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Malta: An Investor’s Paradise (Part 2)

Aerial View on Saint Julien and Spinola Bay at Dawn, Malta

Further to Part 1 of this Article, which focused on the growth of and opportunities associated with Malta’s financial services industry, along with some of the other innovative legislation which is central to attracting inbound investment into Malta, in this Part 2 we shall be looking to further explore some of the attractive characteristics of Malta to foreign inbound investment.

  • High Net Worth Individuals – an oasis of opportunity

Having a stable regulatory environment and a growing economy, Malta is an ideal country for entrepreneurs, wealthy individuals and investors who are seeking excellent opportunities abroad. Malta’s economy is predominantly being driven by the financial services sector, followed by tourism and iGaming. Notwithstanding the financial crises which affected many countries, Malta’s financial sector has continued to flourish, growing from a low base of 3% in the 1990s to now contributing more than 12% of Malta’s GDP. With most of its sectors being relatively new and its highly competitive environment, there is ample space for new entrants to the market.

Another sector worth noting is life sciences, an industry with well-established operations in the manufacture of pharmaceuticals and medical devices, the production of software for the healthcare industry as well as a growing health tourism sector. In combination with an advantageous tax-effective structure and a relatively low-cost environment, Malta has managed to emerge as one of the most reputable and successful financial services centres in Europe and worldwide. Other key industries for foreign investors to explore in Malta include bio-technology, maritime, electronics, ICT and software development, pharmaceutical and health care.

Malta Individual Investment Programme (MIIP)

The Government of Malta, through the MIIP, allows for the grant of citizenship by a certificate of naturalisation to foreign individuals and their families who contribute to the economic development of Malta.

With a one-time contribution of €650,000 for the main applicant and an investment in real estate with a purchase price of €350,000 (a rental option is available) and prescribed bonds of €150,000 which are to be held for a minimum of five (5) years – you are offered all the benefits of an EU passport with rights of work and establishment in all 28 EU countries, along with visa-free travel to more than 160 countries.

Maltese citizenship also enables a quality of life and personal security in one of the world’s safest and most welcoming countries.

With a legal (but not physical) residency requirement of only twelve (12) months and immediate Schengen Visa upon applying for residency – you will very quickly start benefiting from commencement of your application.

Malta Residence and Visa Programme (MRVP)

Following the success of the MIIP the Government of Malta introduced their ‘Golden Visa’ Programme, enabling the issuance of a certificate that entitles the beneficiary and his registered dependants to reside, settle or stay indefinitely in Malta.

Along with permanent residency, for a one-time contribution of €30,000 and an investment in real estate with a purchase price of €320,000 (a rental option is available) and prescribed bonds of €250,000 which are to be held for a minimum of five (5) years – you and your family receive indefinite Schengen Area access.

Global Residence Programme (GRP)

The Government of Malta introduced a new residency programme, the GRP, in July 2013 with the main aim of attracting wealthy individuals seeking to obtain residence in Malta and looking to take advantage of the benefits associated with its tax programme.

With an investment in real estate with a purchase price of €275,000 (a rental option is available) and no minimum stay requirement in Malta (although the beneficiary will be required not to spend more than 183 days in any other jurisdiction per calendar year) – the GRP confers a most advantageous tax status to qualifying third country nationals, namely a fifteen per cent (15%) rate of tax on all foreign income remitted to Malta.

This beneficial tax rate is subject to a minimum amount of tax amounting to €15,000 payable by the beneficiary after taking into consideration any double taxation relief and Malta’s domestic tax legislation.

Furthermore, there are no wealth or inheritance taxes, no additional tax will be payable on capital sums received in Malta, and no additional tax will be payable by the beneficiary’s dependants –  unless the income is Maltese-sourced in which case it will be subject to a flat rate of thirty five per cent (35%)

  • Pro-active and business efficient climate

Investors in Malta can take advantage of a pro-active and business efficient climate, evidenced by the flexible and effective regulator and tax refund system, in which to structure their businesses.

Companies are chargeable to tax in Malta at a rate of 35%. However, the application of the participation exemption, full imputation system and refund system typically result in an effective Malta tax rate of approximately 0-5%. Malta’s tax system is in-line with EU legislation and OECD regulations and is supported by more than 70 double taxation agreements.

