Malta And Citizenship By Investment

On November 17, 2017, Malta’s Prime Minister, Joseph Muscat, told delegates at the 11th Global Residence and Citizenship Conference in Hong Kong that his Government intends to renew its popular Individual Investor Program, which offers Maltese citizenship to those meeting certain wealth and minimum investment requirements.

This feature looks at the details of Malta’s Individual Investor Programme, and other similar citizenship-by-investment schemes that exist elsewhere in the world.

Malta In Brief

Malta is in fact a collection of islands situated in the Mediterranean Sea, about 100 km from Sicily and 290 km from North Africa. The inhabited islands comprise Malta (390 sq km), Gozo (65 sq km) and Comino (2.5 sq km). Malta is the largest of the islands, and is home to the country’s capital, Valletta. The total population of the islands is approximately 416,000, with the majority licing in the eastern half of the island of Malta.

As befits its location in the middle of the Mediterranean, Malta’s climate is generally pleasant, with hot, dry summers, and mild, rainy winters. There are, however, occasional droughts.

With its strategic position in the Mediterranean, Malta has become an important cultural and commercial center. The islands’ architecture, language and culture are an intriguing and unique blend of Mediterranean and Arabic influences, although after almost 150 years as a British colony, British influences abound and English stands alongside Maltese as the official language. Italian is also widely spoken.

Malta is a politically stable parliamentary democracy and has been a member of the European Union (EU) since May, 2004, adopting the euro in 2008.

Despite its heavy dependence on trade with Europe and tourism, Malta is also economically stable and its financially-sound banking sector enabled it to withstand the stresses of the eurozone crisis better than most EU member states.

In terms of infrastructure, the islands are reasonably well equipped given their somewhat isolated location. Malta’s economic policy encourages information technology operations, and the territory has invested heavily in state-of-the-art telecommunications; there is a flourishing e-gaming sector on the island.

The Individual Investor Programme

The Individual Investor Programme was introduced in 2014 and allows for the granting of citizenship by a certificate of naturalization to individuals and their families who contribute to the economic and social development of Malta. Subject to a stringent vetting and diligence process, including thorough background checks, the applicants and their dependents are granted citizenship in exchange for such contribution.

To qualify for citizenship, the main applicant must be at least 18 years of age, provide proof of having been a resident of Malta for a period of 12 months preceding the issuing of a certificate of naturalization and meet the following investment requirements:

  • The acquisition of real estate with a minimum value of EUR350,000 (USD413,000) to be held for at least 5 years; or
  • Lease a residential immovable property in Malta for a period of 5 years, at an annual rent of at least EUR16,000; and
  • Make a contribution to the National Development and Social Fund
  • Invest in stocks, bonds or special purpose vehicles to be identified by Identity Malta, for a minimum value of EUR150,000 to be held for a minimum period of 5 years.

Applicants must have global health insurance coverage for at least EUR50,000 for the main applicant and each of the dependents and must give proof that they can maintain the same for an indefinite period.

Principal Applicants can include in their IIP application:

  • Spouse – in a monogamous marriage or in another relationship having the same or similar status to marriage.
  • Dependents of 18 years of age and under.
  • Dependents between the age of 18 and 26 years of age, who are not married and who are wholly supported by the main applicant and form part of the household.
  • Dependents over the age of 55 years (e.g. parents), who are wholly supported by and who form part of the household of the main applicant.

The following contributions and fees are required as a minimum to qualify for citizenship under the IIP:

  • Principal applicant – EUR650,000 (representing a contribution to Malta’s National Development and Social Fund)
  • Spouse – EUR25,000
  • Each Dependent child aged 0-17 – EUR25,000
  • Each Dependent child aged 18-26 – EUR50,000
  • Each Dependent aged 55 or above – EUR50,000

There are also due diligence fees as follows:

  • Principal applicant – EUR7,500
  • Spouse – EUR5,000
  • Each Dependent child aged 13-17 – EUR3,000
  • Each Dependent child aged 18-26 – EUR5,000
  • Each Dependent aged 55 or above – EUR5,000

There is also a passport fee of EUR500 per person, and bank charges of EUR200 per person.

