The Individual Investor Programme was introduced by means of Act XV of 2013, and involved amendments to Chapter 188 of the Laws of Malta, the Maltese Citizenship Act. The amendment introduced Article 10(9)(b), which states that the Minister may grant a certificate of naturalisation as a citizen of Malta “to any person who is an applicant, or is a spouse or an eligible dependant of such applicant, under the individual investor programme of the Republic of Malta”. This is subject to satisfying the requirements of the Malta IIP and taking an oath of allegiance in Malta.
Malta is a European Union member state since 2004 and can offer Citizenship in an EU country that is stable, neutral and highly respected. It offers Visa free travel to more than 160 countries and citizenship will also grant the right of work and establishment in all 28 EU countries. Malta has a 7,500 year history, it has a highly cultured and a well educated society. The government of Malta is democratically elected and has a very strong legal system and well established institutions. It enjoys a highly evolved educational system and excellent health services. Malta enjoys an excellent climate and is stable and safe with a very low crime rate. Malta also has highly developed industry, tourism and financial sectors, and is well linked with Europe and the world
A person granted a certificate of naturalisation under this Act shall become a citizen of Malta by registration or naturalisation, as the case may be, on the date on which he is registered or naturalised.
Successful candidates will be naturalised as Maltese citizens and reap the benefits of the citizenship. The scheme mainly targets a number of potential investors however also aids the applicant by allowing spouses, dependents up to the age of 26 and over the age of 55 to apply within the same application and a reduce rate.
The programme is constructed around a number of criteria which must be fulfilled in order to be an eligible candidate. The main applicant must be at least 18 years of age and must have been a resident in the country for 12 months preceding the issuing of the certificate of naturalisation. Beneficiaries under the Global Residence Programme may also additionally apply under this Programme.
The programme is encompassed with a number of requirements, which are needed for the application process. These requirements range from a contribution, to investment made into the country, to a number of checks which must be carried out to safeguard the Maltese population.
Once the eligible criteria have been dealt with, all applicants to the Malta Individual Investor Program must make a contribution and make a number of financial commitments towards Malta in order to be able to apply.
A contribution to the National Development and Social Fund has to be made. This consists of a financial contribution of €650,000 for the main applicant and an additional €25,000 per direct dependents, including the spouse and minor children. In the case of dependent children that are 18 to 26 years of age, or dependent parents over 55 years, a €50,000 contribution is applicable.
One must also pitch in an investment of €150,000 in a Government approved financial instrument which must be maintained for a minimum period of 5 years.
The applicant must also commit to retain a residence in Malta for a period of at least 5 years, either through the purchase of a property for which the minimum value must exceed €350,000, or by renting out a property for which the minimum annual rent must exceed €16,000.
Applicants can apply for an E-Residence card before they file the main IIP application and this will enable them to start counting their 12-month residency requirement as per the IIP regulations. Citizenship is granted after 12 months from date of property purchase or rental. Potential Candidates need not spend 365 days in Malta before citizenship is granted since residence is defined under Maltese law as an intention to reside in Malta for any fiscal year, usually evidenced by a stay of a minimum of 183 days or by the purchase/rental of property together with a visit to Malta.
Fit and proper test
Applicants must prove they are in good standing and have good repute. In order to prove this they will go through a ‘fit and proper’ test. Moreover, they must also show they do not suffer from any contagious disease.
Clean Criminal Record
An important aspect for the applicant is to have a clean criminal record. Applicants must provide a police certificate which may be submitted after to the submission of the application however must be presented before approval. A person who has been denied a visa to a country with which Malta has visa-free travel arrangement shall not be entitled to apply under the program. A person who is deemed a potential national security, can tarnish Malta’s reputation, or is subject to criminal investigation will also be denied citizenship.
Application and Due Diligence fees
There is also a due diligence fee which must be paid. For the main applicant: EUR 7,500; for spouses, adult children and parents: EUR 5,000; for children between 13 and 18 years of age: EUR 3,000 each.
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 a limited, 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.
Capital Gains Tax: Malta does not impose estate or donations tax but it does levy a capital gains tax on various assets (mainly immovable property and shares). Capital Gains Tax is not levied on transfer of immovable property if the person transferring the property has owned it and occupied it as his main residence for a period of three years and has not vacated it for more than one year. Otherwise tax shall be levied at the 0 to 35% tax regime on the gain if the property is sold within the first 12 years of ownership or 12% of the sales consideration if the transfer is effected after 12 years of ownership. However the 12% final tax does not apply if the individual property owner is not resident in Malta.
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.
The application will be processed by Identity Malta (a government institution) and is to be submitted through a local Approved Agent. The programme is limited to the first 1,800 approved applications. Within 2 years but not less than 6 months from the date of an approved application the Minister shall issue a certificate of naturalisation to all successful applicants. The applicants can then apply for a Maltese passport after taking an Oath of Allegiance. Passport fees are €500 per passport.
Dr Franco Galea from Saga Juris is a registered agent and can give you advisory services in relation to the Individual Investor Programme from preparation of all documentation up to the submission process. Dr. Galea will also guide you throughout the process whilst liaising with the competent authorities.