Positive Revisions expected to the Permanent Residence Scheme

Dr. Jean-Philippe Chetcuti | 28 Apr 2011

Ccmalta Default

The Residence Scheme Regulations 2004, originally issued back in 1988, were intended to facilitate the entry and indefinite stay of foreigners wishing to enjoy a second or retirement home in sunny Malta. Eligibility rules revolved around the good standing and repute of applicants and minimum income or wealth requirements designed to assure the quality of persons attracted by the scheme.

The Scheme's Benefits for Malta

The Scheme has been a determining factor in attracting affluent foreigners to invest directly and indirectly in our economy in more ways than one:
  • Respectable foreign nationals qualifying for a residence permit under the scheme were obliged to pay tax on all income arising in Malta as well as foreign income received in Malta and were subject to a minimum tax of liability of Euro 4,192, assuring a minimum contribution to public coffers for residents not spending sufficient time in Malta (and therefore use of local resources) to justify the pumping of higher levels of contribution.
  • Indirect contributions to the economy benefited a range of sectors, including tourism, hospitality, leisure, entertainment, professional services, property, banking, financial services, maritime, to mention a few. The inflow of new foreign capital and expenditure in the local economy has generated work and therefore jobs in all these sectors and local profits and salaries generating thousands of euros in taxes and social security contributions.
  • The Scheme has brought more and more foreigners in contact with the other opportunities offered by Malta in the core economic areas of financial services, shipping, aviation and online gaming.
  • The Scheme has served to feature Malta prominently in country indexes ranking countries by levels of quality of life, business-friendliness, safety, and attractiveness as destinations to investors and high-net-worth individuals.

In the light of the above as well as the scheme forming part of an integral package of laws aimed at positioning Malta internationally as a finance centre, it is fair to assume the Government's committment to continuing and improving on the Scheme to improve its effectiveness in attracting wealth to Malta and in assuring Malta's international relevance as a financial services centre.

Cause for Revision

Partly due to its success, the Scheme may have been misrepresented by a minority of advisors and real estate agents locally and abroad who have highlighted too commercially the indirect legal consequences of taking up residence in Malta under the Scheme to further their business interests, giving rise to serious suspicions by Government that the Scheme was susceptible to abuse. While this reaction cannot be condoned, the proper administration of the Scheme by the authorities has in practice rooted out applicants who do not really possess the minimum qualifications required for obtaining a residence permit under the Scheme. In fact, amendments coming into effect in 2006, have proved to have gone overboard in assuring that documents presented in support of an application for residence were genuine to avoid real abuse.
Moreover, an isolated but significant incident indicated that an EU national may have qualified for overseas medical treatment for serious illness at the expense of the Maltese government by virtue of such individual being resident in Malta. However, it should be highlighted that EU nationals have such rights any way by virtue of their EU nationality and not thanks to having a Residence permit under the Scheme . Further, non-EU nationals may only access such funding of medical care as well as rights of freedom of movement, residence and work upon qualifying for Long-Term-Residence Status under the relevant EU directive. This directive grants sufficient discretion to local governments to impose requirements of varying stringency to ensure that third country nationals are not granted too easy an access to European Union rights and freedoms without sanctioned justifications.
There is general consensus on the need to revisit the rules and to raise certain bars that have become inadequate with the passage of time. However, through his role in the Chamber of Advocates, the Chamber of Commerce and the Institute of Financial Services Practitioners, Chetcuti Cauchi has been active in making submissions to ensure changes being considered by Government will go overboard in redressing these concerns and preserving the competitiveness of the Scheme in attractive affluent indivuduals and families to take up residence in Malta.
 

The Way Forward

The firm is eager to see the issue of new regulations to bring to an end this prolonged period of uncertainty for a number of applicants and approved families who have been caught up in the midst of this suspension.  New applicants who are non-EU nationals have continued submitting their applications with a view to preserving their position in the queue of applications for PR permits.  EU nationals have continued with residence applications under the Ordinary Residence Scheme (also a remittance based tax regime) with an option to convert to the Permanent Residence Scheme should the new rules be more favourable to them.

Our Permanent Residence Services

Led by Dr Jean-Philippe Chetcuti and Dr Priscilla Mifsud Parker, Chetcuti Cauchi's award winning Immigration & Relocation Law team is the oldest specialised immigration law practice in Malta. We have successfully represented individuals and families ranging from expatriate retirees, emigrants seeking employment, to HNW individuals listed in Fortune 500.

As advocates, we are registered authorised mandataries according to law and our firm is authorised by the Maltese immigration and tax authorities. We are able to advise you on the tax and legal implications and requirements of the residence application process and indicate expected time frames based on the specific circumstances and nature of your application. Our advice covers the rules applicable to immigrating to Malta under a number of available residence schemes as well as practical relocation assistance ranging from transportation and insurance to schooling and health insurance coverage.

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