Citizenship of Malta by Investment: a Complete Guide

Malta is currently the only EU state that officially has a citizenship-by-investment program. The country provides for a unique legal opportunity to acquire European citizenship in exchange for an investment. You will have to spend over one million euros on becoming a citizen of Malta.

The required investment amount is large in comparison to the cost of a Caribbean passport, for example, but the passport of Malta is a much more reputable document (even though the Caribbean passports are not bad at all either). Besides, no other Schengen zone state offers a citizenship-by-investment opportunity similar to the one offered by Malta. The local citizenship-by-investment program is called Malta Individual Investor Program (MIIP).  

In addition to investing a large sum of money in the Maltese economy, the foreign candidate for citizenship of the country will have to establish ‘close ties’ with Malta. What this means is that you will have to become a resident of Malta at least for some time.

Whatever the costs and requirements may be, citizenship of Malta will bring numerous advantages so this foreign citizenship opportunity is worth considering indeed if you can afford making an investment in the required amount and relocating to Malta for a while.

This is why we are offering this guide on acquiring citizenship of Malta to you. We are going to discuss the following topics below:

• Important facts about Malta;
• Information about the Maltese citizenship-by-investment program;
• The process of acquiring citizenship of Malta by investment;
• Important factors to consider when applying for citizenship of the country;
• The practical value of the Maltese citizenship-by-investment program.

Important facts about Malta

Malta is a small island archipelago located between Sicilia and the northern coast of Africa (Livia and Tunisia). Living in Malta is wonderful in many respects. The local views are breathtaking and you are never going to be far away from the beach if you settle down in Malta.

Besides, the climate is superb in the country: the temperature rarely goes below 9 ° C and it is rarely hotter than 32 ° C. This makes the Maltese climate perfect for those who dislike both cold winters and burning hot summers. The country has a rich culture that has been formed under the influence of Greeks, Romans, the French, the British, and the Northern Africans.

In addition to a beautiful nature and a comfortable climate, Malta is characterized by political and economic stability. The local two-party system is well balanced and Malta managed to go through the 2007-2008 global financial crisis as easily as Germany did.

High-quality banking services can also be found in Malta. The Maltese offshore banks are famous well outside Europe and they are considered among the best in the world. (As a side note, we will gladly assist you in setting up a bank account in Malta remotely.)

Finally, after the Cypriot citizenship-by-investment program has been suspended, Malta is the only EU country that administers a citizenship-by-investment program. And Cyprus is not a member of the Schengen agreement, which Malta is. So holders of Maltese passports can freely travel all around Europe and a great number of other locations.

Information about the Maltese citizenship-by-investment program

The Maltese citizenship-by-investment program is rather young. It was officially launched in 2013 when the required amendments to the local legislation were made. It went into operation de facto in 2014 when the first foreign applicants for citizenship received Maltese passports.

The foreign candidate for citizenship of Malta has to have ‘a good moral character’ to qualify: the due diligence procedures that you have to go through are strict indeed. You will be asked a great number of questions and some of them may be quite personal.

In addition to that, citizenship of a Caribbean state as well as citizenship of Vanuatu in the South Pacific costs considerably less than citizenship of Malta. However, the Maltese citizenship-by-investment program boasts several advantages that cannot be found in the Caribbean or Vanuatu. We list the most important ones below.   

The Maltese passport

The Maltese passport is one of the most powerful documents in the world. Not only does it allow travelling freely across Europe but it also gives visa-free access to the UK and US. You can enter more than 160 countries in total without visas in you hold a passport of Malta and this is probably the key advantage of acquiring citizenship of the country by investment.

This offer should be especially attractive for citizens of those countries whose passports are not so strong. Becoming an EU citizen is a tempting opportunity indeed.

Passing citizenship of Malta to your descendants

If you apply for citizenship of Malta by investment, your core family members will also be eligible for Maltese passports. Moreover, children born to Maltese citizens will automatically become citizens of Malta and, consequently, the European Union. A better future for your children: can there be a stronger argument for acquiring citizenship of Malta?

Social stability and vast opportunities

With a Maltese passport, you will have access to the European social security system, which is an extremely valuable benefit indeed. Best schools, world famous universities, top medical institutions – everything is going to be at your disposal.

