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July 6, 2020

Malta’s IIP given complete overhaul

Following previous criticism of the Malta’s Individual Investor Programme (MIIP), the Maltese government has overhauled the programme.

In a press briefing on July 4th, Malta’s Parliamentary Secretary of Citizenship Affairs, Alex Muscat, announced that following approval by the Cabinet, the MIIP is set to re-launch in September under different conditions.

Rather than simply being modified, the country’s current Individual Investor Programme (IIP) has instead been scrapped and is set to be replaced by a new residence programme featuring new rules.

“The easy way out was to go from IIP 1 to IIP 2 but we wanted to have more people onboard, including the Opposition,” Alex Muscat said in the press briefing. Stating that it was important for Malta to “protect its reputation”, Alex explained that the changes were necessary as “we cannot afford to have one rotten apple”.

These significant changes to Malta’s IIP, which was first unveiled in 2014 and was the first EU-approved citizenship by investment programme in Europe, come following negative publicity about the programme over the past year, along with criticism from the European Commission. While negative publicity had focused on the soft residency requirement Malta had in place, the EC had raised concerns for risks associated with tax evasion, money laundering and visa-free regime in the Union.

Residency rules updated

The most significant change is the introduction of two contribution alternatives, each corresponding to a different residency period. Previously, the MIIP required a flat €650,000 contribution requirement. In the new rules from September, applicants can choose between either contributing €600,000 and qualifying for citizenship within three years of becoming residents or contributing €750,000 and qualifying for citizenship following just one year of residency.

While the MIIP already requires that applicants hold a residence permit for 12 months prior to applying for citizenship, in practice this has not always been in effect with actual physical presence not monitored. Currently, applicants can begin their one-year residency upon submission of their citizenship application, but the new rules means that their citizenship application would not be able to be filed until the 12-month period had been completed.

CBI Malta citizenship by investment

Real estate investment requirement upped

A further change to the current MIIP is with regards to the real estate investment requirement, with the minimum investment amount for property investment set to be doubled under new rules, from €350,000 to €700,000. With regards to renting, rather than buying, the current minimum annual lease of €16,000 will rise to €18,000.

Contribution to a charity

Also, in the new programme, from September, there will be a new category of financial requirements and applicants will have to pick a registered charitable organisation to which they must donate €10,000. And, applicants will have to pay additional €50,000 for each dependent.

Checks pre-application required

Furthermore, it will be necessary for all applicants to undergo and pass strict due diligence checks even before filing of the application. It has been announced that the Malta Individual Investor Programme Agency (MIIPA), which currently handles cases, will be shut down and a new agency is set to be introduced instead.

Limited to 400 per year

Finally, the country will approve a maximum of 400 applicants a year with an overall cap of 1,500.

Following concerns that the investor programme would be scrapped altogether, this overhaul comes as good news to many. After all, the IIP has raised billions in revenue for the Maltese government.

“By welcoming just 300 new citizens a year, we have earned €1.4 billion in six years,” says Alex, adding that the funds have been “a tremendous boost to the Maltese economy and will prove to be even more useful as we recover from the hit the economy has taken from Covid-19”.

The Maltese government will continue to accept applications for citizenship under the MIIPR until its September 30th deadline.