Malta citizenship by investment – a timeless investment with high returns

Uglobal Immigration Magazine, Volume 1, Issue 1

Article By Kenneth Camilleri

Unlike the finite nature of luxury goods, acquiring another passport is undeniably an investment for the ages. Such an action cannot really be overestimated, as the true worth of this investment can span across several generations. Indeed, while the major part of the investment in obtaining a Maltese passport can be returned in five years, its benefits can be passed on to future descendants endlessly 

The Malta Individual Investor Programme (MIIP), launched in 2014, has already made a reputation for itself. It has since received some 1,000 successful applications and has, in turn, granted foreign investors increased mobility, educational opportunities for children and a safe haven where they can escape from political or economic hardshipBut, the question still stands: Are these factors worth a 1 million euros investment? How can each of the benefits of the Maltese passport contribute to returning the investment in the long term. 

Who acquires a Maltese passport?  

Imagine a classic family unit: a loving husband, wife and two children. Imagine a successful and seasoned 40-something businessman, simultaneously acting as the head of this family. Imagine the wife; she would go on to search for housing and establish the dynamics for her family’s living situation. Imagine their children, whose age can vary from 10 to 25, currently enrolled at prestigious private schools or universities in the United Kingdom, the United States or Switzerland. Imagine that these family members each live in a different country. They perhaps meet throughout the year to sunbathe at the best beaches of the Côte d’Azurski in Courchevel or celebrate New Year’s Eve with a full view of the Elizabeth Tower 

An investment in a foreign passport can very well open various doors for seamless travel opportunities. Apart from facilitated travel to all corners of the globe, they would also benefit from being able to live, work and study in any E.U. country without any restrictions whatsoever, even if they have no intention of permanently leaving their home country.  

The minimum investment requirements  

In order to obtain a Maltese citizenship, the main applicant must do the following: contribute 650,000 euros to the National Development and Social Fund; invest in property worth 350,000 euros or sign a five-year lease worth at least 80,000 euros; and purchase government bonds for 150,000 euros. The minimum investment for the MIIP, therefore, amounts to 880,000 euros in total.  

The program provides leeway for spouses and children, as well as parents and grandparents in certain circumstances. A Maltese citizenship is usually acquired for the entire family unit. In such cases, however, dependents will have to contribute an additional 25,000 euros (normally needed for spouses and underage children) to 50,000 euros (normally needed for parents and unmarried children 18 to 26 years old). Therefore, a classic family, as in the case mentioned above, would need to invest from 955,000 euros if they chose the real estate rental option to 1.225 million euros if they go with the real estate acquisition option 

MAIN ADVANTAGES: FREEDOM OF MOVEMENT AROUND THE WORLD  

As a member of both the European Union and the Schengen Agreement, as well as a fervent member of the Commonwealth of British Nations, Maltese citizens can freely travel across most of the countries in Europe, America and the Asia-Pacific region. The borders of 173 countries of the world are open for a Maltese passport holder, with some visa restrictions existing chiefly in Africa, the Middle East and South Asia. Combined with the holder’s first passport, be it Russian, Turkish or Chinese, the list of visa-free destinations is even longer. 

AFFORDABLE ELITE EDUCATION 

Although some secrets are better kept unsaid, it is to no one’s surprise that wealthy families prefer sending their children to the most prestigious universities around the world, the majority of which are conveniently located in the United Kingdom, the United States and Switzerland. A Maltese passport, therefore, might come in handy for the whole family:  

It offers visa-free travel to the United States, which will allow parents to visit children at any time they wish, without having to be subject to a complicated visa procedure and the risk of being refused.  

Before the United Kingdom officially leaves the European Union in 2019, students from the E.U. have the opportunity to pay off their tuition at home tariffs. And this vis-à-vis acclaimed universities such as Cambridge and Oxford translates to some 17,000 -euros worth in savings annually. Such a privilege would prevail in part, or in full, depending on the nature of E.U.-U.K. negotiations.  

Embarking on a Swiss education is attractive due to low tuition feesnormally consisting of small semester fees and administrative expenses. One of the benefits of the Maltese passport is that its holders do not need to obtain a visa and thus have a limited period of residence. It is enough to just register their place of residence upon arrival.  