Fast European citizenship acquisition

We have to be straightforward and say that acquiring citizenship in the Caribbean or in Vanuatu is going to be faster than doing so in Malta. At the same time, the application procedure is quite clear and transparent in Malta and you will be issued a European residence permit right after you submit the application for Maltese citizenship.

Your passport will be ready in a year and this is a short timeframe if you compare it to acquiring citizenship of a foreign country by naturalization. So if you can afford making an investment in the required amount, one year should not seem too long.

Requirements to meet when applying for citizenship of Malta by investment

You have to satisfy certain conditions and be able to make the investment in the required amount to qualify for citizenship of Malta.

You have to be over 18 years of age to be eligible to apply and you have to invest in two different types of assets. You can also acquire citizenship of Malta for your spouse, your children below the age of 25 and your parents above the age of 55.

In addition to that, you will have to meet the following requirements:

“Fit and proper” test

You will have to pass the ‘fit and proper’ test to qualify for citizenship of Malta. The aim of the test is to ascertain that you are not going to pose any threat to Malta and the EU if you become a citizen of the country.

First, you have to be a 100% law-abiding person and the Maltese immigration authorities will use the Interpol and International Criminal Court databases to make sure that you are a law-abiding person indeed. It goes without saying that you will have to supply a clean criminal record issued by your home county’s police authorities.

Second, the Maltese immigration authorities will want to make sure that your sources of income (not only the sources of the investment capital) are 100% legal. They are going to ask you many questions and request a great number of confirmation documents. To be frank, some investors find it frustrating.

You have to realize, however, that the authorities of Malta have to conduct stringent due diligence tests under pressure from the EU officials. This sort of pressure has already made Cyprus ‘suspend’ its citizenship-by-investment program. Chances are that the Maltese program might also be ‘suspended’ or – to call a spade a spade – simply closed.

Good health

Foreign applicants for the MIIP also have to be able to prove that they are in good health. This involves submitting medical certificates that confirm that the applicant (as well as the members of his/ her family) does not have any infectious diseases.

If you have a chronic disease, this should not be an obstacle to obtaining citizenship of Malta by investment. However, you will be well-advised to consult an immigration agent if you have a chronic illness.

Residence in Malta and establishment of ‘close ties’ with the country

Before you can become a citizen of Malta, you have to build ‘close ties’ with the country. Normally, it means living in the country for one year on a residence permit. Only after this period expires, you can acquire a Maltese passport.

This requirement may be rather tough for an international entrepreneur. Living in Malta for a year means that you will have to become a tax resident of the country and taxes in the EU are generally high. Besides, your freedom of movement will be somewhat limited: you will not be able to stay away from Malta for extended periods of time. Therefore, you have to think hard and decide for yourself if you are prepared to make this sort of sacrifice. Acquiring tax residence in the EU might affect your offshore businesses and tax planning strategies.

Investment № 1: a donation to the state fund

 You have to make two types of investment to qualify for Maltese citizenship. First, you have to make a non-returnable donation of 590,000 euros to the Maltese National Development and Social Fund if you are prepared to live in the country on a residence permit for three years before you can apply for the passport. If you would like to acquire the passport after one year only, you have to donate 740,000 euros. The money that the Fund generates is used to finance educational and healthcare projects in Malta as well as to enhance employment opportunities for local people. So even though you will be kissing your money goodbye, it may comfort you to know that it is going to be used for noble causes.

If you are applying for citizenship of Malta with your family, some additional donations are due. In particular, you have to donate an additional 50,000 euros per each dependent family member.

Investment № 2: rent or purchase of real estate in Malta

Second, you have to make an investment of 700,000 euros in real estate in Malta. You can buy a house or an apartment that costs as much or more and you will be entitled to sell it back after five years. The real estate market in Malta is quite stable with the prices slowly increasing over the years.

You can also make a five-year rent agreement. The contract price has to be 16,000 per year or more. In this case, you will be investing a smaller sum in real estate in Malta but you will have nothing to sell back! Besides, if you choose to rent a place in Malta rather than buy it, you will have to donate 10,000 euros to an officially registered charitable organization.