This adds a great deal of value to any Malta-based operation. This is strengthened by the presence of a highly professional financial services sector and an efficient and flexible regulatory environment which ensures the provision of high quality advice in matters pertaining to international tax systems.

  • Immovable property

Malta’s robust, flourishing property sector is certainly another advantage of investing in Malta. The purchase of property in Malta and Gozo continues to represent a solid investment, with the Maltese economy, supported by an English-speaking and highly-educated workforce, in growth mode following a successful weathering of the recent global economic crisis. The strength of the banking industry has helped to protect the economy, and real estate development remains strong. The most popular classes of property – apartments, penthouses and maisonettes – now make up most Malta’s property stock.

Despite the value rise, properties in Malta are still readily available with the creation of several new developments and the redevelopment of existing sites in prime locations. Developments are typically accompanied by an improvement in leisure, entertainment and shopping facilities, making Malta one of the most accessible places to be based. With the long, dry sunny summers, the proximity to the sea, the quality of the Mediterranean food, the number of luxury hotels and the warmth, charm and hospitality of the Maltese – buying property in Malta is much more than just an investment.

Under the Acquisition of Immovable Property Act, a non-resident would first require an AIP permit to acquire property in Malta, while this is not the case for Maltese residents. Nevertheless, Special Designated Areas provide an exception to the rules on residency permits in Malta, in that non-Maltese purchasers may buy property with the same rights as Maltese citizens, thus not requiring a permit from the Maltese government. Once such property is acquired, it may be leased out without any restrictions, unless this is expressly prohibited by a particular tax or immigration programme. As a result, these developments are extremely important with international investors as well as the Maltese. Such Special Designated Areas include celebrated developments at the following:

Ø  Portomaso Development, St. Julian’s, Malta

Ø  Tignè Point, Tignè, Malta

Ø  Fort Cambridge Zone, Tignè, Malta

With effect from 1st January, 2015, the government has introduced a tax incentive for the purchase of property in Valletta. When there is a transfer of property acquired in Valletta before 31st December 2018, and where such property has been restored and/or rehabilitated after the date of acquisition completed in accordance with any planning permit before the 31st December 2018, then the tax on the transfer shall be chargeable at the rate of 5% of the transfer value. The said transfer has to be made not later than five years from the 31st December 2018.

  • A stable and connected Infrastructure

The Maltese archipelago lies virtually at the heart of the Mediterranean, making it the perfect location for travel to a host of different countries, acting as a bridge between Europe and Africa. This means that it is a terrific starting point for those looking to expand into the EU and other neighbouring countries. Its natural Grand Harbour, freeport, highly-regarded airport, excellent high-speed internet access and steady growth, along with its close connectivity with many foreign markets, makes Malta an ideal choice.

  • Highly educated, English-speaking workforce

English and Maltese are the official languages of Malta. Maltese, being its national language and a source of fascination to both visitors and linguists due to its unique quality, is of Semitic origin with innumerable words derived from other languages such as English, Italian and French. Furthermore, the Italian language is widely spoken in Malta, along with a sizable proficiency in German, Spanish and Nordic languages. Being a multi-lingual country, Malta is the perfect location for the set-up of multi-national companies, with the English language being the principal language of international business.

Furthermore, academic institutions in Malta are widely respected, generating a highly-educated workforce – with a strong business supporting professional class of qualified lawyers, accountants, designers, programmers and software developers. Maltese employees are well-known for their strong work ethic and being able to think outside the box. As such, Malta is an ideal location for companies engaged in high value-added activities which require significant levels of input and skill from their workforce.

When considering Malta’s geographical position, its multilingualism, its business environment, its beneficial tax treatments and its other advantageous factors, Malta possesses all the necessary ingredients to attract foreign investments.

WDM International, through WDM Lex Advisory’s Dr. Jonathan De Giovanni, Partner at the Firm, and Mr. Charles Ingham, Manager of Corporate Services and Private Clients, would happily provide potential investors with further information in this regard. Alternatively, such persons may also wish to visit WDM International’s website on www.wdm.com.mt.

 


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