Dateline: Istanbul, Turkey
When I talk about citizenship by investment with people, one of the first concerns that they bring up is the country that they’re going to be getting citizenship from.
While these countries aren’t bad by any means (and their passports are actually quite good by most standards), most people can’t picture themselves actually living there. Second passports are good for many things, but one of the issues that you need to consider is whether you actually would want to live there if push came to shove.
Personally, I would go nuts on a tiny island like St. Kitts and Nevis.
Another issue that I often hear from US citizens looking to renounce is that they want to keep similar passport privileges without the burden of citizenship-based taxation. Although passports like Grenada can offer interesting visa-free access to places like China and Russia, it doesn’t compare to the travel freedom that you have with a US passport.
That’s where Malta comes in – as one of just two citizenship by investment programs in the EU (and the only one in the Schengen Area), a Maltese passport is powerful, and it provides citizenship in a highly livable area of the world with easy access to the rest of Europe.
However, while there are plenty of benefits to Maltese citizenship by investment, it’s also one of the most expensive citizenship by investment programs in the world with total costs for one person adding up to around $1.3 million.
Not to mention, you’ll also have to demonstrate “genuine links” to the country to get a passport, and that generally means actually becoming a resident of Malta.
With that being said, there are plenty of benefits to becoming a Maltese citizen that may prompt you to pursue this program, which is why we created this ultimate guide.
Although this ultimate guide isn’t meant to serve as official, case-specific guidance to the process of applying for Maltese citizenship by investment, it will tell you:
- About Malta;
- About the Maltese citizenship by investment program;
- How to get a Maltese passport;
- Other factors to consider; and
- Whether Maltese citizenship by investment is worth your time and money.
If you’re just starting to learn about citizenship by investment, check out these resources first before diving too deep into one specific country:
- What is Citizenship by Investment? How to Buy Citizenship Fast
- Every Citizenship by Investment Program for 2019
- FAQs on Visas, Passports, and Citizenship
Malta is a small archipelago in the Mediterranean Sea that lies between Sicily and the coasts of Libya and Tunisia.
Living in Malta is quite idyllic by many standards. Its scenery is beautiful, and you’ll never be terribly far from a beach. Additionally, the weather there rarely dips below 9°C or above 32°C, making it an excellent climate for those seeking to escape harsh winters or scorching summers.
Malta also has a rich culture with influences from the Greeks, Romans, French, British, and neighboring North African countries.
In addition to Malta’s stunning scenery and rich culture, the country also enjoys a remarkable level of political and economic stability. Its two-party system is well-balanced, and it weathered the financial crisis well. In fact, along with Germany, Malta is one of two states in the Eurozone that has consistently maintained a good level of economic growth.
Finally, Malta is one of two countries in the European Union that offers citizenship by investment, and it is the only country that does so in the Schengen Area. Therefore, if you acquire Maltese citizenship by investment, you can travel freely throughout the majority of Europe.
The Malta Citizenship by Investment Program
The Maltese citizenship by investment program is rather new, but currently, it’s one of just two citizenship by investment programs in the entire EU and the only one of the Schengen countries.
The program was initially created in November 2013 when the Maltese Government amended its citizenship laws to provide a framework to create a citizenship by investment program. As such, the Malta Individual Investor Program (MIIP) was created to provide high-value investors with good moral character with an opportunity to obtain Maltese citizenship by making a substantial investment in the country.
Today, the program allows investors who make a contribution to Malta’s Government Fund, an investment in government-sanctioned bonds or stocks, and a real estate investment to become Maltese citizens through investment provided they meet other criteria set forth by the Maltese government.
The Benefits of Maltese Citizenship by Investment
Although the program is certainly on the more expensive side than other citizenship by investment programs, Malta citizenship by investment comes with a number of excellent benefits that you should consider.
Perhaps the most desirable benefit of a Maltese passport is that it also grants you EU citizenship as well as unrestricted access to the Schengen Area.
EU citizenship comes with a number of benefits, such as being able to live and work freely throughout the EU. Additionally, since Malta is a member of the Schengen Area, anyone with a Maltese passport does not need to go through customs to enter any other Schengen country.
Like most other EU passports, a Maltese passport is a high-quality travel document that offers visa-free access to over 160 different countries, including the US and the UK.
Because of this, a Maltese passport can be highly desirable if you want to renounce your US citizenship since it offers a comparable passport without the burden of citizenship-based taxation, and if you’re from a country like China or Saudi Arabia, then it can offer you better ease of travel.
