Adds ministry statement
Certain thresholds introduced in the High Net Worth Scheme launched yesterday to replace the Permanent Residence Scheme may impinge on the attractiveness of Malta's offering, the Real Estate Section within the Malta Chamber of Commerce, Enterprise and Industry said.
In a statement, the section welcomed the introduction of a scheme meant to attract foreigners to take up residence in Malta.
Its introduction, it said, was long overdue and the delay caused great uncertainty in the market, especially when neighbouring Mediterranean countries were introducing far more advantageous schemes.
Despite the fact that the Permanent Residence Scheme had not been designed to sell property in Malta, it went a long way to incentivise overseas nationals to purchase property in Malta and stabilise the property market, generating millions of euros for both the private and the public sectors since its inception.
Moreover, this occurred in a negative global economic climate and the fact that the property market in Malta remained relatively stable was a major contributor to the well being of the Maltese economy in turbulent times.
The section said it feared that the announced thresholds could have negative repercussions on the property market in general with a ripple effect on all other service providers, not only to the property industry but also local business in general.
"Whilst appreciating that the introduction of certain measures were necessary, the section is apprehensive that the new rules may be too onerous.
"The section also feels that the new cost of joining the scheme is somewhat exorbitant," it said.
The aim of the new scheme is to provide a solution which reflected Malta’s quality and value, which attracted truly high net worth individuals, who would really be able to generate wealth and economic activity on our shores.
MINISTRY STATEMENT
In a reply, the Finance Ministry said that while acknowledging the concerns of the real estate sector, it would like to reiterate that the percentage of properties purchased by foreigners who are holders of permanent residency status is very low in comparison to the total number of properties purchased by foreigners over the past few years.
"Indeed, while it is estimated that over 15,000 foreigners live in Malta, only 1,042 are Permanent Residence Holders.
"Over the past four years, 3,457 properties were purchased by foreigners in Malta. However, only 123 foreigners were permanent residents who have purchased property."
The ministry said that the former scheme required the payment of only 4,193 euro in taxation.
On the other hand, following EU accession and the subsequent transposition of EU legislation, after five years in Malta, permanent residence holders were eligible for free health care, free education, over and above the significant fiscal and VISA benefits enjoyed by the scheme holders.
This was onerous and detrimental to the economy while also being unfair on the Maltese taxpayer.
The government, the ministry said, has introduced a number of initiatives and schemes that have attracted foreigners who have purchased property in Malta.
These include incentives towards temporary residents, the highly qualified persons scheme as well as the general transformation in our economy that has created a number of high-value added jobs in financial services and e-gaming.
These sectors have not only created thousands of higher-paid jobs for Maltese citizens, but have also attracted a number of foreigners to our shores.
The government will be actively promoting the new scheme, particularly through Malta Enterprise and Finance Malta to ensure its success, the ministry said.