• September 2015
    Written by Tanya Sciberras Camilleri LL.D.

    Understanding the New Residence Schemes

    • In the wake of the Joe Sammut scandal, Government has introduced another residency programme for non-EU nationals. This programme can be described as a lighter version of the Citizenship by Investment Programme, where an indefinite residence permit is granted to applicants who place an investment of €250,000 and who show that they own or rent property in Malta. The form of the investment has yet to be determined by Identity Malta. 

      This programme is definitely aimed at individuals or their families who, whether for financial reasons or otherwise, are not eligible to buy Maltese citizenship or do not have the resources to do so but are able to afford the contribution necessary to qualify for an indefinite residence permit in Malta.

      Similarly to the Citizenship by Investment Programme, applications cannot be submitted directly by non-EU nationals but are to be submitted by accredited persons who may be advocates, legal procurators, notaries, accountants or members of the Institute of Taxation, the Institute of Accountants or the Institute of Management. 

  • The permit comes against a fee of €30,000 which is payable once Identity Malta accepts the application in principle. The application is to be accompanied by a non-refundable administrative payment of €5,500 which will eventually be deducted from this fee once the application is approved in principle. 

    The Programme is available to persons who: 

    1. Are at least 18 years of age and their dependants, whether ascendants or descendants who are not economically active and who are principally dependant on the main applicant. Dependants who are over 18 but have not reached 26 years of age are also eligible provided they are not married. 
    2. Prove that they own property in Malta valued at least €320,000,( reducing to €270,000 if the property is situated in the South of Malta or in Gozo). Alternatively, proof of the lease of property of at least €12,000 annually must be provided (amount is reduced to €10,000 if the rented property is in the south of Malta or in Gozo). This has to be held for a minimum of five (5) years.
    3. Commit themselves to investing in a qualifying investment of at least €250,000 and to retain same for at least five (5) years.
    4. Provide a police certificate issued by the police authorities in Malta and certificates issued from the country of origin and from every country where the applicant would have resided for a period of more than 6 months in the ten years previous to the date of application. If this cannot be provided, then Identity Malta will accept a sworn affidavit by applicant in exceptional cases.
    5. Provide a certificate from a reputable health system that the main applicant and dependants are not suffering from any contagious disease and that they are otherwise in good health. 

    The accredited agent is tasked with carrying out a due diligence exercise on the prospective applicant and dependants over 12 years of age, in order to ensure that no a priori evidence that applicant or his or her dependants over are not fit and proper persons. Applicants or their dependants are disqualified from applying for a residence permit if they have been indicted or have faced serious criminal proceedings, such as money laundering, funding of terrorism or war crimes. Neither will they be eligible to apply if they are considered a threat to public policy or public health or security of if they have been charged or found guilty of any crimes against the good order of families or if they have been interrogated or placed under suspicion of any criminal charges in respect of voluntary offences punishable by more than two years imprisonment. 

    An applicant must be in in receipt of sufficient stable resources throughout the validity of the certificate in order to maintain the entire family and must provide an affidavit to confirm an annual income of not less than €100,000 or capital of not less than €500,000. The €250,000 minimum investment and the property owned or leased must also be retained for a minimum of five (5) years. Throughout the period of validity of the certificate, applicant and dependants must be in possession of a valid travel document and must be covered by health insurance. 

    Curiously enough, an applicant who resides in Malta legally and continuously for a period of four years or more will be disqualified from continuing to hold the residence permit even though the permit entitles the applicant and his family to reside in Malta indefinitely. This is rather a contradiction in terms and one wonders how this particular clause will be enforced and whether a few days absence from Malta will be sufficient for a certificate holder not to fall foul of the regulations. My conclusion is that this rule is intended to bar such permit-holders from ever becoming eligible to acquire the status of long-term residents in terms of the EU rules. EU legislation permits non-EU nationals who reside in an EU state for a continuous period of five years to acquire long-term resident status. However, it is debatable whether Government is legally permitted to exclude permit holders from becoming eligible to acquire such a status by means of a legal notice. 

    Similarly, no mention is made of the fiscal position of such permit holders. Non-EU nationals can also qualify to reside in Malta in terms of the Global Residence Programme, with the stark difference being that global residents are subject to a minimum annual tax payment of €15,000, whereas this recent programme requires a minimum investment of €250,000. It is however to be presumed that permit holders in terms of this new scheme will nonetheless be taxed in Malta on the income they bring into the country. 

    It is not known whether Government is going to place a cap on such permits, as happened with the Citizenship by Investment scheme and it still remains to be seen whether non-EU nationals, particularly Libyan nationals, are able to come up with the funds necessary in qualify as residents.
  • This Article was first published in The Sunday Times of Malta on 27th September 2015