Citizenship by Descent
If you become a Maltese citizen through investment, then you and your family can become Maltese citizens for life, and your citizenship can be passed down through generations.
Additionally, since Malta is a member of the EU, you and your descendants will receive EU citizenship by descent as well.
Social Stability and Opportunity
Whether you choose to live in Malta or another EU country, the EU offers an unprecedented level of social stability and opportunity to its residents and citizens as well as their children.
If you value high-quality schools and social services, then Maltese citizenship by investment could be a good choice for you.
Quick, Easy Processing
Finally, the processing for acquiring citizenship by investment in Malta is quick, simple, and straightforward.
The rules for eligibility for this program are straightforward, and if you can make the minimum investment and have a clean criminal record, then you’re likely qualified for it.
The application itself is also quite easy to navigate, and you’ll receive your EU residence immediately after applying. Then, your passport will be issued within one year.
Therefore, if you’re looking for a straightforward and high-quality citizenship that you can obtain within a year, then you should consider getting Maltese citizenship by investment.
How to get a Maltese Passport through Investment
In order to get Maltese citizenship by investment, you must meet a handful of general criteria, and you must also make an investment in the Maltese Government Fund, certain bonds or stocks, and local real estate to become a Maltese citizen through investment.
Yes, to become a Maltese citizen by investment, you must make three separate investments.
You will also need to be above 18 years of age, and you can also obtain citizenship for your dependents for an added cost. Eligible dependents include spouses, unmarried children below the age of 25, and parents over the age of 55.
Additionally, you will need a licensed agent to guide you through the process of becoming a Maltese citizen through investment.
The following section will therefore outline the various requirements to become a Maltese citizen by investment as well as provide a step-by-step guide to the process.
General Requirements for Malta Citizenship by Investment
Regardless of your chosen investments, you will need to meet a handful of general criteria to become a Maltese citizen through investment.
The “Fit and Proper” Test
The first general requirement that you will need to meet to become a Maltese citizen is passing the Maltese government’s “fit and proper” test.
According to my colleagues at Chetcuti Cauchi, the “fit and proper” test is designed to ensure that all prospective citizens are reputable and in good standing with their current countries of residence or citizenship. The Maltese government will often perform background checks through INTERPOL and the International Criminal Court, and you will also be required to provide police reports from your country of residence.
In general, if you have a clean criminal record and have not been involved in any major scandals, you should be able to pass Malta’s “fit and proper” test.
Applicants to MIIP must also be able to prove that they are in good health to be eligible for citizenship.
For the most part, this requirement generally refers to contagious diseases, but if you have any chronic ailments, then you may want to consult a professional before going through the application process.
Residency and a “Genuine Link”
As the only citizenship by investment program green-lighted by the EU, Malta’s citizenship by investment program also includes a somewhat finicky requirement – all prospective citizens must prove a “genuine link” to Malta to be approved.
Typically, this requirement means that you’ll need to spend one year as a resident of Malta prior to receiving your passport to prove that you have a genuine link to the country.
This requirement can be the most difficult to meet for Nomad Capitalists. If you have business interests around the world and want to avoid establishing tax residency in the EU, then spending a substantial amount of in Malta could seem antithetical to your interests.
Therefore, you’ll need to carefully consider how this requirement plays into your offshore and tax strategies and if getting this particular citizenship by investment is the best choice for you.
Investment #1: a Contribution to Malta’s Government Fund
The first investment that you must make is a contribution to Malta’s National Fund.
The Maltese National Development and Social Fund finances projects such as education, healthcare, and job creation. Though you won’t get any return on your investment, your money will go directly to further improving Malta’s social atmosphere and infrastructure.
For this requirement, you will make a non-refundable donation of at least €650,000 – or roughly $730,000 – to this fund. If you are also getting citizenship for spouses and minor (under 18) children, you will need to add €25,000 per person, and for older children and parents, you must donate an extra €50,000 per person.
Because the donation for dependents is relatively small compared to the whole cost of Maltese citizenship by investment, you will want to take timing into account when you apply. If you’re about to get married, for instance, then you will want to wait until you’re married so that your spouse can get citizenship for only €25,000.
Investment #2: Real Estate
In addition to your donation, you must also make a minimum investment in local real estate.
For a real estate investment to qualify, it must be a minimum of €350,000. You can also choose to sign a five-year rental agreement, but minimums on that investment are less clear, and you will not receive any return on that investment.
Maltese real estate isn’t particularly lucrative, but the country’s local real estate market is fairly stable. Therefore, at worst, you’ll likely maintain the value of your investment, but there’s also some potential in certain parts of the country.
