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Malta: Residency and a fresh route to European living and working

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February 15, 2017

Malta: Residency and a fresh route to European living and working

Malta: Residency and a fresh route to European living and working
Neil Petch

Author:

Neil Petch

Chairman of Virtugroup

Malta is a small European island country in the Mediterranean. But don’t let its size fool you. It may only have a population of 430,000 but it offers a wealth of diverse opportunity, with three different investment-based residency or citizenship programmes.

With its capital and administrative centre in Valletta, the country has two official languages – English and Maltese. Previously governed by both Spain and France, Malta officially became part of the British Empire in the early 1800s. It gained independence from the British in 1964 and a decade later the country was declared a Commonwealth Republic.

Today, Malta is a popular destination for the security, culture and lifestyle it offers, along with its thriving real estate market. All of which are, not surprisingly, of key interest to the investor looking for a way into Europe and the rest of the world.

Essentially, there are three options when it comes to residency and citizenship in Malta: The Malta Residence and Visa Programme (MRVP); the Global Residence Programme (GRP); and the Individual Investor Programme (IIP).

What we’re going to focus on primarily is the exciting MRVP opportunity – because for many, second citizenship may not always be an option if your home country (including China and many others) does not recognise dual citizenship. This forces investors to either renounce their home nationality or their hopes of second citizenship. So the MRVP offers a very attractive solution to this.

With that in mind, let’s look at its benefits in more detail.

A residency card that opens up Europe: The MRVP was launched in 2015 to enable international investors to attain Maltese residency rights while simultaneously growing the Maltese economy. For a modest three-part investment (two parts of which you need only hold for five years) this programme creates a route into Europe and the Schengen zone. Once granted, your Maltese permanent residency card allows you to live indefinitely on the islands, as well as travel across the entire 26-state Schengen zone without the hassle of internal border controls.

The MRVP was launched in 2015 to enable international investors to attain Maltese residency rights while simultaneously growing the Maltese economy.

Become part of the Commonwealth: Formally constituted in 1949, the Commonwealth of Nations is an agreement between 54 countries globally, including Malta. These nations agree to pursue common values regarding human rights, democracy and free speech and as such enjoy global repute that other nations may lack. The Commonwealth also represents increased business, investment and trade opportunity for members – intra-Commonwealth investment exceeded USD 200bn from 2000 to 2010 according to the Royal Commonwealth Society’s Trading Places Report. So as a resident of Malta you’re investing in your reputation and ease of doing business globally.

Reputable programme: The MRVP has stringent due diligence procedures, ensuring only the most reputable investors are granted residency. Investors must be of impeccable character with proof of high net worth. This level of scrutiny grants the programme considerable prestige, and your investment will be well regarded. Despite this scrutiny, the programme is still fast and you can expect to hear a final decision from the Maltese government within three months, after which you can apply for your residency cards.

Enjoy economic, political and social stability: As a permanent resident of Malta you’re entitled to reside, settle and stay indefinitely on the islands, which are considered very stable. The KOF Globalisation Index scored Malta at 75.04 in 2016 based on its political, economic and social development. The Human Development Index ranks Malta as 39th most economically developed country in the world, based on various measures including life expectancy, income and education. Malta is the second safest country in the world from natural disaster, according to the WorldRiskReport 2015. So as a permanent resident of Malta, you’re joining a prosperous nation with a stable future.

The Human Development Index ranks Malta as 39th most economically developed country in the world, based on various measures including life expectancy, income and education.

Family friendly programme: The MRVP is ideal for families, as you can include family members in your application to ensure you all benefit from residency. You’re able to include a spouse, children, parents and grandparents who are financially dependent, plus disabled dependents of any age.

Exceptional relocation destination: Malta is the smallest country in the EU at only 316 kilometres square, but it packs a major punch in terms of history, culture and environment. Millions of tourists flock here every year – nearly two million in 2016 – drawn to the picturesque coastline and Baroque architecture. Malta is situated farther south than parts of Africa, so sunshine-drenched days here are the norm. These things combine to account for the island's popularity among expats. So much so, that Malta is ranked the 10th best place to retire in 2017 by the Annual Global Retirement Index.