The stages of applying for citizenship of Malta by investment

If you can afford making the investments in the required amounts and if you meet all the requirements specified above, you can start the process of applying for citizenship of Malta by investment. Before you do so, however, you have to complete the following primary tasks:

• First, consult a Maltese immigration agent on the process of applying for citizenship of Malta by investment. The process is rather complicated and you will need to learn the details from a qualified specialist. Offshore Pro Group has long-standing relationships with experienced immigration agents in Malta and we will be happy to put you through to one of them.
• Second, you have to prepare all the application documents following the recommendations of your immigration agent. Please remember that in addition to standard documents such as your passport, birth certificate, police clearance, and so on, you will have to supply papers confirming the legality of your sources of income.
• Third, you will have to do the maths: calculate how much citizenship of Malta is going to cost you in terms of taxes. You are preparing to become a tax resident in Malta and you will have to pay taxes at the Maltese rates.

Application stage 1: filing an application for legal residence in Malta

The first step in the process of acquiring citizenship of Malta by investment is applying for a residence permit in the country. You can start applying online but you will have to visit Malta to complete the process. Besides, you will have to start living in Malta!

At this stage, you will have to make a payment of 5,000 euros to the Maltese National Development and Social Fund plus a thousand euros per every dependent family member. This payment is going to count towards the donation.

This first stage is fairly simple if you are able to submit all the required documents. If this is the case, you will be issued a residence permit almost instantly.

Application stage 2: filing an application for citizenship of Malta

You can submit an application for citizenship of Malta right after you obtain the residence permit. Depending on what country you come from and on the number of dependent family members that you are bringing with you, the application forms will be different. Please consult your Maltese immigration agent on this issue.

At this stage, you have to pay the Due Diligence fee and the passport issuance fee. Besides, you will have to increase your donation to the Maltese National Development and Social Fund to 10,000 euros.

After you submit the application and meet all the financial requirements, the Maltese immigration authorities (in particular, the Identity Malta agency) will process the application. They will have 90 days to approve or reject the application. In case the application is approved, the agency will take another 30 days to complete the due diligence checks. So after 120 days, you will have your application for citizenship of Malta provisionally approved: now you have to meet your financial obligations.

Application stage 3: making the required investments

The next step in the process of acquiring citizenship of Malta by investment is making the required donation and investments. First, you will have to increase your donation to the Maltese National Development and Social Fund to 650,000 euros (or more if you have dependent family members). You have to do it within five months from the date of filing the application for citizenship. And because your application will have been under consideration for four months, you will actually have only one month to make the donation.

You will have more time to make the required investments though. You have to buy/ rent an apartment or a house by the end of the eighth month of residing in Malta.

Application stage 4: acquiring the naturalization certificate

After you have made the required donation and investments and after you have legally resided in Malta for one year, you are eligible to apply for a naturalization certificate. This document will serve as a legal foundation for applying for a Maltese passport. Please remember that you have to hold the real estate in your possession for five years in order to keep the passport.

Important factors to consider when applying for citizenship of Malta

Without doubt, having a Maltese passport would bring some enormous benefits. Besides free travel almost all over the world, you will have wonderful protection with a Maltese passport because you will be a citizen of the European Union, an extremely powerful international organization.

However, there are some problems associated with acquiring citizenship of Malta by investment. First, it costs a lot. Second, the European citizen status brings not only advantages but also some obligations that might be burdensome. Look into the following issues in particular: 

Alternative methods of acquiring European citizenship

If you are after a European passport, you should know that there are some alternative ways of acquiring ones and they are not as costly as acquiring citizenship of Malta. First, if you have Irish or Italian ancestors, you can obtain citizenship of the respective country in a fast and very inexpensive way. Of course, you will have to prove your Irish/ Italian ancestry to the immigration authorities of the country.

Some European countries also offer residence-by-investment opportunities. For instance, you may want to consider acquiring legal residence by investment in Portugal. The required investment amount is at least twice lower than it is in Malta, non-returnable donations are not involved, and after five years of holding the residence permit, you will be eligible to apply for a Portuguese passport. What is more, you do not have to become a tax resident of Portugal because you do not have to live there to keep the residence permit. Spend a week in the country on average each year and that will be enough. At the same time, your Portuguese residence card will let you freely move around Europe, just as a Maltese passport will do. 

Taxes in Malta

To become a citizen of Malta you will have to become a tax resident of the country and there is no overcoming this requirement: you have to establish ‘close ties’ with Malta to qualify for citizenship of the country. This is a good reason to think hard before applying for it. Would your Maltese tax residence have an impact on your offshore business operation? Would it make you reconsider your tax planning strategies?

