Looking Through the Porthole to Maltese Citizenship

By virtue of Legal Notice LN 47/2014, the Government of the Republic of Malta can now grant, after a rigid and thorough due diligence process, naturalization by investment to reputable individuals and their dependants who will make a noteworthy contribution to the social and economic development of the country.

Legal Notice 47 of 2014 came into force on the 4 February 2014 and made official the latest establishment of the Individual Investor Program for the Republic of Malta.

The Malta IIP is aimed at high net worth individuals and families worldwide. The scheme has been fully approved by the EU Commission. An important facet is that the program, which concedes Maltese citizenship in return for satisfying the prescribed investments in Malta, has a ceiling of 1,800 applications, after which the program will be exhausted. To date, according to recent press releases, applications submitted for Maltese citizenship under the Individual Investor Programme amount to over 200, with the majority having been reported as not facing any serious objection.

While applications emanate from upwards of 30 different jurisdictions, the majority centre on applicants from Russian speaking countries.

Requirements

Citizenship shall be conceded to suitable individuals and families who satisfy the due diligence checks and make a significant contribution to the National Development Fund established by the Government in the manner prescribed.

In order to initiate the process the following needs to be done:

Primarily the potential applicant needs to physically fly to Malta for a few days. When he is here the client will get his biometrics taken and against a payment of €5,000, is registered to obtain an e-residence card EU permit valid for 12 months, which is very useful until the passport is issued after 12 months (€5000 is half of a non-refundable €10,000 contribution to Malta that is later deducted from the €650,000 contribution to the Malta government). If the ‘Main Applicant’ has a spouse and/or children/dependents who he also wishes to obtain such an e-residence card, while not mandatory, this is possible under the program at an additional minor charge of €1,000 per additional e-residence card required.

Upon being issued with the e-residence card, the application process for citizenship by investment commences with the collation of the initial paperwork.

In this regard the concession of Maltese citizenship has been tied to (i) one year effective residence in Malta, (ii) the holding of immovable property in Malta by title of either ownership or lease, and (iii) additional investment in Maltese government securities and (iv) global health insurance coverage for at least €50,000 for the main applicant and each of the dependants

The minimum contribution levels that are cumulative have been set as follows:

•   €650,000 for main applicant.

•   An additional contribution of €25,000 is required for a spouse and for each dependent under the age of 18.

•   Contribution for each dependent over 18 of €50,000 each.

The holding of immovable property in Malta currently shall be for a five-year minimum holding period either through purchase (minimum value €350,000) or leasing (minimum annual rent €16,000). Additional investment in Maltese Government bonds and securities shall be of a minimum of €150,000 investment, which the applicant must make also with a minimum holding period of five years.

There is no Value Added Tax (VAT) charged on any of the payments made in relation to the Malta Individual Investor Program, either to the Maltese supervisory entity or the Maltese Government or to any agents. This is because such payments are classified as a ‘contribution’ and not a ‘service’ type payment. This is reflected also on the receipts issued by the Maltese authority.

Definition of the One Year ‘Effective Residence’

One of the core requirements is that of a year’s ‘effective residency’, which needs to have been achieved by the applicant. Such residence needs to be satisfied in such a manner that exudes a sufficiently strong bond between the applicant and Malta. Owing to the highly delicate and complex camp to which residency belongs,  no written guidelines by the European Commission on this requisite have been issued.

The applicant will need to satisfy the pertinent Maltese authority through tangible and visible engagements that his dossier of connections to the Maltese islands is truly robust enough to warrant the grant in his favor.

In practice, the entire process from start to finish will consume circa 12 months, which coincides with the statutory minimum requirement whereby a passport under the MIIP can be issued only after 12 months have elapsed since the applicant first held Maltese residence.

Citizenship not a Right but a Privilege

Applicants are reminded that citizenship grants are concessions not rights and are thus subject to revocation in circumstances of abuse. Verifications will include source of wealth and source of funds, satisfaction of Maltese anti-money laundering legislation, clearance of EU or UN black-lists, background checks by due diligence specialists and risk weighting assessments, Europol and Interpol collaboration with national executive police to conduct further checks and interviews as necessary.

The Exclusive Club

Those applicants who apply for residence in Malta through the Malta Individual Investor Program, will be afforded ‘red carpet’ treatment in that their biometrics will be taken exclusively and directly at the newly opened Identity Malta premises, hosted at the Mediterranean Conference Centre in Valletta.

Names of successful applicants will be published once in the Government Gazette together with all the other persons who would have obtained citizenship in the course of that year under various regimes.

If most of the current 200 applications are successful in attaining eventual Maltese citizenship, the Maltese  government will stand to gain circa €130 million to the local coffers.

The new citizens’ Maltese passport will concede the holders full voting rights here in Malta and ease of access to the border-free Schengen area inside of the European Union.

In addition, because of the insurance requisite a variety of insurers locally have developed flexible, tailored packages of cover on two different levels for applicants of the IIP.

Basically the two tiers of tailored cover comprised the following:

1.     IIP Basic Plan (satisfying the bare minimum requirements with a lower overall limit)

2.     IIP Upgraded Plan (which provides health insurance coverage with higher limits)

Importantly, the firms we are hereby citing have obtained written confirmation from supervising entity ‘Identity Malta’ that their plans fully satisfy the IIP requirements.

The next important point with regard to the Maltese citizenship program is that for applications with spouse/children passport joint applications, these will be considered together as one application (in other countries they are considered separately with a lot of time being wasted in this way). Hence, in the optimal scenario where the application is a successful one from start to finish, the result would be the issuance of all the passports relating to main applicant as well as his spouse/children simultaneously, as the precipitate of one and the same process within one and the same time frame.

Regarding VISA requirements for entry into Malta to apply for residence, Maltese agents will together with Identity Malta assist and facilitate matters for the applicant as necessary, this may include the booking/coordination of flights and hotel accommodation close to meeting venue to make Applicant’s visit as smooth and enjoyable as possible.  

Just as a point of clarification we must highlight that these three countries are presently excluded from the Malta IIP: Islamic Republic of Iran; Islamic Republic of Afghanistan and People’s Republic of Korea (North Korea).

PKF Malta is a fully qualified and licensed Accredited Agent under the Malta Individual Investor Program with license number IIP 065.

For more information contact Mr George Mangion on gmm@pkfmalta.com or the undersigned on mmifsud@pkfmalta.com