Malta’s EU residency and citizenship programmes: Suitable alternatives to the EB-5
A growing number of countries are introducing programmes that allow wealthy investors to acquire residency or citizenship. Malta offers such programmes and is now setting high standards within the sector.
After joining the EU in 2004, Malta became one of the fastest growing economies across the Eurozone, with a strong track record of delivering innovative and efficient solutions across multiple sectors – including residency.
Over recent years, Malta introduced multiple residency and citizenship programmes that, today, provide an attractive and suitable alternative to the Unites States’ EB-5 Programme, known to be demanding for its job creation requirement and at-risk nature.
EB-5 – a demanding programme
Created by the US Congress in 1990, the EB-5 Programme allows foreign investors to obtain a green card, and eventual citizenship, when investing in a US project that creates at least 10 full-time jobs.
The minimum investment amount ranges between $500,000 and $1,000,000, depending on the project’s location. The money remains at risk until applicants complete their immigration process and their green card is issued.
This only happens once the 10 jobs have been created (for at least two years) and detailed records are presented proving the jobs actually exist. Applicants must also prepare a detailed business plan explaining how their proposed project meets the programme’s criteria. They must also present an economic impact report showing how the project’s capital expenditure and projected operating revenues will create a sufficient number of EB-5 jobs.
Delays and uncertainty
Over the past months, issues surrounding the EB-5 have increased. Lengthy processing times are delaying applications unnecessarily.
It’s taking an average of 26 months to process the I-526 petition, through which applicants prove they’re in the process of investing in an approved project. It takes a further 29 months to process the Form I-829 that is submitted after having held a two-year conditional residence permit ahead of obtaining the green card that grants permanent residence.
The US tax reform is also proving to be problematic, because it could have a significant impact on the typical EB-5 investor, resulting in a lot of uncertainty surrounding this programme.
In view of this, high net worth individuals seeking a residency or citizenship programme are exploring alternatives to the US, and Malta offers various options.
Malta – a thriving economy
Malta’s economic success is down to various factors but, principally, to the style of governments that, throughout the years, favoured commerce and innovation within a robust yet straightforward framework.
This open-minded and forward-thinking approach, a lean bureaucratic process and a stable socio-political climate within a safe and secure country, all enable the Maltese jurisdiction to be pro-active as opposed to reactive.
Over recent years, Malta introduced multiple programmes which seek to attract individuals of the highest calibre to take up residence in Malta – an island State that offers great investment opportunities apart from the benefits of EU citizenship. These programmes also contribute towards the ongoing development of the nation by transferring skills and knowledge to the domestic workforce. Here are the two principal programmes:
Malta Residence and Visa Programme
Through the Malta Residence and Visa Programme, applicants can obtain permanent Maltese residency within 3 to 5 months, making this programme a highly attractive alternative to other residency programmes.
In order to become permanent residents they must pay a non-refundable contribution of €30,000. They are also required to buy or lease a property of a certain value (details outlined in the table below) and invest €250,000 in government stocks which need to be held for a minimum of five years.
- Border-free travel across Schengen countries. Without internal border controls, people are free to travel wherever they wish within the Schengen Area without having to worry about passports, visas and long lines at control points.
- Access to a work permit and acquisition of tax residency. Applicants are taxed on income and capital gains arising in Malta and foreign income (only when this is remitted to Malta). Individuals are not taxed on capital gains arising overseas, even if these are remitted to Malta.
Malta Individual Investor Programme
The Malta Individual Investor Programme (MIIP) was launched by the Government of Malta in 2014 to attract foreign investment into the Maltese economy. This programme targets high net worth individuals as well as families worldwide and it is considered to be one of the best designed and most exclusive citizenship-by-investment programmes.
Applicants under this programme must undertake a rigorous due diligence procedure which, if concluded successfully, would then require them to take up residency in Malta for a minimum of one year. They are also required to contribute €650,000 to the National Development and Social Fund, as well as buy a property with a value of at least €350,000, or lease a property with a value of €16,000 per annum.
Once residence is obtained, applicants are considered to be residents but not yet domiciled in Malta for tax purposes. This means they are taxable on income and capital gains arising in Malta, and on foreign income which is received in Malta.
- Visa-free access to 167 countries
- Border-free travel within Schengen countries
- Visa waiver programme: Maltese citizens may apply to travel to the US without a visa for business or leisure trips of up to 90 days
- Access to over 70 Double Taxation Agreements (DTA) as well as the ability to apply unilateral relief where no DTA is in place
- Allows for dual citizenship
- Access to high level health and education infrastructure
Setting highs standards
Malta’s compliance and due diligence standards are considered to be the most thorough in the citizenship-by-investment industry due to their transparency, relocation flexibility and residence requirements, among other factors. In fact, Henley and Partners ranked the MIIP as the best in their definitive comparison of leading investment migration programmes.
Malta is setting the standard when it comes to residency programmes. It is also likely to play a key role in working with other countries to help them adopt a similar approach in terms of compliance and due diligence criteria which need to be met.
This attention to detail and good practice, together with the multiple benefits that come with Malta’s programmes, truly make them suitable alternatives for those seeking to invest overseas while obtaining residency or citizenship.