do is visit Malta to have their biometrics taken at the beginning of the process and then to take the oath of allegiance at the end. The definition of residency should be interpreted in the spirit of the residency clause by which the legislator wants applicants to forge links with the island. Acceptable criteria include having local mobile phone, a car, membership of a local club or professional body, as well as any involvement in philanthropy, Persons resident in Malta one year prior to the approval of their IIP application need not satisfy further residence requirements. Malta allows that an individual hold more than one citizenship after having been naturalized as a Maltese citizen. However, the individual’s current country or citizenship may have restrictions. For a residence permit to be issued, in view of biometric capture requirements, the prospective applicant will need to be in Malta. It is up to the IIP Main applicant to determine when best to apply for a residence permit. The date of issue of the residence permit will impact on his/her ability to prove that he/she was a resident of Malta for 12 months prior to the issue of the certificate of naturalisation.
Fit and proper' Test
Applicants must show they are in good standing and repute and will undergo a 'fit and proper' test. The Government of Malta is committed to the highest standard of due diligence to ensure only deserving and reputable applicants are allowed to proceed for the grant of Maltese citizenship. A four-tier due diligence process is carried out directly by the Government that will assess applicants and process applications subject to Governmental approval at various stages. Applicants must demonstrate a clean criminal record, with checks being conducted with the International Criminal Court, INTERPOL and various other authorities and sources. Applicants must provide a police certificate which may be submitted subsequently to the submission of the application but at all times prior to approval.
Applicants must show they do not suffer from a contagious disease. A health insurance is required.
Due Diligence Process for Maltese Citizenship
Applications Identity Malta was set up under the relative regulations to handle the review of applications and due diligence of Malta citizenship application files submitted through Authorised Registered Mandataries such as our firm. The Government of Malta is committed to the highest standard of due diligence to ensure only high standing and reputable applicants are allowed to proceed for the grant of Maltese citizenship. The kind of due diligence checks to be carried out by Identity Malta will include, but are not limited to (i) Public information checks (ii) Background verification reports (iii) Global Government agency checks (iv) INTERPOL.
Malta Citizenship Application Process
Applications for Malta Citizenship Programme are to be made to and processed wholly by Identity Malta. Applicants must be represented by an Accredited Person. Dr Anton Tabone has satisfied the requirements imposed by the IIP Regulations and is a Licensed Accredited Agent (no. IIP 086). The programme imposes responsibilities on Authorised Agents to ensure the highest standards of quality are maintained throughout the application process, for the protection and benefit of applicants and the reputation of the Maltese citizenship by investment programme.
Application Time Frames & Payments
1. Apply for Residence: applicants who are not already resident in Malta are advised to start the process of residency to set the clock ticking on the 1 year residency requirement. A deposit on account of the €650K contribution is due at this stage: €5,000 for main applicant. €1,000 per dependent.
2. Day 0: Formal Application by Accredited Person: An application is formally submitted to Identity Malta with the essential supporting documents. Payments due now include the due diligence fees, passport fees and a deposit of €10,000 on account of the €650K contribution, less any payments made on applying for residency. Evidence of source of funds to be presented.
3. Day 90: Identity Malta confirms if documentation submitted are formally in order, subject to a further month of further verifications.
4. Day 120: In Principle Approval: This is the approval of the process conditional only to the fulfilment of the obligations undertaken under the IIP.
5. Day 125: Formal Request for Contribution: Identity Malta requests payment of remaining balance on contribution.
6. Day 145: Deadline for paying balance on contribution.
7. Day 240: Final Compliance: Provide evidence of Property Purchase / Rental & €150K investment.
8. Day 183; Issue of Certificate of Naturalisation (maximum time to issue: 2 years). Subject to: Oath of Allegiance, 1 Year residence.
Taxation Merits tied to the Malta Citizenship by Investment Programme
The acquisition of Maltese citizenship under the IIP does not have any tax consequences, and even if one’s residence is moved to Malta, one would still retain the status of a non-domiciled person and thus have an advantageous tax exposure. Candidates that become residents and domiciled in Malta are required to pay income tax on their worldwide income. Personal income is taxed at progressive rates of up to 35%. However, individuals that are resident in Malta but not domiciled in Malta will only be required to pay tax on income arising in Malta and income (excluding capital gains) that arises outside Malta that is received in Malta.
In Malta there is:
- No inheritance or death taxes
- No estate duty
- No net worth or wealth taxes
- No Municipal taxes
Malta has concluded double taxation treaties with around 60 countries with a number of other agreements signed but not yet in force. The standard VAT rate in Malta is of 18%. The corporate tax rate is 35%, however special tax concessions apply for non-resident / non-domiciled owners.
Contribution requirements and scheduled fees are shown below:
National Development and Social Funds (NDSF):
Principal Applicant EUR 650,000
Spouse EUR 25,000
Each Dependent aged 0-17 EUR 25,000
Each Dependent Aged over 18 EUR 50,000
Government Due Diligence Fees:
Principal Applicant EUR 7,500
Spouse EUR 5,000
Each Dependent Aged 0-17 EUR 3,000
Each Dependent Aged Over 18 EUR 5,000
Per Person EUR 500
Per Application EUR 200 Property Investment Obligation:
Purchase (min) EUR 350,000
Lease per year (min) EUR 16,000
In both cases the property must be held for a minimum of five (5) years and must not be let or sub-let
Portfolio Investment Obligation EUR 150,000
Required investment in a prescribed investment to be held for a minimum of five (5) years
The initial fee prior to approval is EUR 10,000 and is considered a non-refundable deposit fee.