The High Net Worth Individual Rules for EU nationals, those from the EEA and Swiss nationals, has been killed off by a legal notice.

It has been replaced by a residency programme which has the same eligibility parameters as the Global Residence Programme for non-EU nationals, with regards to the minimum spend on purchase or rental of property, as well as a minimum tax of €15,000.

The applicant must spend a minimum of €275,000 for a property in Malta and €220,000 for one in Gozo or the south of Malta or €9,600 annual rental for Malta and €8,750 for Gozo and the south.

The legal notices also introduce a punitive clause meant to deter the beneficiaries from trying to obtain long-term residence or permanent residence

The High Net Worth Individual Rules (HNWI) for non-EU nationals, which only attracted two applications in its two-year existence, had already been superseded by the Global Residence Programme (GRP).

The HNWI for EU nationals, those from the EEA and Swiss nationals, has now been replaced by the The Residence Programme (TRP) which grants a 15 per cent tax status for the applicant and his family on any income they bring to Malta.

The government’s consultant on these programmes, John Huber, explained that it did not make sense to keep a programme which was more onerous than the GRP.

The legal notices also introduce a punitive clause meant to deter the beneficiaries of both the TRP and the GRP from trying to obtain long-term residence or permanent residence .

“If you opt for the 15 per cent tax status, then you have to provide your own medical health care insurance and so on.

“But once a person gets long-term residence it means that Malta becomes responsible for his welfare, including the provision of social benefits.

“If you apply for long-term residence – whether you actually get approved for it or not – you will be taxed at the normal tax rates up to 35 per cent on your worldwide income,” he explained.

A number of other changes were made. For example, the need for an applicant to be “fluent” in one of the official languages of Malta has been changed to the more pragmatic requirement to be able to “adequately communicate”.

The Malta Retirement Programme has also been amended to include the south with the lower threshold applied to Gozo for the acquisition or rental of property.

Another important change was the recognition of partners in stable relationships as, prior to this, each of the persons would have had – at least in theory – to buy or rent a property to get the tax status for both partners.

The new programmes solve other issues too. The HNWI was introduced to replace a residency scheme which had been abruptly suspended, and opened up the possibility of exploitation by unscrupulous landlords.

“Let me give you an example. Under the old scheme, the residents had to pay a minimum rental of €4,150. But, if they changed their address, they were obliged to adopt the minimum thresholds of the HNWI, which meant they had to pay a minimum rental of €20,000 – quite a huge leap.

The landlords basically had them over a barrel

“The landlords basically had them over a barrel as they would threaten to raise the rent knowing that the resident really did not have much choice. We know of some cases where this happened, which of course created a lot of fear. Many people just gave up and left Malta.

“Now if they do change their address, they move to the TRP or GRP thresholds of €9,600 or €8,750, which are still higher but not unacceptably so.”

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. But Mr Huber does not see that as low – given the circumstances.

“That is still 36 in just over 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.

“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.

“And the introduction this year of the Individual Investor Programme – the so-called citizenship scheme – also eclipsed the GRP as an alternative for those who want Schengen visa,” he said.

He also pointed to the Portugal factor as this member state is granting passports after five years’ residence, with lower property parameters, and offering tax holidays for 10 years at 0 per cent.

“We had already lost a lot of momentum because of suspension of the previous residence scheme. Now, with the Portugal factor, our Swedish market was virtually destroyed. Thankfully we do see a few good ones trickling back but it will never go back to previous levels,” he said.

Residence schemes

  Minimum taxation Minimum taxation for dependents Minimum acquisition Malta Minimum acquisition Gozo Rental Malta/South Rental Gozo/South
HNWR/EU €20,000 €2,500 €400,000 n/a €20,000 n/a
HNWR/non-EU €25,000 €5,000 €400,000 n/a €20,000 n/a
Global Residence Programme €15,000 Nil €275,000 €220,000 €9,600 €8,750
Residence Programme €15,000 Nil €275,000 €220,000 €9,600 €8,750
Retirement Programme €7,500 €500 €275,000 €220,000 €9,600 €8,750

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.