Malta: Immigration By Investment Programs In Malta: Citizenship Or Permanent Residency?

Known for its strategic location, desirable standard of living, advantageous tax system, world-class health care and strong academic institutions, Malta is an attractive country for retirees as well as families and entrepreneurs alike. Mr. Jean-François Harvey, Founder and Global Managing Partner of Harvey Law Group (HLG) recently mentioned in an interview with the Washington Times that "business executives in particular can benefit from Maltese residence without needing to make a bold permanent move".

Non EEA/EU nationals can opt to obtain (i) Maltese citizenship through the Malta Citizenship by Naturalization for Exceptional Services by Direct Investment program (MCESDI – more commonly called MEIN), or (ii) permanent residence under the Malta Permanent Residence Program (MPRP). Those obtaining permanent residence through the MPRP can eventually become eligible for Maltese citizenship after 5 years through a separate process.

Malta permanent residence allows 90 days of visa-free travel anywhere in the Schengen Zone¹ in each 180-day period. On the other hand, the Maltese passport is a strong European passport that gives visa-free access to over 180 countries worldwide and permits the passport holder to settle down to live, study and work in any EU member state.

The investment options required under the MPRP are within reach of many investors. Mr. Jean-François Harvey notes that "Malta is one of the few programs globally that allows investors a rental option instead of exclusively necessitating a property purchase, donation, funds investment or government bond". To be eligible under MPRP, investors need to be able to demonstrate a net worth of at least EUR 500,000 (comprising at least EUR 150,000 in financial assets) but the actual investment required is less than that: they may choose to either (i) purchase property from EUR 300,000 (or EUR 350,000 depending on location), or to (ii) rent property for EUR 10,000 per annum (or EUR 12,000 depending on location).

The Maltese citizenship and MPRP are popular with families because they permit to include multiple generations to an application: not only legal spouse or common-law partner (same-sex couples included), but also dependent children of any age, as well as dependent parents and grandparents. Additionally, there is no minimum residency requirement required.

Although the MPRP is not a citizenship program, it can lead to citizenship later on, subject to meeting conditions including 5 years of residency in Malta. This requires having resided physically in Malta (i) continuously for the first 12 months immediately before the application without exiting Malta, and (ii) for at least 4 years (i.e. 48 months) over the period of 6 years immediately preceding those 12 months.

In comparison, MEIN offers a direct pathway to Maltese citizenship for a significantly larger investment. Applicants can either purchase a real estate property of at least EUR 700,000 or lease a property with an annual rental of at least EUR 16,000 (to be maintained for at least 5 years). In addition to this property investment, a contribution to the Maltese Government is required for at least EUR 600,000 (increased to EUR 750,000 for applicants wishing to speed up the process from 3 years down to 1 year). There are other fees that apply, notably a donation of EUR 50,000 per dependent, and due diligence fees, donation to NGO etc. Experienced legal advisers will be able to provide specific details of those fees.

Malta accepts dual citizenships. This means that whichever the path of obtaining Maltese citizenship, the investors will not be required renounce other citizenships.

Malta's MEIN Controversy – "Selling" Citizenship?

Although the MEIN program appeals to many foreign investors, notably because it is the only program of an EU member state that confers an EU citizenship, it has faced a lot more controversy than the MPRP. Given the mounting pressures on Malta to end MEIN, it is uncertain how much longer the program might continue under the current conditions.

Over the past few years, the European Commission has raised concerns about CBI schemes and associated potential risks of money laundering, tax evasion and corruption. The Commission began an infringement case against Malta over its MEIN program in October 2020, stating that it considers a Member State granting EU citizenship in return for investments without any genuine link to the Member State concerned to be a breach of EU law. In March 2022, the European Commission issued a recommendation urging Member States to immediately repeal any existing CBI schemes and to ensure strong checks are in place to address the risks posed by investor residence schemes. In pushing for this change to be made, the Commissioner for Justice and Consumers, Didier Reynders, stated that "European values are not for sale. We consider that the sale of citizenship through 'golden passports' is illegal under EU law and poses serious risks to our security".