Investment #3: Government-sanctioned Stocks or Bonds
The final investment that you’ll need to make is in bonds or shares that have been approved by the Maltese government. The minimum for this investment is €150,000.
Your Maltese agent and the Maltese government will provide guidance as to what stocks and bonds that you may buy as a part of this program. In general, they must be designated as something that the government finds beneficial for the country.
You then will need to keep this investment for at least five years in order to remain in good standing with the Maltese government.
The Step-by-Step Application Process
If you can meet Malta’s investment requirements as well as the country’s general standards for its MIIP program, then you can set out to begin the application process.
Prior to this step, you should do three things:
First, you should consult with a licensed agent to assist you with the process of applying for Maltese citizenship by investment.
Second, you will need to account for how establishing residency in Malta will impact your overall Nomad Capitalist strategy. Since you will be paying Maltese taxes, you will need to plan for that and determine how that burden will affect your tax status elsewhere.
Third, you will need to gather all required documents prior to submitting your application. While the Maltese government website does not state exactly what you need for your application, you should expect to provide basic documents like your birth certificate and other passports as well as a police report from your current countries of residence.
From there, the forms that you will need to complete will depend on issues like your current country of residence as well as whether you are applying with dependents. You can find a complete list of the various forms that you might need to fill out here.
After you get these basic requirements in order, the process for becoming a Maltese citizen by investment is relatively simple and straightforward.
Step One: Apply for Residence
The first step in the process of getting Malta citizenship by investment is applying to become a Maltese resident.
You can begin this process online, but you will need to arrive in Malta in order to complete the process as well as to begin your one-year residency requirement.
During this stage, you will make an initial €5,000 contribution to Malta’s Government Fund, adding €1,000 per dependent.
This part of the process is relatively simple and straightforward. Provided that you meet all requirements and provide the necessary documents, you should be approved for Maltese residency near-immediately.
Step Two: Initial Application
Once you’re approved for Maltese residency, you may then immediately apply for Maltese citizenship by investment.
The exact application forms that you will need to submit will depend upon your individual circumstances, such as your current country of residence and the number of dependents that you wish to bring with you. You should seek guidance from your Maltese agent in this regard.
Additionally, at this time, you will also need to pay a due diligence fee, a passport fee, and a €10,000 deposit on your initial donation. You will also need to provide evidence of source of funds at this time.
Once you have completed this initial application, the Maltese government will review it for 90 days, and at that point, Identity Malta will confirm if all of your documents are in order. The Maltese government will then take another month to further review your documents and complete their due diligence, and you will receive conditional approval by the end of 120 days.
Step Three: Complete your investments
The next step in this process is to complete all of your investment requirements.
Once your application is conditionally approved, you will then need to pay the rest of your €650,000 (or more if you have dependents) contribution by the five-month mark.
You will have more time to complete the other two requirements – real estate and stocks/bonds. By your eighth month of residency, you will need to prove that you have met the minimum standards for both.
Step Four: Receive your Certificate of Naturalization
Once you have completed your application, residency, and investment requirements, you can then collect your Maltese Certificate of Naturalization.
When you become a naturalized citizen of Malta, you can then apply for and receive a Maltese passport.
Other Factors to Consider
Maltese citizenship by investment can be an attractive option for people looking for a top-tier passport that you can get by investment, but at the same time, the $1.3 million price tag is quite high even for incredibly wealthy people.
Therefore, before you pack your bags for Malta, you should consider these factors:
Other EU Passport Options
If you’re in search of an EU passport specifically, then you may want to consider whether you have access to other means of acquiring a European passport.
If you have Irish or Italian ancestry, for instance, you can get citizenship by descent there for a much lower cost. Likewise, if you want to actually live in the EU, you can get residency there somewhat easily, and you can then naturalize in the country in which you want to live in.
Therefore, if you’re dead-set on living in or getting a passport from the EU, you may want to consider less costly options.
If you decide to pursue Maltese citizenship by investment, then you will become a tax resident of Malta in order to meet the “genuine link” requirement.
Therefore, before you apply, you should consider whether becoming a tax resident of Malta fits in with your offshore and tax strategies.
Residents of Malta are taxed on their worldwide income, and rates range from 0% to 35%. Foreign-sourced income is generally taxed at a rate of 15%, which is somewhat lower than in other European countries.
You will also likely need to pay capital gains and similar taxes while living in Malta.