Residents of Malta are taxed on their global income and the personal income tax is between 0% and 35%. As a rule, a 15% tax rate is applied, which is lower than in many other European countries.

Besides, you will probably have to pay the capital gains tax and some other taxes when you become a resident of Malta. On the other hand, there is no inheritance tax, nor gift tax, nor property tax, nor any municipal taxes in the country.

The future of the European Union

The passport of Malta gives its holder an opportunity to live and work in any country of the European Union as Malta is a member of this organization. However, EU citizenship might have some drawbacks too.

The Union is growing and currently, there are several new candidates for membership in the EU. The costs of the organization management are growing together with its size and it might have some tax consequences for Europeans.

The United States of America uses citizenship as the foundation for taxing the person. If the person is a citizen of the USA, he or she has to pay taxes to the US federal budget wherever in the world he/ she makes an income. At the moment, you have to be a fiscal resident in Europe to be taxable there. However, chances are that the EU might adopt the US taxation principles one day.

The best part of your investment will be non-returnable

The name ‘donation’ speaks for itself: if you donate money, you will never see it again. And the amount of the required donation in Malta is quite large! If you buy real estate in the country, you will not be allowed to let it on a lease during the first five years of holding the Maltese passport. You can start renting your property out later but you cannot count on a very good income from rent. You should be able to sell your real property back after five years, but are you going to make any capital gains? It is hard to say.

Let us now compare the financial requirements of the Maltese citizenship-by-investment program with the requirements of the Portuguese residence-by-investment program that we have mentioned above. The maximum required investment amount in Portugal is 500,000 euros if you choose to invest in real estate in the country. You do not have to spend more than one week a year in Portugal to keep your residence card and you can let your house or apartment on a lease as this is perfectly legal in Portugal.

You cannot sell your Portuguese property for five years but the same is true for your Maltese property! After five years, you can apply for full citizenship of Portugal. When you are a citizen of Portugal, you can do what you please about your real property in the country. In Malta, the immigration authorities are going to closely watch you for the first five years (making sure that you still keep the house) so you will not be able to think of yourself as a rightful citizen of Malta. Not yet. Malta is a wonderful place to live without doubt but the cost of acquiring citizenship of the country seems a bit … exaggerated.

The practical value of the Maltese citizenship-by-investment program

We are inclined to think that the practical value of the Maltese citizenship-by-investment program is rather low. Low in comparison to some other residence- and citizenship-by-investment opportunities available elsewhere.

If you seek citizenship of a European country only and you are not considering any other continents, you should look at Portugal in the first place, we believe. Besides, Spain has a residence-by-investment program with the minimum required investment amount of 500,000 euros. Obtaining a Spanish passport is going to take considerably longer than obtaining a Portuguese one, however.

There are other interesting options to consider too. A Caribbean passport, for example, will let you enter the EU without a visa and stay there for three months over any six-month period. And the cost of acquiring Caribbean citizenship-by-investment is much lower than it is in Malta. The Commonwealth of Dominica, for instance, will issue a passport to you in exchange for a donation of US$ 100,000 only. This is less than 10% of the cost of Maltese citizenship.

Moreover, you do not have to make a non-returnable donation to qualify for citizenship of one of five Caribbean states that administer citizenship-by-investment programs. Instead, you can make a returnable donation in some resort property on the islands and this will make you qualified for a Caribbean passport. The required investment amount starts at US$ 200,000, which is, again, much lower than in Malta.

Besides, you do not have to wait for one to three years to acquire foreign citizenship if you choose a country other than Malta. In Saints Kitts and Nevis, for example, the application processing time can be as short as six weeks. Six weeks only and you have a second passport! The same goes for citizenship of Vanuatu in the South Pacific. It will be interesting to note here that you would have to pay some extra for accelerated application processing in Saint Kitts while six weeks is the normal timeframe of application processing in Vanuatu.

The Maltese passport is much stronger than the passport of a Caribbean state or Vanuatu and there is no denying it. By ‘stronger’ we mean both the number of visa-free destinations and the level of protection that it brings. But it takes a lot of time and money to acquire citizenship of Malta by investment in comparison to some other similar opportunities.