|Malta’s Individual Investor Program|
In March 2014, the Government of Malta launched the Individual Investor Program (IIP), designed to attract investment to the Malta National Development and Social Fund by rewarding such contributions with the grant of Maltese citizenship.
The IIP allows for the grant of citizenship to duly qualified, reputable foreign individuals and families who make a significant contribution to the economic development of Malta and who establish a genuine link with Malta. The IIP has the world’s strictest due diligence standards, ensuring that only highly respectable clients will be admitted. The program intake is also capped at 1,800 successful main applicants, after which the program will close, making this the most exclusive program globally.
Citizenship is granted to suitable individuals and families who hold resident status in Malta for a period of 12 months immediately preceding the granting of citizenship and who qualify under the strict due diligence regime and who meet all other requirements stipulated under the law and regulations
All individuals and families applying to the Malta Individual Investor Program must make a significant contribution to the National Development and Social Fund established by the government. The minimum contribution levels that must be met in the initial phase of the program have been set as follows:
Contribution to National Development and Social Fund of EUR650,000 for the main applicant.
Contribution for spouse and minor children: EUR25,000 each.
Contribution for dependent children 18 to 26 years or dependent parents above 55 years: EUR50,000 each.
Furthermore, due diligence fees apply, and these have been set at the following levels:
In addition, an investment of EUR150,000 into government-approved financial instruments, which must be maintained for a minimum period of five years, is required. Over 200 applications for citizenship have been received since the program’s launch in March 2014, with a good number already at the due diligence phase. This represents a commitment of foreign direct investment into Malta of over EUR200 million (USD330 million) over the last six months.
Malta has developed a unique, four-tier due diligence system, which is considered the most thorough in the world for this kind of programme. The four tiers are as follows:
1. Database and public searches
The requisite application forms containing personal information and relevant supporting documentation must be submitted, and are reviewed and screened against global databases. The passport/s of the main application and family are verified. Internet searches about the applicant, their families and companies are then cross-referenced with online databases.
2. Background verification checks
A background verification report is produced by an international due diligence firm, who are an approved government service provider, to validate the veracity of information submitted by the applicant. There will be an independent review of information sourced from the public domain and international databases.
3. Government checks
At this stage, the government carries out their own research, which will include Interpol screening, Financial Crimes screening and independent due diligence checks.
4. Risk-weighting assessment
A risk-weighted assessment, a first in the Citizenship-by-Investment field, will be undertaken by assessing each application against a risk-weight matrix; following this, the application may be approved; declined; returned with a request for additional information; or, in some cases, an interview may be requested.
If, at any stage of this process, an application is found to contain false information or omissions, it will be automatically declined.
The acquisition of Maltese citizenship under the IIP does not, in itself, trigger tax residency, but even if one decides to move and take up permanent residence in Malta, one would normally still retain the status of a non-domiciled person.
Individuals who are resident and domiciled in Malta pay income tax on their worldwide income. Personal income is taxed at progressive rates up to 35 per cent. However, individuals who are resident but not domiciled in Malta pay tax on (a) income arising in Malta and (b) on income (excluding capital gains) remitted to Malta that arises outside the island. The tax rate varies in accordance with the individual’s tax status.
There are no restrictions on dual citizenship in Malta. The Maltese Citizenship Act specifically provides that dual citizenship is allowed. Once citizenship has been granted, it cannot legally be revoked except in case of misrepresentation or fraud, as is the case in most countries.
The opinions expressed do not constitute investment advice and specialist advice should be sought about your specific circumstances.
Published on our website on Feb.5, 2015