Luckily, however, Malta is one of the more tax-friendly countries in the EU. Property taxes and stamp duties are minimal, and the country has no inheritance taxes, gift taxes, wealth taxes, or municipal taxes.
Malta also has a residential tax system, so if you decide to leave the country eventually, you can also leave its tax system.
The Future of the EU
Because Malta is a part of the EU and the Schengen Area, you should not only consider issues within Malta, but also issues within the EU.
Living in the EU has plenty of benefits – namely the ability to live and work freely throughout most of the European continent. However, EU citizenship can also have a few drawbacks.
While I’m not an EU doomsday theorist, I can see that EU citizenship could potentially become an albatross in the future.
You see, as the EU grows and requires an increasingly large amount of money to operate, its tax policies might become more stringent. The EU might install GILTI-style provisions, or it may force citizens to pay taxes if they don’t pay a minimum amount of tax elsewhere.
So, if you get your Maltese passport and decide to then move to Dubai, Singapore, or another low-tax jurisdiction, you might end up paying anyway if the EU decides they want to tax you.
Therefore, unless you’re dead-set on getting EU citizenship, then you may want to reconsider it.
Opportunity Cost and Return on Investment
As with any citizenship by investment program, you need to consider the opportunity costs and potential for return on investment with Malta’s citizenship by investment program.
The problem with Maltese citizenship by investment is that you pay a lot of money with very little return. The €650,000 donation is completely non-refundable, and you aren’t going to earn any interest on your €150,000 bonds or stocks.
So, the only way to make your Maltese investments profitable is through your €350,000 real estate investment, and doing that can be difficult. Rental yields in Malta aren’t great, and the real estate market is fairly stable.
In addition to these financial cost considerations, you should also consider how living in Malta and becoming a Maltese tax resident may have some opportunity costs.
For one thing, you’ll be less mobile than you were before since you now need to spend at least 183 days in Malta to get your citizenship. This means fewer trips to monitor your offshore investments and accounts or to acquire new ones.
You’ll also need to consider how this new tax burden will impact your offshore and tax strategies. Living in Malta means paying higher taxes, which add up over time, and your Maltese residency could impact your business taxes as well.
Therefore, before you apply for Maltese residency and citizenship, you will need to consider how this process will holistically impact your life.
Is Maltese Citizenship by Investment Worth the Cost?
After reading a bit about the benefits, drawbacks, and process of obtaining Maltese citizenship by investment, you may be wondering whether Maltese citizenship by investment is worth $1.3 million or more.
On one hand, Malta isn’t the best or easiest citizenship by investment program.
Although the process for Maltese citizenship by investment is straightforward, you have to meet quite a few requirements. It’s not like Dominica’s program where you give them $100,000, fill out a few forms, and get your passport.
You’re going to need to actually be willing to move to Malta, and you’ll be paying thirteen times as much for a passport.
And, as I mentioned in the previous section, an EU passport could become an undue burden in the next couple of decades. You don’t want to renounce your US citizenship only to be saddled with another citizenship-based tax burden in the future.
This means that you’ll need to carefully consider how getting Malta citizenship by investment will impact your current plans and strategies since it is another tax burden and will restrict your movement for at least a year.
With that being said, Malta’s citizenship by investment scheme is an interesting option.
Despite the potential drawbacks of being in the EU in the future, having an EU passport with Schengen access is certainly valuable. While there are similar programs in Cyprus and Bulgaria, Malta is the best by far.
For the average Westerner, however, there’s not much value in having a Maltese passport.
If you’re a citizen of the UK, Australia, or another EU country, then you already have most of the benefits that a Maltese passport can offer you, and if you’re a US citizen looking to renounce with an EU passport, then you need to consider how an EU passport may lock you into another tax system in the future.
On the other hand, Maltese citizenship by investment might be a great idea for someone from China, Russia, or the Middle East.
If you’re from one of those countries, then a Maltese passport has two major benefits. First, it will allow you to access the lifestyle benefits of living in Europe, such as greater educational and work opportunities, and second, it’s likely a more valuable passport than the one that you currently have.
However, this doesn’t mean that all Westerners should write off Maltese citizenship by investment. If you’re from the US, for instance, you may prefer the EU’s social services to the paltry safety net that you have at home.
The reality is, though, that it’s much easier – and less expensive – to get St. Lucian citizenship and then get a European residence permit.
Therefore, while Malta is an interesting option for citizenship by investment, it isn’t always the best for most people.
Even if $1.3 million isn’t an issue for you, you should still weigh your options to make sure that you’re going where you’re treated best.