Malta halves EU property residency requirement

Malta’s High Net Worth Individual Rules for EU, which carried a minimum property investment of €400,000, has been replaced by the Global Residence Programme, with an entry point as low as €220,000

Malta has announced a new residency programme for EU nationals – and has halved the minimum property purchase requirement.

The High Net Worth Individual Rules for EU nationals, which required property investment of at least   €400,000 has been replaced by the Global Residence Programme (GRP), which requires a minimum spend of €275,000 on a property in Malta and €220,000 for one in Gozo or the south of Malta.

The limits are the same as the Global Residence Programme for non-EU nationals, and both include the option of €9,600 annual rental for Malta and €8,750 for Gozo and the south.

Those accepted under the Residence Programme and their family pay just 15% tax on any foreign-sourced income they bring to Malta and locally-sourced income at a flat rate of 35%, subject to a reduced minimum annual tax liability of €15,000 covering the main applicant and dependents included on the same application.

The aim of the Malta Residence Programme for EU nationals is to attract wealthy individuals and families to take up residence in Malta, says leading agent, Frank Salt.

Marketing Manager, Nick Bilocca, told OPP Connect, “This is definitely going to have an impact on the property market, as it is much more affordable for people.

“The key reason people choose the scheme is for tax benefits. If you are a High Net Worth Individual paying 55% tax, you can take on this programme and pay 15%. Investing in a property would pay for itself from tax saving over time.

“The change has come about to make the package more attractive. One of the main attractions you have in Malta is that it is a tax-friendly country with a great lifestyle, health and education services and we speak English.”

Among European residents most likely to take up the scheme are those from Scandinavia, Mr Bilocca suggests.

Over the last 12 years or so, property prices have risen by around 6% on average, although this year growth is around 3% per annum. Income from buy-to-let property is normally around 4-5% a year, he says.

Other changes have been made, such as the inclusion of partners in stable relationships and reducing the need for an applicant to be “fluent” in one of the official languages of Malta to be able to “adequately communicate”.

The Malta scheme has one of the lowest entry points in the European Union and is less than half of the €500,000 property investment needed to qualify for the ‘Golden Visa’ property-for-residency scheme in Spain and Portugal, which is open to residents of non-European Union countries and is dominated by the Chinese.

To apply for the any application of special tax status, a non-refundable €6,000 administrative fee needs to be paid or €5,500 in the south of Malta.

The High Net Worth Individual Rules for non-EU nationals only attracted two applications in its two-year existence.

The GRP was introduced just over a year ago and has had limited success. Only 36 applications have been received, of which nine were approved with 15 others close to approval.

The Maltese Government consultant, John Huber, says the Global Residence Programme for non-EU nationals has attracted 36 applications in a year.

“Compare it with just two applications during two years of the HNWI non-EU scheme. So really the levels are staggering. It will never be as attractive as the old residency scheme which had ridiculously low thresholds: the minimum tax was just €4, 192,” he told the Times of Malta.

“There are other factors too. For example, we had a very good market for South Africans but the higher thresholds coupled with the worse exchange rate for the rand meant we lost a lot of this market.”

Malta also has a Retirement Programme, with the same property threshold