The Malta Individual Investor Programme (MIIP) is a successful citizenship-by-investment scheme. The program generated millions of euros into Malta’s economy throughout the years. However, the Maltese government recently announced that the current format of the program will be no more after the investor cap is reached. Alex Muscat, the Parliamentary Secretary for Citizenship, informed that the new format will be activated in October 2020. Now that the 1,800-approvals cap of the MIIP is reached, Malta is set to initiate the transition.
Malta Aims to Further Strengthen the Due Diligence Process
The MIIP already had one of the best due diligence processes in the world. Yet, the new format of the program will have a more detailed process. Alex Muscat remarks, “The [MIIP] Agency has one of the most stringent processes of due diligence around the world. In fact, it has refused a total of 368 applicants for citizenship, and a further 35 were refused from applying for citizenship following initial KYC (know your client) checks conducted through local police authorities.” By implementing an even more thorough due diligence process, Malta aims to clear all doubts.
The MIIP Brought Over EUR 1 Billion into Malta
The previous format of the scheme brought around EUR 1.4 billion into the country’s economy. Not overlooking the success of the MIIP, Malta aims to update the program to cleanse it from its weaker spots. Reporting on the previous performance of the scheme, Alex Muscat states that, “more than €270 million were invested in property, either through a five-year lease or by means of an outright purchase. Another €186 million worth of bonds or shares were invested and nearly €5 million were donated to various local voluntary organizations. This brings the total amount to just over €1.4 billion.”
The Changes to the Malta Individual Investor Program
The update will bring several changes. First, the new system does not allow applying for citizenship before obtaining residency. In the new scheme, only successful residents will be able to apply for naturalization.
Modification on Residency and Contribution Requirements
The current form of the MIIP requires a flat EUR 650,000 contribution. After October, there will be two options: Applicants may choose to contribute EUR 600,000 or EUR 750,000 to the Maltese economy. The difference between these amounts is due to their relationship with the residency requirement. If the applicant chooses to contribute EUR 600,000; they must reside in Malta for three years before applying for citizenship. If the contribution is EUR 750,000; they may apply for naturalization after one year.
The current form of the program also required one year of residency before citizenship. However, it did not prevent applying for citizenship before that year is complete. So, applicants could apply for citizenship and receive their residence permits during the process. The new format does not allow individuals to apply for naturalization without obtaining a residence permit.
The Minimum Requirement for Real Estate Investment Also Changed
The new changes also involve the real estate investment route of the program. The current format of the MIIP requires EUR 350,000 investment in real estate. According to the new amendments, this amount will double. Thus, the new minimum investment requirement for Malta real estate becomes EUR 700,000.
With the update, the minimum annual lease of properties will also increase. The new plan ups the lease to EUR 18,000 from EUR 16,000 per year. Moreover, applicants will need to prove the value of the real estate with an architect to prevent the abuse of the program. At this point, it is not clear if these changes apply to Malta’s other islands, Gozo and Comino.
The Lifespan of the New Format and Its Donation Requirement
According to the new format, the program will involve a list of charity organizations registered in the scheme. The list will take effect starting in October 2020. New applicants will have to choose one of the registered charities and donate EUR 10,000. Information on the update suggests that 70% of the income will be channeled into the National Development and Social Fund.
The updated version of the program will not approve more than 400 applicants per year. The cap for this version is set at 1,500. The updated MIIP will be conducted by a new unit replacing the MIIPA (Malta Individual Investor Programme Agency).