Residence or Citizenship by Investment?

    Residence or Citizenship by Investment?

    Residence or Citizenship? A brief comparative study of Malta Residence and Citizenship by investment programmes.

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    • Citizenship or residence?
    • Comparison of the requirements under IIP and MRVP programmes
    • How do Maltese residence and citizenship programmes interact?
    • Which Maltese Programme is the best?
    Residence or citizenship? A brief comparative study of Malta Residence and Citizenship by investment programmes.
     

    Citizenship or Residence?

    Citizenship or residence? This question can be complex and even difficult for an individual considering between the two options. The reasons influencing the choice are different and numerous. For instance, some countries do not allow their citizens to have second nationality. This is the case of China, certain CIS countries like Ukraine[1] and Kazakhstan[2] and of many other countries.  Among other factors taken into account one may certainly mention personal and corporate taxation, the ability to travel visa-free, a desire to seek economic or political stability.

    In certain cases, an individual is not sure regarding the obtainment of the second citizenship. In this case residence schemes can be a perfect solution which give the said applicant additional time to think and to accustom to local traditions, learn the official language and even open a business.

    Maltese legislators kept in mind those different life situations and offered specific programmes, namely: Malta Individual Investor Programme (MIIP), Malta Residence & VISA Programme (MRVP) and Global Residence Programme (GRP).

    This article is devoted to a comparative study between Maltese citizenship (IIP) and residence (MRVP) by investment programmes.
     

    [1] See Art.19 The Citizenship Act of Ukraine adopted on the 18th January 2001 № 2235-III (available at the website: http://zakon.rada.gov.ua/laws/show/2235-14 ), (accessed on the 12th May 2019).

    [2] See Art.21 of the Citizenship Act of the Republic of Kazakhstan, adopted on the 20th December 1991 № 1017-XII (available at: https://online.zakon.kz/ ), (accessed on the 12th May 2019).

     

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    Comparison of the requirements under IIP and MRVP Programmes

    In order to simplify further reading we are firstly outlining the methods of our analysis. In this regard we divide all the legal requirements for both programmes in question in three groups, namely:

    #1 Those applicable to the main applicant and his/her dependants, 

    Generally speaking, those requirements apply to the personality of the main applicant and his/her dependants.

    This group contains such requirements as to be at least 18 years of age, to have a clean criminal record, to present the certificate of good health, have valid travel documents, etc.

    It is important to say that EU, EEA and Swiss nationals are not entitled to participate in the residence by investment programme. No such restriction applies to those nationals should they wish to file under citizenship by investment programme.

    Furthermore, the nationals of the following countries are not allowed to apply for the IIP and MRVP programmes:

    Banned Countries List
    MRVP Countries Ban List IIP Countries Ban List
    1. Afghanistan
    2. Iran
    3. North Korea

     

     

     

     

    1. Afghanistan
    2. Chad
    3. Iran
    4. Libya
    5. North Korea
    6. Somalia
    7. Syria
    8. Venezuela
    9. Yemen
     
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    #2 What are the financial contributions and other qualifying investments;

    Under MRVP and IIP, the applicant is obliged to make an investment in Maltese residential real estate either in the form of the acquisition or as a rent. Secondly, both programmes oblige the applicant to make relevant investments in securities.  

    Apart from the investments, the applicant under the law is obliged to pay the relevant fees and a one-time contribution to the National Development and Social Fund.

    Although both programmes require investments in residential property and securities, the amounts are different. Under IIP the applicant undertakes either to purchase or to rent the residential real estate in Malta. In the first case the value of the acquired property should not be less than €350,000 . As for the rent, the annual lease shall not be less than €16,000 per annum.

    The residence programme, on the other hand, requires from an applicant either to purchase residential real estate in Malta for the minimum amount of €320,000 or to rent it for the amount of at least €12,000 per year. Alternatively, the applicant is entitled to purchase or to rent the property in Gozo or in the South of Malta. In the case of an acquisition in such areas, the value of the property in Gozo or in the South of Malta should not be less than €270,000. As for the rent, the amount shall not be less than €10,000 per annum.

    As we have outlined earlier, the second difference relates to the amount of investments in securities. IIP programme requires the applicant to make investments in securities for the sum of €150,000, while under MRVP rules the said amount constitutes €250,000.   

