Q & A – Maltese Citizenship by Investment

Please note that one can never buy a Maltese passport.  The honour of having a passport needs to be earned in one of the ways specified in our Constitution.  One of these is your deep affinity with our country and the level of commitment and investments you have here.

The following are some examples but this list should not be taken as being exhaustive:-

(a)           Residential -The applicant would most likely need to spend some time in Malta in execution of his mandatory obligations vis-à-vis purchase/rental of property and the acquisition of the required Malta investments;

(b)           Philanthropic - recognition will be given should the applicant make a contribution to a local charity for example;

(c)           Commercial - if the applicant sets up a Maltese company, trust, foundation or other vehicle, the Agency would also consider this in the light of aiming to achieve a genuine link to Malta;

(d)           Social - Where an applicant integrates directly or indirectly in the social life of the Maltese population, say for example by having his personal yacht berthed in a Malta marina, and further, by participating in local sailing events;

 

Personal; personal visits (or holiday trips) to Malta would clearly score the most points. One may also consider other situations where although not being physically present in Malta, genuine links could be imputed. Examples of these could be where the applicant’s children are enrolled in a Maltese educational institution, the use of a Malta-based doctor, engaging or employing persons to service the house or apartment purchased or rented – be it a cleaning personnel, handyman or gardener.

Upon the passing of the first 120 days, in which the applicant’s proposal for obtaining citizenship by investment is being evaluated in depth, the Minister will issue an “ In Principle Approval “of the application. This is a strong statement by the Malta authorities that, based on the facts and documents presented, including a declaration or executive summary as to how the applicant intends to fulfill the “genuine link” requirement, the applicant has very strong credentials for acceptance within the Programme.

It is therefore at this point that the applicant would need to pay the balance of EUR 640,000 and pass on to fulfill and execute his mandatory requirements as well as continue to gather proof of establishment of his genuine links to Malta.

The onus is therefore now on the applicant as to whether to continue to actively pursue the Programme having been given the green light by Malta.

Clearly, if for some extraordinary reasons, the applicant fails to perform his obligations and abandons the Programme entirely, then the payment may be lost. However, at such an advanced stage in the process, one would presume that the applicant would be expected to carry this through to the end.

It is worth mentioning also that the law covering the Malta IIP refers to a period of 6 months to 2 years within which to execute the Programme, and if for some reason or other, the applicant delays to fulfill the 12 month genuine link proposal in his earlier application statement, the Programme continues to remain operational until such time as this requirement is fulfilled within such 2 year period – the only implication here would be that the final outcome of the Programme would be slightly delayed.

The only other reason that could possibly result in the loss of the amounts paid – following the issue of the ‘In Principle Approval’ – would be if matters of say a criminal nature come to light in respect of the applicant that would automatically debar him from continuing to execute the Programme.

Our authorities expect that one of the reasons for anyone wanting to become Maltese citizens is their affinity to the island.  And such affinity normally translates to one wanting to reside in the national country and enjoy all the benefits that such citizenship entitles you to.

On the other hand, being a Maltese citizen does not mean entrapment within our shores.  Our authorities realise that any entrepreneur with large investments overseas will translate to substantial periods of absence from our island.  And our authorities actually encourage overseas trade since this enhances our own national wealth.

Therefore there is no expectation that one is resident throughout the year.  But a regular period of local residency, even if a short one, is expected.

Maltese taxation is based on domicile and residence – but not citizenship.

Domicile of choice is not acquired through citizenship, but on the demonstrated fact that the person intends to continue to reside in Malta for the rest of his/her life, and the cancellation of all connections with the domicile of birth.

Residence, on the other hand, is established by fact i.e. the intention to reside in Malta for not less than 183 days in any calendar year.

This distinction is important since, whereas a DOMICILED person is taxable on world wide income whether of capital or income nature, a resident person is taxed on INCOME REMITTED to Malta only.  Capital gains earned overseas, whether remitted to Malta or not, are not taxable in Malta.

A non-resident of Malta (whether holding a Malta citizenship or not) is only taxable in Malta on INCOME ARISING (including that of capital nature )  in Malta.

Under Maltese law any capital gains arising from the sale of one’s residency is totally exempt from Malta Income tax if sold after it had been used as the seller ‘s main and sole ordinary residence in Malta for at least 3 years.  If sold earlier, a final withholding tax is charged on the selling price.

Malta has one of the most advantageous personal tax regime in the world , except for Tax Havens.  Some of the important tax issues that would be relevant to your as a Malta Citizen , would be:

  • No inheritance or death taxes
  • No estate duty
  • No wealth taxes
  • No other form of national, state or council taxation