Applications must be accompanied by supporting identification and verification documents authenticated in English, as set out in the Checklist and Guidelines, together with:

  • Police conduct certificates
  • Proof that the main applicant has been a resident of Malta for a period of 12 months preceding naturalization
  • Medical certificates stating that the applicant and his dependents are not suffering from contagious diseases and are in good health
  • An affidavit of support for each dependent who is over 18 years of age.

According to figures announced by Henley & Partners, which runs the scheme on behalf of the Maltese Government, the IIP had attracted over 400 applicants from more than 40 countries by January 2015.

Muscat has previously said that the program will enhance the island’s competitiveness by increasing its talent pool and global network.

Other Citizenship-By-Investment Programs

Similar types of programs are also available in St Kitts and Nevis, Dominica, and St Lucia. Their requirements are described below.

St Kitts

Background

St Kitts and Nevis are islands in the Caribbean Sea, about one-third of the way from Puerto Rico to Trinidad and Tobago.

The two volcanic islands, which are renowned for their beautiful mountain scenery, total 261 sq km in area and are separated by a three-km-wide channel called The Narrows. The climate is tropical, tempered by constant sea breezes and there is little seasonal temperature variation. The rainy season is from May to November and there can be hurricanes between July and October.

The capital is Basseterre, on St Kitts, and there are harbors at Basseterre and Charlestown (Nevis). Bradshaw International Airport, near Basseterre, can handle large jets, while Nevis’s Newcastle Airport is only capable of handling light aircraft.

Airline services to the Federation have been improving, and there are now direct flights from New York, Philadelphia, Miami, as well as links to other Caribbean islands.

Since gaining independence in 1983, St Kitts and Nevis has been an independent participant of the British Commonwealth. Unlike most other English speaking Caribbean jurisdictions, it is neither a dependency, nor a crown colony of Britain. The Federation has its own representation at the United Nations and is politically stable.

There is no personal income tax, net worth tax, gift tax, turnover tax, or estate duty on St Kitts and Nevis. Corporate Income Tax and Withholding Tax apply to domestic companies, but not to entities carrying on business solely with non-residents.

Citizenship Scheme

According to the Government, a St. Kitts and Nevis passport allows visa-free travel to more than 130 countries, including all European Union countries, Caribbean and Commonwealth nations. Citizens often acquire long-term travel visas to the United States.

There are currently two options available to qualify for the Citizenship by Investment Program:

  • The Sugar Industry Diversification Programme (SIDF)

The Sugar Industry Diversification Foundation (SIDF or the Foundation) was established on September 16, 2006 with National Bank Trust Company as Founder. Its primary purpose was to assist the government to transition from sugar as the main industry to a more diversified economy by researching and funding the development of alternative industries. The Foundation has been designated a specially approved project for the purpose of Citizenship-by-Investment.  Therefore, contributions to the Foundation of at least USD250,000 qualify foreign nationals, subject to stringent due diligence checks, to apply for Citizenship-by-Investment in St. Kitts & Nevis. Applications are made to and processed by the Citizenship by Investment Unit of the Government.

In order to qualify, the investor commits a non-refundable SIDF charitable donation of:

  • USD250,000 for a single person
  • USD300,000 for a family of four
  • USD350,000 for a family of five
  • USD450,000 for six or more persons.

Applications must be submitted with the following due diligence fees: USD7,500 for the main applicant; and USD4,000 for each dependent over the age of 16.

The application normally takes three to six months to complete.

  • Acquisition of Real Estate

The Citizenship-by-Investment Program was established in 1984, making it the longest established program of this kind in the world. According to the government, it has distinguished itself from many other similar programs by rigidly enforced investment requirements and meticulous due diligence procedures. The Citizenship by Investment Unit receives approximately 300 applications per year, and in January 2016, Prime Minister Timothy Harris revealed that as of December 31, 2015, more than 10,000 passports had been issued under the citizenship-by-investment scheme.

