Malta Individual Investor Programme
The Malta Individual Investor Programme (IIP), introduced in the first quarter of 2014, offers citizenship in an EU Member state that is stable, neutral and highly respected in the international community, making it a viable investment and gives a lasting bond with the country. This programme gives the person a grant for citizenship to reputable foreign individuals and families. It is interesting to note that this programme is open to all nationals be it non EU nationals or EU nationals.
This programme will be a good opportunity for investors to contribute to the local Maltese economy while at the same time benefiting from a citizenship in Malta. Successful candidates will be granted citizenship by a certificate of naturalization, which can also be extended to include their families and dependents.
The Maltese authorities shall guarantee an efficient application process, and it will also adhere to the strictest diligent standards and vetting of applicants, thus ensuring only highly respectable clients will be admitted.
Benefits: Successful candidates will be awarded citizenship, which automatically includes EU citizenship. This in turn gives the right of establishment in all 28 EU countries and Switzerland. With that said it extends the new citizen to the largest Internal Market opening up many economic options. Other benefits also include the ability to work and set up a business in Malta and visa – free travel to over a 160 countries in the world, including the USA.
Eligibility criteria for the Malta IIP: The main applicant must be the minimum age of 18 years and is given the right to add his/her spouse, children, parents or grandparents, given that certain conditions are met.
Financial contribution: All individuals and families applying to the Malta IIP must make a significant contribution to the National Development and Social Fund established by the Government. 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.
Property: 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.
Bonds Investment: An investment of €150,000 in Government bonds is also required, which also must be maintained for a minimum period of 5 years.
Residency Status: Upon buying or renting a property in Malta, candidates are issued an Identity Card. Citizenship is granted after 12 months from date of property purchase or rental. Candidates do not need to spend 365 days in Malta before citizenship is granted. Residence, under Maltese law is defined as an intention to live in Malta for any fiscal year. This is translated into a minimum stay of 183 days or by the purchase / rental of property together with a visit to Malta.
Fit and Proper Test: The fit-and-proper-person test or director’s test is a test undergone to show that they are in good standing and repute.
Clean Criminal Record: The applicant must not have a criminal record. Applicants must provide a police code of conduct which must be submitted subsequently to the submission of the application but before approval. Any applicant who has been denied a visa to a country with which Malta has visa -free travel arrangements shall not be able to take part in this programme. A person who is deemed a potential national security risk or reputation risk, or is subject to criminal proceedings will also be denied citizenship.
Applications: The programme is limited to the first 1,800 approved applications. The application will be processed by Identity Malta (a government institution) and is to be submitted through a local approved agent. Through its hands – on participation in promoting Malta on an international level, and in association with a number of local and highly specialized agents; Engel & Völkers Sara Grech can assist international clients in obtaining a residence and citizenship under the respective programmes, including the Malta IIP.
Taxation Merits tied to the Malta Citizenship by IIP: 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 affected after 12 years of ownership. However the 12% final tax does not apply if the individual property owner is not resident in Malta.
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.
Malta has concluded double taxation treaties with around 60 countries with a number of other agreements signed but not yet in force.