Although Malta took positive steps in this direction by suspending MEIN for Russians and Belarusians in March 2022, the Commission was nonetheless dissatisfied and referred Malta to the Court of Justice of the European Union in September 2022. However, the Maltese government maintains the view that the power to confer EU citizenship is a competency that belongs to Member States and not the EU. If Malta and the EU Commission do not manage to settle the matter and Malta fails to communicate measures that implement the provisions of the EU directives in a positive direction, the EU Commission may ask the Court of Justice to impose penalties. If the Court of Justice finds that a country has breached EU law, national authorities must take action to comply with the Court judgement.

Pressure from the EU Commission is not the only pressure that Malta is facing over MEIN. Currently, Malta is one of 41 EU countries that enjoy visa free travel to the United States for up to 90 days under the U.S. visa waiver program, but due to controversies over the Malta CBI program, this may soon cease to be the case. In March 2022, U.S. Congress representatives introduced the "No Travel for Traffickers" Act. If passed, the Act could revoke the right of a country to a U.S. visa waiver if they sell passports in exchange for economic investment. The Act could also direct the U.S. government to cooperate with the United Kingdom and the EU to also eliminate visa free travel for the Schengen Area for countries that run citizenship by investment programs.

It is difficult to say how much longer MEIN will be able to continue under its current form. Other countries facing similar pressures in the past caved and ended their CBI programs as a result. For instance, Moldova ended its CBI scheme in June 2020, followed by Cyprus in November 2020 and Bulgaria in March 2022. Additionally, even after an application for MEIN has been submitted, citizenship gained under MEIN could potentially be revoked. Bulgaria ended their CBI program in March 2022 but later revoked the citizenship of 17 individuals that obtained their citizenship through their CBI program in May 2023.

Malta Permanent Residence Program – The Safer Choice?

The MPRP has not faced such issues. In September 2022, Malta's Home Affairs Minister reported an enormous increase in applications for the MPRP in the prior few months. Whilst applicants for both MEIN and MPRP would need to meet compliance requirements and undergo strict due diligence checks, MPRP applicants would benefit from a much shorter processing time - it would only take approximately 6 to 8 months to achieve permanent residency under MPRP (against 18 to 40 months or so for the MEIN).

The MPRP and MEIN programs both require applicant to be very open about disclosing assets they own worldwide and how they were accumulated. The Maltese authorities place important emphasis on the applicants and dependents having clean police records and being subject to a stringent due diligence exercise. In case of doubt or any questions, the authorities may ask for further information and full cooperation from the applicants (and dependents) is expected. The application may be jeopardized if the applicants and their dependents fail to meet this.

Although strict due diligence and disclosures must be met for both programs, the lengthy duration of the MEIN process means that in practice applicants may find the MEIN process more cumbersome than the MPRP which can be quickly processed.

As Mr. Jean-François Harvey noted in his interview with the Washington Times, "there is a trend towards tighter due diligence checks on investor migrants by governments globally and at our firm, we welcome this as it will protect the integrity of the investment migration industry". Given the strict due diligence process expected to apply for Malta programs, applicants would be well advised to work with experienced professionals like HLG to ensure that all their documentation is correct and no red flags are raised so their application can be processed smoothly and diligently.

MEIN may not be the best option for investors compared to the MPRP. On one hand, given the political pressure that Malta faces to close MEIN, it is uncertain how long the program could continue for under its current form – and even if it does then applicants need to be made fully aware of the significant costs and risks that could materialize.

At the end of the day, we understand that often immigration can be an overwhelming and daunting experience. Whether you are retiring abroad, starting a business, or looking to obtain a second citizenship, the Malta Permanent Residence Program offers a wide range of benefits that may suit your needs. If you are interested in learning more, please contact your local HLG office here for more details. Founded in 1992, Harvey Law Group (HLG) is a leading multinational law firm with offices across Asia, North and South America, Europe, Africa, and the Middle East to cater to your specific needs for immigration and beyond.

Footnote

1. Schengen countries list: Belgium, Czech Republic, Denmark, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, Luxembourg, Hungary, Malta, Netherlands, Austria, Poland, Portugal, Slovenia, Slovakia, Finland and Sweden, along with Iceland, Liechtenstein, Norway and Switzerland.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.