As wealthy foreigners rush to get citizenship in Malta under a new program, the residency requirement is taking many forms.
Russians rent high-end villas, then stay in five-star hotels when they visit.
A US financier plans to live in Switzerland, but occasionally vacation in Malta.
Photo: Reuters
One Vietnamese businessman, eager to start the clock ticking on the 12-month timetable for residency, sent the paperwork on his private jet to expedite renting a property he had never seen.
“They come twice, once to get a residency card and once to get a passport,” immigration lawyer Mark George Hyzler said.
Malta’s citizenship program, which offers a passport to those willing to pay 1.2 million euros (US$1.34 million), has been controversial since it was introduced more than a year ago. However, the residency requirements, meant to make the program more palatable, are only increasing the consternation among critics, who say the program has resulted in the sale of citizenship to the global 0.1 percent.
Applicants must show they have rented a property in Malta for 12 months, but they do not necessarily have to spend any time in the Mediterranean island nation, raising the question of what genuine links they are establishing.
“It is questionable how the residency requirement is being applied,” Maltese MP Tonio Fenech said.
Lawyers, accountants and real-estate agents say the citizenship program has catapulted Malta onto the radar of the global elite. Applications are pouring in and the program aims to raise 2 billion euros, more than a quarter of Malta’s GDP.
“We want to attract individuals who can add value to our country because of their ideas, and their networks and their businesses and their talent,” said Jonathan Cardona, CEO of Identity Malta, which administers the Individual Investor Program.
Housed in a sprawling, fortresslike 16th-century building once used as a hospital, the Malta citizenship program nods to the country’s multicultural past, punctuated over the years by invasion. Maltese, the official language with English, looks and sounds Arabic, but its speakers are primarily Roman Catholics who pray to Allah.
The citizenship program also reflects Malta’s present. The country, which covers 316km2 and is about 80km south of Sicily, has few natural resources and a population of just 424,000, about half that of South Dakota. Malta counts on the reliable sun and shimmering blue sea to attract tourists. Beyond that, it has had to be creative to keep the country’s coffers filled.
The tax system, in particular, has been a boon. Some foreign companies can be structured to pay 5 percent in corporate taxes. Malta also has double taxation treaties with 65 countries, allowing individuals and businesses to avoid being taxed in two places.
Significant tax advantages and a pro-business regulator have created a booming financial services industry. It now represents 12 to 15 percent of the country’s GDP, up from 6.3 percent in 2004. Online gambling companies have flocked to the island, as have hedge funds.
With a strong corporate base, Malta sailed through the economic crisis relatively unscathed. The economy grew 3.5 percent last year. Unemployment is 5.8 percent, the fourth-lowest in Europe.
Malta was looking to expand that economic growth through the citizenship program. Under the initial plan in 2013, the newly installed Labor Party government proposed selling passports for 650,000 euros, with few other requirements for citizenship.
Almost immediately, it drew protests. Critics say the country was not an economic basket case like other European nations trying similar programs. They also worried that the program would damage its reputation as an attractive place to do business.
“We do not want to form part of a law which prostitutes Malta’s identity and its citizenship,” Mario de Marco, a vocal member of the opposition, said during the debate.
The opposition took the program to the European Parliament in an effort to block it. While the parliament condemned the program, it could do little else, because citizenship is controlled by national governments.
To placate the parliament and the opposition, the government raised the bar for citizenship. Strict due diligence standards were set to weed out money launderers and criminals. It also raised the cost and adopted a residency requirement.
In addition to the 650,000 euro fee to the government, applicants must now invest 150,000 euros in government bonds, buy property for at least 350,000 euros or rent a place for at least 16,000 euros a year — all of which must be held for at least five years.
“This is not ‘tick the box,’” Cardona said.
Hyzler and others say that the newcomers are establishing real links to Malta. They are setting up bank accounts and buying health insurance, both of which are required. They are also joining country clubs and donating to local charities, which is encouraged.
“Clients genuinely want to do more than just make the investment,” said Mark Stannard, managing director of the Maltese office of Henley & Partners, a residence and citizenship planning firm.
He said a Saudi national with a Lebanese passport who had applied for Maltese citizenship had recently returned with a delegation of 12 to consider setting up businesses in aviation, life sciences and real estate.
Hyzler said some of his Chinese clients wanted to invest more than the 150,000 euros in government bonds and were weighing establishing businesses.
However, critics have taken aim at the rollout.
Henley & Partners was initially awarded the exclusive rights to market the program and process the applicants, collecting fees in two ways. A family of four with two minor children and two grandparents pays Henley about 135,000 euros to apply; the government pays Henley 26,000 euros to handle that application.
Henley also makes money from ancillary services. The company can rent and sell property through Henley Estates and manage that property for those who are not living in Malta.
In January last year, before the program officially started, Henley gave up the exclusive rights, sharing half of the business with other private companies. However, critics still bristle at the outsourcing of such activities by the government.
“There’s no reason Malta should engage a private company to sell its citizenship,” said Daphne Caruana Galizia, a columnist at the Malta Independent newspaper. “It’s absolutely insulting.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six