‘Revised’ permanent residence scheme still in the works

Chamber of Commence board member John Huber said the Chamber that talks with the government on the scheme’s overhaul have been “actively ongoing since the start of the year”, and a conclusion is expected by the end of the month.

He however said there are no commitments yet by government to that effect. “But now we are seeing the light at the end of the tunnel,” Huber said, adding that the last meeting held earlier this week was “very fruitful.”

John Huber

In mid-March, Finance Minister Tonio Fenech said in parliament that a revised version of the Permanent Residence Scheme would be announced in weeks.

“Hopefully the new scheme will be launched shortly for a brief consultation period, where all the affected sectors will be able to have their say,” Huber said. He emphasised that it is not only the property sector that will be affected by the scheme, but also service providers and trade sectors “such as importers and retailers.”

“When you have a number of individuals coming from all over the world and entering the market to save tax and contribute to the economy in a significant manner, the multiplier effect is big,” Huber argued.

Asked if he felt that government was doing all it could do to speed up the process, Huber was cautious. “I think that the government is doing its best. There are obstacles, as well as daily government routine and the normal state of affairs where everyone has to have their say to consider.”

He said on top of this, government was working to close all loopholes within the scheme. “They have to clear up certain issues regarding a 2003 EU Directive dealing with long-term residence, which seems to be a stumbling block,” Huber said. “I feel confident that once that is over, the revised scheme will be announced.”

Originally, the scheme was suspended for all non-EU nationals on 24 December, 2010. 15 days later, the scheme was also suspended for EU nationals. Government justified its move by arguing that Malta’s free healthcare scheme was being abused through the scheme.

David Franks, CEO of financial and tax advice company Blevins Franks that advises clients about Malta’s permanent residence scheme, speculated that a higher minimum rent or spending limit could be on the cards. “The minimum is currently low, frankly,” he told MaltaToday.

David Franks, CEO Blevins Franks

One of the scheme’s conditions requires applicants to purchase a property with a minimum price of €69,000, or rent at €4,150 per annum. Franks said that the most recent contact between government and the company was during a Blevins Franks seminar held on 24 May 2011, opened by Fenech.

“He told us that the government was looking into the scheme and revising it,” he said, adding that Fenech however did not provide timeframes of any kind. Frank also referred to the government’s main reason for freezing the scheme, emphasising that “the health aspect is quite complex.”

He explained however that the permanent residence scheme itself doesn’t provide rights to healthcare, but it is Malta’s healthcare system itself that provides those rights to residents. Frank speculated that government could be attempting to address this through two different ‘tracks’ for the scheme. “One would be for people who want to live in Malta for a few years, while another could be for those who want to live in Malta for longer.”

Franks said the uncertainty revolving around the scheme has meant that people are delaying making decisions and could have been pushed to look at other jurisdictions. He said that while Malta is attractive and benefits from considerable interest, “there is a lot of competition out there.”

While he could not say however whether the scheme’s uncertain future turned potential investors away, Franks reiterated that it did delay people’s decisions.

Questions sent to the Finance Ministry inquiring as to what stage the revision has reached, and whether the Ministry had a timeframe in mind for its launch, went unanswered.