Potential tax advantages: When you’re granted Maltese residency through the MRVP, you may also qualify for tax incentives granted under the Global Residence Programme (GRP). This would give you a preferential 15% tax rate on foreign-source income received in Malta – such as a pension. There’s also significant opportunity to claim double taxation relief, as Malta holds over 70 double tax treaties with other countries worldwide. Irrespective of further eligibility, as a Maltese resident through the MRVP you’ll only pay tax on income sourced in or remitted to Malta, and nothing on foreign-source capital gains.

Exciting investment opportunity: One of the financial requirements for attaining residency in Malta is an investment in qualifying real estate. This grants you the benefits of Maltese residency, but it’s a smart investment in its own right. In 2015 the Central Bank of Malta announced robust year-on-year property price growth averaging 5% during the first three quarters of 2015, increasing to 10% in the final quarter.

The property market in Valletta, Malta’s capital, is particularly exciting, with investors snapping up real estate to capitalise on the city’s fledgling cosmopolitanism. Valletta has been designated the European Capital of Culture for 2018 so that should tell you everything you need to know about the direction in which the city is heading.

Possibility of citizenship through IIP: Malta also offers a separate programme called the Individual Investor Programme (IIP). It allows you to secure Maltese second citizenship in exchange for an investment of around EUR 825,000. The breakdown of this is a minimum of EUR 650,000 contribution, EUR 150,000 investment and EUR16,000 annual lease for five years. Additional due-diligence, passport and professional fees apply. Maltese citizenship entitles you to all the benefits you would expect as an EU national, including visa-free or visa-on-arrival travel to 165+ countries, and freedom to live, work or study anywhere across the union.

Maltese citizenship entitles you to all the benefits you would expect as an EU national, including visa-free or visa-on-arrival travel to 165+ countries, and freedom to live, work or study anywhere across the union.

Securing Malta residency: The MRVP is a straightforward process, and residency can be secured in only three months. To be eligible for the programme you must hold a clean criminal record, and must pass stringent due diligence checks. You must also be a third country national – not Swiss, Maltese, EU or EEA. In addition, you’ll need to prove an annual income of at least EUR 100,000 derived outside Malta, or show capital of at least EUR 500,000. Finally, you’ll need to meet certain requirements with regards to your international insurance policy.

Those conditions satisfied, the remaining requirements are financial, staggered throughout the application process. First is a EUR 5,500 non-refundable deposit to submit your application to Identity Malta, the Maltese governmental agency responsible for the programme. They review your application and if you have provided everything they need they then issue you an acknowledgement of receipt, and begin assessing your claim. Once your claim is approved, you pay EUR 24,500 to complete your total non-refundable government contribution of EUR 30,000.

As well as this EUR 30,000 contribution, you’ll also make a qualifying investment in real estate. To progress your application you must show proof of title to a qualifying property with a minimum value of EUR 300,000, or EUR 270,000 in South Malta or Gozo. Alternatively, you must show proof of lease to a qualifying property at an annual rent of at least EUR 12,000, or EUR 10,000 in South Malta or Gozo. You must hold these for a minimum of five years.

There is also an investment requirement at this stage, into stocks, bonds or other purposes outlined by Identity Malta, to the tune of EUR 250,000 minimum. Again, you must hold this for at least five years. There are also minimal administrative fees of EUR 137.50 per residence card issued, plus the agreed professional fees through your registered agent. Once you receive your residency card, your right to residency is permanent and your card can be renewed indefinitely.

The Malta Residence and Visa Programme is rightfully one of the most popular of its kind, offering investors an easy way into the EU and Schengen Area. Malta is a real gem of the Mediterranean and has a thriving expat culture to show for it, so investors choosing to relocate will be in good company. The MRVP is an exciting opportunity to invest in an increasingly cosmopolitan country with vast development potential.

Next Generation Equity specialises in dual citizenship-by-investment and residency-by-investment programmes around the world. To schedule a no obligation consultation.