Due diligence process is key to Malta’s successful program

Malta’s colorful history and enviable climate promise just under 12 hours of sunshine a day in the summer and just over six hours of sunshine a day in the winter. Nevertheless, Malta can be viewed as much more than a lovely holiday destination.

After its independence in 1964, Malta’s economy has indeed been a success story. Although it is the smallest European Union member-state since 2004, Malta boasts a booming economy with a high GDP growth rate and record low unemployment. In fact, during the first half of 2018, Malta had the fastest growing economy in the Eurozone, enjoying an economic growth rate of more than 5%. [1] In recent years, Malta has attracted growth-minded entrepreneurs and multinational companies seeking pro-business opportunities in diverse sectors such as education, health, gaming, maritime activities, aviation and even fintech.

INVEST TO IMMIGRATE 

The increasing interest in immigration-by-investment has not gone unnoticed, as more and more high net worth individuals and ultra-high net worth individuals seek opportunities beyond their countries of origin. Why? Because immigration-by-investment programs do not just promise endless business opportunities, but also an improved quality of life. This is because successful applicants and their loved ones are granted access to better healthcare, education and security, combined with various travel opportunities.

Many governments around the globe have been working to increase the attractiveness and popularity of their immigration-by-investment program by reducing financial and investment obligations. Yet, Malta has continued to focus its efforts at offering a highly attractive program that upholds a very high standard of due diligence. It's targeted at individuals who have the potential to introduce long-term investment, business networks and talent to the Mediterranean island. This is the reason why Malta’s Individual Investor Program is being described as one of the most robust and successful citizenship-by-investment programs in the world.

MALTA’S INDIVIDUAL INVESTOR PROGRAM

Malta’s Individual Investor Program, introduced by the Maltese government in 2014, facilitates the granting of Maltese citizenship by naturalization to applicants and their family members upon the completion of a very well-structured application process. The program also requires the applicant to satisfy certain financial and non-financial obligations.

In terms of the program, applicants must invest a minimum sum of 650,000 euros in the economic development of Malta through a monetary contribution made to a fund established by the Maltese government. The fund aims to provide resources for improvements across various sectors. Applicants are also required to invest a minimum of 150,000 euros in Maltese government-issued stocks, bonds and other approved financial instruments. Such investments must be maintained for a minimum period of five years.

Another requirement stipulated in the program is acquiring or leasing a residential property in Malta. The residence in Malta must be held by the applicant for a minimum of five years. In recent years, Malta has made headlines around the globe for its robust real estate growth. In 2017 and 2018, property prices in Malta rose more than in any country in the world, mainly due to the country’s economic growth. [2] This has resulted in a higher demand for property investment opportunities. Applicants of the program also have the option to invest in a property situated in what is known as a "special designated area," which is intended to provide high-level facilities and amenities in the same area.

FINDING A 'GENUINE LINK'

Malta’s Individual Investor Program requires that the certificate of naturalization, which leads to the issuance of a Maltese passport, will not be issued unless the applicant provides proof that he or she has been residing in Malta for a minimum of 12 months. However, this residency requirement does not imply that the applicant would need to spend one year residing in Malta before Maltese citizenship is granted. The Maltese authorities have confirmed that this residency requirement should be interpreted in the way the legislator intended, which is requiring the applicant to forge "genuine links" to Malta.

Although what usually constitutes a "genuine link" has been debated, in practice, acceptable criteria include regular visits to Malta, a significant donation to one of the many Maltese charities, membership to a local club or professional body and having a local cell phone number. Of course, applicants who physically reside in Malta for a period of 12 months prior to the approval of the application need not satisfy any further requirements.

PROOF OF GOOD STANDING AND GOOD HEALTH

Malta’s Individual Investor Program is not for everyone. The Maltese government needs to ensure that only individuals who are in good standing and of a respectable repute are granted the opportunity to proceed with their application.

The fact that the Maltese government is committed to apply only the highest standard of due diligence in order to ensure the selection of deserving applicants means that applicants must undergo a "fit and proper" test. This test consists of a four-tier due-diligence process, with criminal checks being carried out directly by the Maltese government in corroboration with the International Criminal Court, INTERPOL and various other authorities. Applicants must also show that they are of good health and do not suffer from any contagious disease.

WHAT ABOUT TAXATION?

An individual’s liability to Maltese income tax is dependent upon two concepts, namely domicile and residence. An individual’s domicile is normally deemed to be the country where he or she is born (domicile of origin) and unless that individual moves to a country with the intention of staying there permanently (domicile of choice,) his or her domicile shall remain the domicile of origin.

Malta’s Income Tax Act defines the term "residence" for tax purposes as an individual who resides in Malta for an aggregate period of no less than six months in a calendar year, except for such temporary absences which may seem reasonable and consistent with the claim of such individual being a resident in Malta. This means that, besides granting successful applicants the unrestricted right to live and work in Malta and the member-states of the European Union, the acquisition of Maltese citizenship has no tax implications.

THE IMPORTANCE OF A GOOD REPRESENTATIVE

Applicants to Malta’s Individual Investor Program must be represented before the Maltese authorities by a duly authorized agent who is trained to guide prospective applicants throughout the entire process of the application. It is always advisable to choose an experienced agent who is reliable, can guarantee guidance throughout the application process, and can prove the necessary expertise in the preparation and submission of the application and other documentation required. 

Sources:

[1] https://timesofmalta.com/articles/view/malta-tops-europes-economic-growth-projections.701351 

[2] https://www.bloomberg.com/news/articles/2018-09-14/malta-beats-out-hong-kong-for-world-s-top-home-price-gains 

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