Citizenship by Investment

Critical Changes to the Malta Individual Investor Programme (IIP)

Articles, CSB Group, Due Diligence, Malta Exceptional Investor Naturalization

July 7, 2020

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From September 2020 onwards, a new IIP programme will be in place, as announced on the 3rd of July 2020 by Mr Alex Muscat, Parliamentary Secretary for Citizenship and Communities. But how will the new programme look vis a vis the existing Malta Individual Investor Programme (IIP)?

Practical Changes to the Malta Individual Investor Programme

The changes that we now anticipate, up to the 3^rd of July – day of the formal announcement, can be summed up as follows:

MALTESE RESIDENCY

The Contribution to the National Development Fund plus the requirement for a property investment remain, but there is no official pronunciation regarding the Government Bond investment.

There will be two residency options leading to Maltese citizenship:

Three Year Residence Requirement: A long path to citizenship, where applicants will make a contribution of EUR 600,000 for themselves as principal applicant and EUR 50,000 for every dependent. They may apply for citizenship after 3 years of effective residence.

One Year Residence Requirement: Or the short way – and quite similar to the current IIP where applicants can apply for citizenship after 12 months. They will need to make a contribution of EUR 750,000 for themselves as the principal applicant and EUR 50,000 for every dependent.

The biggest change perhaps, is that applicants will need to be granted residence in Malta prior to being granted citizenship. Therefore, we are expecting a higher level of due diligence checks and background verifications at the residency stage.

PHYSICAL PRESENCE

Also, potential applicants may need to spend more time in Malta, apart from the 15 mandatory days under the current IIP. While this will mean less flexibility, it is improbable that an aggressive residency requirement will be implemented due to the mobility needs of private clients and high net worth individuals.

REAL ESTATE REQUIREMENTS

Another investment category that remains, albeit under a higher threshold – and one that may raise more than one eyebrow, is real estate investment. If the IIP applicant prefers to purchase real estate, the minimum value is set at EUR 700,000 – previously EUR 350,000. For those applicants who opt to rent Maltese property – the minimum annual value is EUR 18,000, whilst before it was set to EUR 16,000.

STOCKS & BONDS

Concerning the investment of EUR 150,000 in; stocks, bonds, or other investment vehicles, the Maltese Government has not stipulated anything, but it is expected that they will be scrapped. A philanthropic donation of EUR 10,000 will be in place, which is something already in practice under the current Malta Individual Investor Programme regulations.

As we have stated in previous articles regarding the impending amendments to the IIP, changes in the qualifying investment and strengthening of the due diligence process are in line with what we predicted.

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Other Structural IIP Changes

As it happens with the existing Malta Individual Investor Programme (IIP), there will be a cap imposed, 400 approved IIP applications per year can be authorized with an overall total of 1,500.

All applications will be handled by a new agency replacing the Individual Investor Programme Agency. This new agency will be responsible for all paths leading up to Maltese citizenship. Agents will need to be professionals who are familiar with laws related to anti-money laundering and financing of terrorism.

How does this affect your situation?

You still have time to submit your residence application under the current Malta Individual Investor Programme (IIP) until the 31^st of July 2020, and apply for Maltese citizenship until the 30^th of September 2020.

If you have residence under the current Malta Individual Investor Programme (IIP) rules, but you do not submit your citizenship application before the 30^th of September 2020, your application will fall within the new regulations.

Procuring a second citizenship or residence by investing in a jurisdiction of choice can certainly protect HNWI and their families, as well as giving them independence, freedom and flexibility.

CSB Group’s Citizenship & Planning services headed by Andres Gutierrez assists private clients, HNWIs and UHNWIs and their families in deciding the best routes to achieve financial diversification, freedom & security through a sound and smart Investment in Europe or the Caribbean.