The program is designed to channel investment into the country’s tourism industry, a major pillar of its economy. To qualify for the program, the investor therefore must enter into a contract to purchase real estate in a tourist development with a minimum value of USD400,000 on either St. Kitts or Nevis. Qualifying real estate investments must be in completed, or under construction, houses, condos etc. Land only purchases do not qualify. Once the purchase contract has been signed, and the developer has received an initial deposit (usually 10-20 percent) the investor may apply for citizenship.

Property acquired through this program may not be sold within five years, and if it is, the investor’s citizenship may be revoked. After the five-year period has been completed, the real estate may be sold and citizenship retained by the original owner.

Dominica

Dominica forms one of the Lesser Antilles islands in the Caribbean Sea between Guadeloupe to the north and Martinique to the south.

The volcanic island is approximately 750 sq km and is largely covered in dense rain forest.

With a population of around 74,000, Dominica is one of the poorest islands in the Caribbean; with a gross domestic product estimated to be just over USD800m in 2016 and per capita income of USD11,300 in the same year. The two main centers of population are Portsmouth in the north, and Roseau in the south west of the island.

Dominica’s tourism sector is less well-developed than in other Caribbean islands, and the island receives around 50,000 visitors per year; without an offshore business sector, the island’s economy is still largely dependent on agriculture. However, the tourism industry is growing and the Government has been keen to sell the island as an eco-tourist destination which may appeal to the more adventurous holidaymaker.

There are no taxes on non-residents in Dominica. However, residents are subject to substantial taxes on income produced on the island.

Citizenship Scheme

A Dominica passport allows visa-free travel to more than 50 countries, including most of the Caribbean and the UK. Visitors to the rest of Europe and the US will require a visa.

Before being granted a Dominican passport, applicants have to undergo an extensive due diligence check by the government. This is normally carried out by a third party agency. After an initial review the agency will define the fee to be charged based on the citizenship, age and number of countries in which the applicants have lived. After the fee is paid directly to the investigation agency, due diligence can take from four to eight weeks.

To obtain a Dominican passport under the scheme, an applicant must deposit money into the Government Fund or make an investment in real estate on the island.

If the former option is taken, a single applicant must make a contribution to the Government of USD100,000. This contribution rises to USD175,000 for a main applicant and their spouse, and to USD200,000 for the applicant, spouse and two children under the age of 18.

If the real estate option is taken, the applicant must purchase authorized real estate to the minimum value of USD200,000. The real estate must be held for three years and may be eligible for re-sale under the Citizenship by Investment Programme after five years from the original purchase date.

Once the background check has begun, the application process can be commenced. However, the procedures are very detailed and much paperwork will be required; the government requires that all documents be no more than three months old and notarized. According to the Government, non-refundable application fees include:

  • USD1,000 processing fee per application;
  • Due diligence fees of USD7,500 per applicant, USD7,500 per spouse, and USD4,000 per dependent (aged 16 years and above);
  • Naturalization fee of USD250 per person; and
  • Expedited passport issue fee of USD1,200.

There is an additional set of fees for those choosing the real estate option, as follows:

  • USD50,000 for the main applicant;
  • USD35,000 for the spouse;
  • USD35,000 for a family of up to four persons, including the Main Applicant and up to three dependents
  • USD50,000 for a family of up to six persons, including the Main Applicant and up to five dependents
  • USD 70,000 for a family of seven persons or more, including the Main Applicant and six or more dependents

In cases where an applicant is not accepted, the contribution is returned minus the application fee. The granting of the citizenship is at the sole discretion of the government of Dominica but applicants are only denied when due diligence reveals false information or that the applicant has a criminal record.

St Lucia

A byword for tropical beauty, St Lucia is a scenic and atmospheric Caribbean island located between the Caribbean Sea and the North Atlantic Ocean, to the north of Trinidad and Tobago.

