New global residence programme aimed at reviving property market

The government has lowered the minimum thresholds for the purchase of immovable property and rental property by foreigners in Malta. 

Speaking this morning, Parliamentary Secretary for Competiveness and Economic Growth Edward Zammit Lewis explained that the minimum tax threshold for tax exiles who purchase property in Malta has been lowered to €15,000 from the previous €25,000. 

He added that the bond amount of €500,000 will be removed completely while the application fee for foreigners purchasing property in the South of Malta and Gozo will be slightly reduced. 

The new Global Residence programme replaces the High Net Worth Individuals (HNWI) programme, launched in 2012 to the dismay of tax auditors which felt it to be a poor replacement for its predecessor, the Permanent Residence Scheme.

Property developers are expected to be pleased at news that selling property to foreigners seeking tax rebates by domiciling in Malta, will now be a less onerous affair than under the HWNI programme.

Speaking to MaltaToday, Zammit Lewis explained that the feedback he has received from all stakeholders involved, including accountants, tax consultants, lawyers, estate agents, construction companies and the hospitality sector, have been "immensely positive."

"In the process of drawing up the legislation, I have received positive feedback from all stakeholders. We have addressed the pitfalls of the previous scheme which among other shortcomings, was suspended for a six month period and applications were in fact turned down," he said.

Zammit Lewis pointed out that the previous administration's shortcomings in the sector "deeply irritated" all stakeholders and created uncertainty.

Stressing that the HNWI scheme damaged the country international standing, Zammit Lewis said that the government would be embarking on an international marketing exercise "to rebuild the country's reputation."

Asked what kind of markets the government would target, Zammit Lewis explained that the marketing exercise will target untapped markets such as South Africa and China.

Quizzed whether the new programme would drive property prices up, Zammit Lewis categorically rejected the notion with an "absolute no."

"We were aware of this and during the setting up of the law, we were very careful and made sure that the parameters of the new Global Residence programme are not in direct competition with the local market for first-time buyers," he said, stressing that first-time buyers are also a priority for government.

In addition, Zammit Lewis said, the over supply of property in Malta also ensured that the prices would not shoot up.

Under the global residence programe, dependants of the applicants will not have a minimum tax bracket, with a specific and detailed description of a dependent set to be introduced in the new legislation.

Speaking at the launch of the programme this morning, Zammit Lewis said: "The new programme shall be called the Global Residence Programme and shall be addressed to non-EU and non-EEA. It is government's intention to look into all the programmes that Malta has and if necessary introduce improvements to make them more attractive." 

Zammit Lewis said that the Global Residence Programme would effectively be a new legislation and will replace the HNWI rules launched in 2011. 

He explained that the programme was the result of extensive meetings with the main stakeholders in the field, including key experts from the government and members from the Malta Chamber of Commerce, Enterprise and Industry and the Malta Developers Association.

The new regulations will be introduced by legal notice by the end of this month.

Zammit Lewis noted that through the new programme the government intends to prioritise the South of Malta and Gozo, where lower requirements will be adopted, "which will surely benefit investment and Economic Growth in these areas. "

"This position taken by the government reflects the fact that the prices of immovable property and the island of Gozo are lower," he said.

The old permanent residence scheme was suspended by the previous government in January 2011 and replaced with the High Net Worth Individuals (HNWI) scheme in September of the same year.

The HNWI scheme was intended to attract wealthy foreign nationals who not only purchased property on the island but also contributed to the island's  economy.

The 2011 changes meant that the minimum required spend on property increased from €116,000 to €400,000 for properties bought after September 14, 2011, among other conditions.

The new Programme shall also require the use of an Authorised Registered Mandatory in Malta to submit the application on behalf of the client.

"We shall be highly vigilant in the conduct of the mandatories and whilst acknowledging the good work in promoting Malta we shall not tolerate abusive marketing or unprofessional behavior," Zammit Lewis.

The government will also simplify the application procedure by introducing the concept that the mandatory may appear for his client when applying for the programme and also either applying for or procuring the Uniform Residence Permit.

Zammit Lewis said the government will be providing the programme all the necessary support and resources to ensure its success.

"We shall be active in assisting that Malta gains the momentum that it lost with the introduction of the HNWI. Everyone benefits from the attraction of this sector of residents in Malta.  It is not only the property sector that benefits, but industries such as the Financial Services industry, the legal profession, the entertainment and hospitality industry and even the aviation industry.  We shall once again revive Malta as a destination of choice to the benefit of the economy and to increase our competiveness," Zammit Lewis added.

In the process of drawing up the new legislature, Zammit Lewis chaired a specifically set committee composed of former Labour MP Charles Mangion, Aldo Farrugia from the International Tax Unit, Mario Borg from the Inland Revenue Department, Mark Sultana from the Department for Citizenship & Expatriate Affairs, John Huber from the Malta Chamber of Commerce, Enterprise and Industry and Sandro Chetcuti from the Malta Developers Association.