In a recent press release the Maltese government confirmed that, once the quota of 1,800 applications is reached, a revised programme will be launched. This confirms what Parliamentary Secretary for Citizenship Hon. Alex Muscat said last February 14th in an interview with The Sunday Times of Malta expressing his views of "launching it straight away to avoid having a gap in revenue."
Where are we now?
Whilst an exact amount would be quite challenging to precisely quantify, we know for certain that by mid-February over 70% of that quota was already reached according to the declarations made by Hon. Muscat in the same interview. Going back to last year, if one were to look at the last report issued by the Office of the Regulator of the Individual Investor Programme, which has been issued in November 2019 that covers up to June same year, 1742 applications were received, and 1198 were approved.
Therefore, it is of no surprise that the quota could be reached during 2020 – basically, "within months", according to Mr Muscat. If a few months ago there were questions about the continuity of the programme now it is clear that it will go on, and no, there will be no gap in between.
The reasons to why are very clear to see – the benefits of Investment Migration are vast and widely known in the industry. The Malta IIP has positively impacted the Maltese economy, raising over EUR800M since 2014, and has been used to finance different projects. More recently, as a temporary measure to fight the COVID19 effects on the Maltese economy, up to 80% of the income generated from the IIP went into the Consolidated Fund on the Government's account.
Aside from recent EU scrutiny – something common in the industry and lately not only to Malta but also to Cyprus and Bulgaria - Citizenship is and remains the competence of each EU member state. The Maltese government is always open to ideas that could further improve the programme to keep being at the forefront of the Investment Migration industry.The Prime Minister of Malta, Dr. Robert Abela, has indicated that further reforms will be considered and that the Maltese government has engaged in discussion with European institutions and stakeholders.
Malta IIP, Quo Vadis?
Knowing that there will be continuity and that a revised programme will be launched once the cap is reached, where are the changes pointing at?
Malta has one of the most robust and rigid Due Diligence processes in the Investment Migration industry – its all-time rejection rate is near 25% - citizenship to be granted requires "strong links" to the island and the names of successful IIP applicants are published.
The source of funds, source of wealth and identity of each applicant are checked by police and intelligence agencies as part of the 4 tiered Due Diligence. Certainly, even benchmark vetting procedures can be improved. One solution to this, though, may be to extend some Due Diligence obligations to the Agents to save time and have ongoing monitoring on all applicants and IIP citizens.
Another area of (most likely) potential change is the qualifying investment, probably on investment amounts but also its structure. In short, what we could be looking is the following:
- the Real Estate investment amount to increase, as it has remained untouched since inception, whilst the market has appreciated substantially and considerably, as we have been witnessing. Perhaps, even scrapping the rental option?;
- Increasing the Government contribution for family members and additional dependants;
- the Investments in stocks, bonds or special purpose vehicles to be scrapped, levelling out the above increases;
However, and with an eye to the Cyprus and Montenegro qualifying criteria, may the government choose for a reduced contribution amount with a (much higher) Real Estate investment?
When will these changes happen?
It is expected that the new programme could be revised sooner rather than later since, as we have seen above, more than 70 per cent of this allocation has been reached.
We expect that these changes, whichever they are, are carefully thought and implemented, keeping the IIP at the vanguard of the Investment Migration industry.
Investing in a second Citizenship or Residence by investing in the jurisdiction of choice can certainly protect HNWI and their families, as well as giving them independence, freedom and flexibility.
CSB Group Citizenship & Planning services headed by Andres Gutierrez assist Private Clients, HNW and UHNW individuals and their families in deciding their best routes to achieve Financial Diversification, Freedom and Security through a Sound and Smart Investment in Europe or the Caribbean.
Originally published 11 May 2020
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