The terrain of the 600 sq km island is volcanic and mountainous with some broad, fertile valleys. The highest point is Mount Gimie at 950m, in the western part of the island, although the two striking cone-shaped peaks south of the western coastal town of Soufriere, known as the twin Pitons, are one of the scenic natural highlights of the Caribbean.

Sandy beaches abound, which has helped the island become a popular upmarket tourist destination. As one would expect, St. Lucia’s climate is tropical, but temperatures, which range between 23 and 29 Celsius, are moderated by northeast trade winds. There is a dry season from January to April, and a rainy season from May to August.

The island, with its fine natural harbour at Castries, the capital city, was contested between England and France throughout the 17th and early 18th centuries (changing possession 14 times); it was finally ceded to the UK in 1814. Even after the abolition of slavery on its plantations in 1834, Saint Lucia remained an agricultural island, dedicated to producing tropical commodity crops. Self-government was granted in 1967 and independence in 1979.

The majority of the island’s population of approximately 165,000 are of black African descent. The official language is English, but a French patois is also spoken.

As in St Kitts and Nevis, the currency is the Eastern Caribbean Dollar (XCD), which is pegged to the USD dollar at a rate of XCD2.7 = USD1.

Citizenship Scheme

To stand a chance of being accepted onto St. Lucia’s citizenship by investment scheme, an applicant must provide a sworn affidavit declaring financial resources of at least USD3m, as well as documents to support the claim.

To gain citizenship under this program, the applicant then must make a minimum investment in one of the following four schemes:

  • the Saint Lucia National Economic Fund;
  • an approved real estate project;
  • an approved enterprise project; or
  • the purchase of Government bonds.

Single applicants intending to investment in the National Economic Fund must make a minimum investment of USD100,000. This rises to USD165,000 for applicants applying with a spouse, and to USD190,000 for applicants applying with a spouse and two dependents. An additional USD25,000 must be invested for each additional qualifying dependent.

A minimum of USD300,000 must be invested in an approved real estate project. Qualifying projects include high-end branded hotels and resorts and high-end boutique properties. Investment in an approved real estate project cannot be sold or transferred for a period of at least five years after the granting of citizenship.

For an approved enterprise project, a single applicant must invest a minimum of USD3.5m and create at least three permanent jobs. Joint investments can be made by more than one applicant, for which the minimum investment is USD6m, plus an additional USD1m investment from each applicant. Joint investments must create at least six permanent jobs. The following are considered as approved enterprise projects: specialty restaurants; cruise ports and marinas; agro-processing plants; pharmaceutical products; ports, bridges, roads and highways; research institutions and facilities; and offshore universities.

If the applicant chooses to go down the government bond route, the minimum investment is USD500,000 per single applicant. This rises to USD535,000 for applicants applying with a spouse, and to USD550,000 for spousal applications with two dependents. An additional USD25,000 is required for each additional qualifying dependent. A qualifying bond investment must be registered and remain in the name of the applicant for five years from the date of first issue. The bond also must not be interest-bearing.

Under the citizenship by investment regulations, the applicant must submit a police certificate from their country of birth and from any other country in which they have resided for a period of one year or more during the 10 years immediately prior to submission of the application. This rule also applies to qualifying dependents aged 16 or older. Qualifying dependents must also undergo due diligence checks.

Various fees are payable by authorized agents, promoters and marketers, as well as by the applicants themselves. For scheme applicants, USD7,500 is payable for due diligence and background checks, plus USD5,000 for each qualifying dependent over the age of 16. Applicants intending to invest in an approved real estate or enterprise project must pay a non-refundable administration fee of USD50,000, plus USD35,000 for each dependent over the age of 18, and USD25,000 for each dependent under 18. There is also a non-refundable processing fee of USD2,000, plus USD1,000 for each qualifying dependent, in the case of each application.

The regulations allow the Government to grant up to 500 applications for citizenship by investment annually, although this number can be reviewed by the relevant government minister.

A St Lucia passport allows visa-free entry into around 80 countries.

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