There have been only 21 applications so far for the Global Residency Scheme, launched by the government last June, and of these, only four have been approved, according to the Inland Revenue Department.
Of those approved, only property has so far been purchased, and that for just €300,000.
The new residence programme for non-EU citizens replaced the foreign residents’ scheme which was controversially suspended in 2011.
The previous scheme was suspended and initially replaced by the High Net Worth Individuals Scheme (HNWIS) which did not prove popular because the minimum value of purchased property had been raised from €116,000 to €400,000.
Most people are not aware of what Malta has to offer. Government needs to increase awareness overseas
Under the Global Residence Scheme, the value of immovable property bought in Malta by foreigners has to be at least €275,000. However, when the property is in the south of Malta or in Gozo, the minimum value can be €220,000.
Under the HNWIS, applicants would also have been eligible if they rented a property for a minimum of €20,000 annually, but that threshold was lowered to €9,600 in Malta and €8,750 in Gozo or the south of Malta.
In the past, third-country nationals also needed to place a €500,000 bond with the government and an additional €150,000 per dependant. This provision has been removed.
However, the abrupt suspension of the HNWIS left many purchasers stranded, with a promise of sale already signed which turned out to be null and void. It created considerable ill feeling, which made stakeholders – from potential purchasers to intermediaries – reluctant to trust the Maltese jurisdiction. But there are other reasons for the disappointing take-up.
Joe Lupi, managing director of Frank Salt (Real Estate), said it was important to analyse why the Global Residence Scheme has not really been a success.
“One has to appreciate that most of these applicants, unlike what used to be the case in the past, do not take up residence because they wish to retire here, although their intention would be to do so in the future. Most of them would still have a business in their country and would still wish to keep running their business. This is where the biggest setback comes in, as applicants will not be allowed to spend more than 183 days in any other jurisdiction,” he said. “On the other hand, the main incentive for non-EU is the fact that the Global Resid-ency Scheme gives applicants a Schengen Visa, and hence access into Europe.
“As for those taking up the scheme for retirement, the €15,000 minimum tax is in most cases still being considered on the high side.
“Finally I think we are still suffering from lack of credibility with some countries, due to the disastrous way the old residency scheme was withdrawn and replaced after a year with the new Global Residency Scheme which requires a bond of €500,000 from applicants. I believe that with time, the number of applicants will improve.
“As far as what else can be done to get more applicants, it is very simple. Most people are not aware of what Malta has to offer. Government needs to increase awareness overseas.” Mr Lupi said.
This last point was also stressed by Dhalia chairman Chris Grech, who said that increasing the numbers would be very challenging.
“It requires promotion worldwide as well as an identity,” he said.
“Without promotion and a powerful awareness campaign, I think it will be slow-moving. Both government and the private sector can do more, by taking ownership and promoting aggressively.”