Since the 2008 financial crisis, several countries in the Mediterranean turned to selling citizenship to non-European nationals as a means to help rebuild their economies. These countries include those that were most affected by the economic depression, like Portugal and Spain who now both offer “golden visa” programs
. The term “golden” was intended as an acknowledgement of the value of European Union passports as well as the wealth that foreign investors could potentially bring to the nation. Both Portugal’s and Spain’s programs offer residency in return for a sizeable investment into the economy, most often a property purchase, and after several years, residents have the opportunity to obtain full citizenship. These programs received support from Mediterranean states as a way to raise revenues after the 2008 financial crisis, which caused unemployment rates to rise above 20% in many countries.
Malta, a small Mediterranean island, only introduced its own passport-by-investment
program in 2014. Malta was a former British colony and English is one of the two official languages. It is also a member of the European Union and the EU Schengen Zone, so citizens have the right to live and work in any of the other member EU countries. Malta’s Individual Investor Program (IIP) offers citizenship for investment after an initial one-year residency has been completed.
The program is among the higher-priced Citizenship by Investment Programs though. A non-refundable contribution of €650,000 must be made to the National Development and Social Fund, a €150,000 investment in bonds, and a property must be purchased for €350,000, or rented for a minimum of €16,000 per annum over a five-year period. The bare minimum investment in this case would be €880,000 for an investor who chooses to rent a property. The investment requirements were derived based on global demand, and also to reassure Maltese citizens that the investors would be very high-net-worth individuals from abroad. Malta’s Individual Investor Program receives substantial support as a means to build up the nation’s capital in times of economic uncertainty.
The immigration by investment programs offered in the South of Europe exist, for the most part, due to the property markets being badly hurt by the financial crisis of 2007-2008. Spain’s real estate crash, for instance, left millions of homes empty, and projects were abandoned mid-construction. Mediterranean countries tried everything they could to bring back the second homeowners who had left after the crisis. Unlike Northern Europe which has very few second homeowners, nearly 20% of housing in the Mediterranean is second homes making these foreign property investors essential to the economy. The introduction of Citizenship and Residence by Investment Programs
has allowed the countries affected to expand their property market beyond wealthy European investors to the global privileged.
Even though Malta’s capital, Valletta, displays architectural beauty from the renaissance, few investors will choose to settle in this densely-populated city. Those investing in Maltese passport will often settle in newly-constructed luxury real estate, which continue to crop up in Special Designated Areas. After the initial one-year residency period is over, and Maltese passports issued, new citizens by investment don’t always remain in Malta. Maltese citizens have the right to live, work, study and obtain healthcare in any of the EU member states. Malta’s program is viewed by many as a hub to give investors access to the rest of Europe, most notably Northern Europe, where stronger job markets may exist.
The selling of passports is relatively easy as most foreign national high-net-worth investors are looking to increase the mobility provided by their current passports, especially those of politically or economically unstable countries. Small countries like Malta must continuously modernize in order to guard themselves from any economic destitution. Given Malta’s history of migration and trading, as well as the lack of economic opportunities at present, the exchange of passports for capital investments into the island’s economy is an ingenious option.
For more information on Malta’s Individual Investor Program, please click here
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