16 Dec 2018 Citizenship by Investment Scheme under the Individual Investor Programme (‘IIP’) in Malta
In November 2013, the Government of Malta introduced the IIP which allows a foreign individual to obtain Maltese citizenship through a certificate of naturalisation following a contribution to the economic development of Malta. Through this programme affluent persons of impeccable standing and repute can obtain Maltese citizenship and receive a Maltese passport, on the basis of a contribution to be made to the national development and social fund (the “National Development and Social Fund”) set up by the Government of Malta.
Malta is a member of the European Union and also forms part of the border-free Schengen area. Therefore, a foreign individual obtaining Maltese Citizenship under the IIP shall obtain the right to travel and settle freely within the twenty-eight (28) member states of the European Union whilst also having access to investment opportunities in Malta and throughout the European Union.
Disclaimer: Readers of this newsletter should note that at the date of the circulation of this article, the Maltese IIP rules and regulations may be subject to further amendments by the Government of Malta and any relevant Government entities.
In order for an individual to be eligible under the Citizenship by Investment Scheme (the “Applicant”), he must be represented by an Approved Agent authorized to act as an authorized intermediary firm by Identity Malta.
Affluent persons of impeccable standing and repute shall be eligible Applicants to be naturalised and receive a Maltese passport if they provide sufficient proof that he/ she has resided in Malta for a period of at least twelve (12) months immediately preceding the day of the issuing of the certificate of naturalisation.
The number of successful Applicants who obtain a certificate of naturalization, excluding dependents, shall not exceed one thousand eight hundred (1,800). This is foreseen to be increased by the Government of Malta.
Furthermore, the Applicant shall contribute a total investment of one million one hundred and fifty thousand euro (EUR 1,150,000).
Such contribution shall be divided as follows:
Contribution to the National Development and Social Fund
Each Applicant is required to contribute six hundred and fifty thousand euro (EUR 650,000) to an independent National Development and Social Fund set up by the Government of Malta for that purpose.
For the Applicant’s spouse, children and dependents also wanting to obtain Maltese citizenship through the IIP, the following required contributions shall apply:
- in the case of a spouse or minor child, a contribution of twenty-five thousand euro (EUR 25,000); and
- in the case of a dependent child between the age of eighteen (18) and twenty-five (25) years and a dependent parent above the age of fifty-five (55) years, a contribution of fifty thousand euro (EUR 50,000).
Property Purchase or Rental
Applicants must make an investment in property of a value of at least three hundred and fifty thousand euro (EUR 350,000) or enter into a property rental contract of at least sixteen thousand euro (EUR 16,000) per annum both under a five (5) year contract.
Investment in Bonds / Shares
Applicants are required to invest at least one hundred and fifty thousand euro (EUR 150,000) in bonds or shares in Malta to be kept for a five (5) year period. Such investment shall be made in stocks sanctioned by the Government of Malta as being beneficial to Malta.
Global Health Insurance
Applicants and any of his/her dependents must have a global health insurance coverage for at least fifty thousand euro (EUR 50,000) and must provide evidence that they can maintain it for an indefinite period.
No certificate of naturalization shall be issued to the Applicant unless it is proved that he / she has been a resident of Malta for a period of at least twelve (12) months preceding the day of the issuing of the certificate of naturalization.
Following the expiration of the required twelve (12) month residency period and the issuance of a certificate of naturalization approving the Applicant as a Maltese Citizen the Applicant shall have the right to move freely throughout Malta, reside in any part of Malta, to leave and to enter Malta and also the right of free movement throughout all Member States of the European Union.
The Approved Agent shall be responsible to prepare the applications with the Applicants and their respective families and to submit the applications.
The application processing time frame is expected to be between six (6) months and two (2) years from the date of filing of an application for citizenship to be obtained to the granting of the citizenship by investment under the IIP subject to the satisfaction of the residency requirement above mentioned.
Due Diligence Process
The Government of Malta is committed to the highest standard of due diligence to ensure that only affluent and reputable applications are allowed to proceed for the grant of Maltese citizenship.
For the applicant’s due diligence documents to be processed the applicant shall pay the following fee:
- For the main applicant : seven thousand five hundred euro (EUR 7,500);
- For the spouse, adult children and parents: five thousand euro (EUR 5,000) each; and
- For children between 13 and 17 years of age: three thousand euro (EUR 3,000) each.
Maltese citizenship shall be granted only to suitable individuals and their families who pass the due diligence test and who make the above mentioned contributions to the National Development Fund. An Applicant shall be deemed duly eligible if he satisfies a number of conditions mainly that he has a clean criminal record, is not/ may not be an enemy of the State or threat to Malta and he or his dependents must not suffer from any contagious disease and are otherwise in good health. Nonetheless, Identity Malta may still consider the applicant for approval in special circumstances to be demonstrated by the applicant.
Taxation for New Citizens
Obtaining Maltese Citizenship shall not change the tax treatment of an Applicant or his family unless they take up residency in Malta.
Individuals resident and domiciled in Malta pay income tax on their worldwide income. Personal income is taxed at progressive rates of up to thirty-five percent (35%). On the other hand, individuals who are resident but not domiciled in Malta pay tax on income arising in Malta and income, with the exception of capital gains, that arises outside Malta and remitted to Malta.
With regards to the above, residency shall mean that an individual is resident in Malta except for temporary absences, whereas domicile shall imply that the individual’s long term intention is to live in Malta.
The acquisition of Maltese citizenship under the IIP does not attach with it any tax implications because if a successful Applicant moves his own residence to Malta, he or she would still retain the status of a non-domiciled person and thus be taxed as indicated above.
Structuring and incorporation of financial and non-financial companies; structuring and incorporation of collective investment schemes; and joint ventures.