    It is important to mention that under both cases the applicant is required to hold the investments for 5 years.

    Apart from the investments, the applicant is required to pay in both cases a non-refundable contribution. In the case of IIP it amounts to €650,000, for the main applicant, while under MRVP it constitutes €30,000 for the main applicant including his or her dependants. Additional contribution amounts are applicable for dependents under the IIP and parents/grandparents under the MRVP.    

     

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    #3 Procedural Requirements  

    The third group is represented by the requirements relating to the filing of the application. The Reg.11 of the Legal notice 47 of 2014 enables the Malta Individual Investor Programme Agency, which is the Agency responsible to receive and process IIP applications, to issue, from time to time, procedural guidelines to specify the operational aspects and interpretations under the IIP regulations.  

    The Malta Residence and Visa Agency similarly is in charge of receiving applications under the MRVP and is empowered to issue procedural guidelines from time to time.

    Under both programmes, the applicant is required to be represented by an accredited agent.

    Nexia BT is accredited to represent applicants under both programmes. Additionally, Nexia BT is a Government appointed official concessionaire for the MRVP in the Middle East.

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    How do Maltese residence and citizenship programmes interact?

    As we have analysed above, the MRVP programme provides mostly similar or “mirror requirements” in comparison to the IIP programme.  

    Another question that we would like to tackle is whether the beneficiary under MRVP programme can further file an application under IIP? While there is no direct reference in the legislation or regulations, there is also no express prohibition in this regard.  Recipients and holders of a residence certificate under the MRVP can hence subsequently apply under the IIP, provided they follow the process and requirements of an IIP application.

    There is also no direct route through which a holder of a residence certificate under the MRVP can obtain Malta citizenship simply by being resident in Malta. Under certain conditions one may be eligible to apply but there is no guarantee of acceptance.

    Should an MRVP residence card holder wish to subsequently apply under the IIP, there are some overlaps in the qualifying investment and property that need to be taken into consideration.

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    Investments required under Maltese residence and citizenship programmes

      Investments under MRVP Investments under IIP
    Residential Real Estate €320,000 if the property is in Malta;
    €270,000 if the property is located in Gozo or in the South of Malta.
    €350,000 – property acquisition
    €12,000 annual rent if the property is in Malta;
    €10,000 annual rent if the property is in Gozo or in the South of Malta
    €16,000– annual rent
    Securities €250, 000  €150, 000 
     

    The applicant in question would need to ensure that the relative qualifying investment and property are matching the minimum requirements under each programme. Hence it transpires that an MRVP residence card main applicant who files for and is accepted under the IIP would be able to dispose of €100,000 worth of qualifying investment post approval from the IIP.

     

    Which Maltese Programme is the best?

    To sum up, our conclusions on the topic are as follows:

    • The MRVP programme allows a hesitating individual to ponder further and to accustom to local life and traditions before going for a fully fledged citizenship. While this may come at a cost in relation to the added contribution payments, other qualifying requirements are very similar and hence, with proper planning, can also be overlapping.
    • A full citizenship application on the other hand is a secure, transparent and fast route, which albeit comes at a substantial cost. It provides attractive and immediate EU and worldwide rights post finalisation of the process. 
    • The decision by the potential applicant will hence mainly depend on the urgency, mobility needs as well as available funds for such an application. It is important to approach an accredited agent who can guide you to make the most appropriate decision for you and your family.
     

    Why choose Nexia BT?

    Founded over 25 years ago by Brian Tonna, managing partner, Nexia BT is a leading firm providing a wide range of services in the financial sector to corporate and private clients.
     
    We pride ourselves of having worked closely with large international companies and high-net-worth individuals. This experience allows us to help our clients achieve their maximum financial results in business.
     
    Nexia BT specialises in the development and maintenance of various business structures for corporate entities as well as private HNWI and UHNWI clients together with residence and immigration planning. Nexia BT is accredited by the government of Malta for various residency and citizenship programmes.
     
    Through our highly qualified professionals within our legal, audit, tax and advisory departments, we offer a personalised, holistic solution for every client. The International Client Services unit includes Russian, Mandarin and French-speaking executives who are familiar with the characteristics and requirements of foreign markets.
     
    Author
    Mikhail Botvinov 
    International Client Services