A study by the European Greens has flagged Malta as a popular tax destination for the rich and famous, although the authorities refused to hand over data about the number of high income individuals who have benefited from tax exemptions.
In the study, published on Tuesday, the Greens call on the EU to harmonise existing tax rules and develop a common framework against tax avoidance on personal income.
The Greens say Malta, Cyprus and Italy recently introduced new schemes or extended existing ones “to be even more damaging”, even doing away with the need to reside in the country.
A 2019 study by the European Commission report on citizenship and residency schemes across the EU found that although the residence requirement exists in legislation, in practice the requirement for applicants to physically reside in Malta is not verified sufficiently.
Both Malta and Cyprus featured on a ‘blacklist’ published by the OECD in 2018 due to the “high-risk” schemes which could allow individuals to hide or misrepresent their wealth.
The report by the Greens delves into how Malta, Ireland and the UK operate so-called ‘non-dom’ schemes. Such schemes allow people residing, but not domiciled in these countries for tax purposes, to avoid paying tax on foreign-derived income.
“Anyone who keeps his or her investments neatly separated in Jersey or the British Virgin Islands whilst living a comfortable life in London or in the pleasant climate of Malta can thus make huge profits without paying any tax there or in any other place”, the Greens say.
The Greens note in their report how Malta is the only European country to feature in a top 20 worldwide list of wealth growth driven by the migration of wealthy people over the past 10 years.
According to the list, published by research group New World Wealth, while Malta experienced migration driven wealth growth of 95% between 2007 and 2017, European countries with high tax regimes experienced negative growth.
Greens MEP Sven Giegold, who has been in both the PL and PN’s crosshairs this week over calls for decisive action by the European Commission over Malta’s rule of law failings, urged the Commission to present an action plan on how to end tax avoidance of the super-rich.
He said European tax competition had entered a new phase. "The EU member states are inviting not only Apple, Facebook and Amazon, but also super-rich people like Christiano Ronaldo to reduce their tax burden."
"The EU member states compete for the privilege of wealthy private individuals with extra tax deals while the rest of the population pays the bill”, Mr Giegold said.
Mr Giegold said the front runners of tax injustice are the Netherlands and the UK, each with more than 50,000 beneficiaries of non-dom rules.
A request for data by the Greens for information about the amount of beneficiaries in Malta was rejected by the Finance Ministry.
Malta last week was dubbed a “tax haven” by the European Parliament due to its advantageous tax regime for companies.