Apart from international education opportunities, worth noting is the fact that Maltese public universities are free of charge for Maltese citizens. Additionally, the island  hosts universally recognized and prestigious offices of U.K. universities, through which one can obtain a British diploma while simultaneously enjoying the glory of a Mediterranean climate and lifestyle. Indeed, one can very well obtain a degree in economics and finance from the London School of Economics, in computer science from the Goldsmiths, University of London or in medicine from the Queen Mary University of London 

EMPLOYMENT WITHOUT RESTRICTIONS  

The E.U.’s four freedoms not only open the door to unlimited, borderless travel, but also the ability to work in another member state without any restrictions. Non-E.U. applicants, for instance, cannot enjoy the same privilege, as their employment is possible only when an employer has proved that there is no better candidate among locals, E.U. citizens or long-term residents. This type of authorization, however, does not yet guarantee a positive outcome for the issuance of the working permit and, consequently, means that a lack of E.U. citizenship can be a serious obstacle to building a career, even after having pursued studies in Europe.  

As time has shown, many of the children of wealthy investors, freshly graduated from a European university, tend to stick to their usual circle of contacts and therefore do not immediately return home to further their careers. Indeed, they have countless opportunities to work in leading European companies, apart from the fact that quite often they take on responsibility for the European-based faction of their parents’ business. If they possess a European passport, they, therefore, do not need a work permit and can freely change their place of work any time.  

QUALITY MEDICINE FOR FREE 

Free healthcare is a centuries-old tradition in Malta. First laid down by the Knights of St. John, which went on to pave the way for the ideal of quality treatment for all inhabitants, medical care for Maltese citizens is still completely free. It is the state, from the taxes it has received, that generously sponsors this industry.  

More importantly, thanks to Malta’s role as an E.U. member state, citizens are holders of the free European Health Insurance Card. This allows them to use medical services under the same conditions as residents in any E.U. country, as well as Iceland, Liechtenstein, Norway and Switzerland. The exception, however, relates to treatment or medical services provided by private clinics.  

PROFITABLE REAL ESTATE  

For Maltese real estate, 2017 was a great year. Indeed, the real estate market, according to the Knight Frank Global House Index Q2/2017, was ranked first in the E.U. and third worldwide, especially in terms of growth, which was recorded at an impressive rate of 14.6 percent. Undeniably, factors such as MIIP applicants, the introduction of certain tax benefits and Maltese substantiation of the gaming industry (whose employees simultaneously earn high salaries and create a demand for real estate) were all contributors to this boost. 

Over the past decade, the growth rate in property prices has fluctuated at an average annual increase of about 10 percentCoupled with the possibility of selling real estate acquired through the MIIP after five years, such a dynamic allows the new Maltese passport holder to return the initially invested 350,000 euros and expect to earn extra capital gains, estimated at 150,000 to 200,000 eurosThe five-year-purchase of real estate, therefore, is the best solution for getting back a substantial part of the MIIP investment.  

VALUABLE BONDS  

Another main financial requirement for the MIIP is the acquisition of state-approved bonds or shares amounting to 150,000 euros. However, like the real-estate option, these can also be sold after five years. Moreover, a small income can be gained. According to the IMF estimates, in the last five years, the market for Maltese government bonds has been experiencing a yearly yield growth of 2.5 percent 

FINAL CALCULATIONS  

To sum up, the applicant is able not only to return half of the initial investment in the MIIP after five years, but also benefit from an additional 200,000 euros stemming from the capitalization of real estate and bond profitability, as well as to save hundreds of thousands on a well-endowed education and quality medical care for all family members in the long run. 

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About the Author
Kenneth Camilleri
Kenneth Camilleri

Kenneth Camilleri is a senior partner at Chetcuti Cauchi Advocates, a leading European law firm with offices in Valletta, Cyprus, London, Zurich and Hong Kong. He specializes in corporate and personal taxation. Camilleri advises corporate clients represented by the firm on tax and VAT aspects of operating locally and internationally. He is also the partner in charge of the Asia desk within the firm, with responsibility for Mainland China and Hong Kong. Camilleri advises on Maltese and Cypriot immigration investment programs, and sits on the Taxation Committee of the Malta Institute of Accountants.

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