Residence requirement in the Grant of Maltese Citizenship

The 'Genuine Link' requirement in Maltese citizenship

Dr. Jean-Philippe Chetcuti | Published on 23 Nov 2020

Malta Citizenship By Investment

The residence requirement or the obligation to reside in Malta for a year before being granted Maltese citizenship under the Malta Individual Investor Programme has resulted from fierce debate since the circulation of the first draft of the IIP regulations back in 2013.  

MIIP 2014: Introduction of an EU-approved residence requirement

The original draft Malta Individual Investor Programme was built on the Caribbean model for citizenship by investment programmes and lacked a residence requirement. The first bold draft of a citizenship by investment programme within the European Union was met with an immediate barrage of dissent unleashed locally and internationally. Fast forward 2 months, successful discussions between the Maltese Government and the European Commission, with the support of the European Parliament, led to the approval of Maltese Citizenship law amendments that would add a one year residency requirement to the Malta Individual Investor Programme.

MIIP Law 1.0 Residence & Genuine Connection Requirement

Investors successfully passing the 4 tier due diligence process as part of their Maltese citizenship application are required to demonstrate at least 12 months of residence in order to naturalised as a Maltese citizen.  The law doesn't define "residence" for the purposes of the MIIP but, based on judicial precedent in international law, residence doesn't require physical presence for a full year. A residence card must be held for a minimum of 12 months and a sufficient level of integration with Malta should be achieved in order to satisfy this requirement.  In a paper I co-authored with colleague Dr Antoine Saliba Haig, we call this minimum level of connection with Malta 'the "Genuine Link" and is in compliance with international jurisprudence in the area of citizenship law.

The Grant of Maltese Citizenship for Exceptional Services to Malta

After the closure of the MIIP on reaching the quota of 1,800 families in 6 years, the investor route to Maltese citizenship was introduced in a different form through the Granting of Maltese Citizenship for Exceptional Services Regulations 2020.

Families applying under the investor migration route are required to show at least 12 to 36 months of residence in order to naturalised as a Maltese citizen.  The law doesn't define "residence" for the purposes of Maltese citizenship for Foreign Direction Investment in Malta but, based on judicial precedent in international law, residence doesn't require physical presence for a full year or three, as applicable.  A residence card must be held for a minimum of 12 to 36 months and a sufficient level of integration with Malta should be achieved in order to satisfy this requirement. 

Interpreting the Residence, 'Genuine Link' Requirement in Maltese Citizenship

In fact, it is widely regarded as out of tune with reality for any investor migration programme to require wealthy investors and entrepreneurs to fully relocate and spend long periods of residence in any given year. The typical profile of investors or entrepreneurs and their families who seek Maltese citizenship by investment often generate their wealth through intensive often internationally-spread asset holdings and business interests.  These businesses and assets require close follow up and therefore it is quite common for our investor clients to maintain multiple homes in different countries and to spend their time between these different homes.  Such investors often don't even spend 6 months in their own country of origin.

The residence requirement was introduced to reflect the principle of effective nationality espoused by the Nottebohm Case (ICJ 1955) which set a minimum period of one year of connection with the country for the new citizenship to be recognised by other states. 

My experience with investors under the IIP is that investing, doing business in Malta or making Malta one of their preferred global footholds satisfies this requirement.

In our experience representing investors in Maltese citizenship applications, full relocation to Malta is the objective in only a small fraction of the cases.  The majority regard the IIP as a first step in a medium to long term plan to move to Malta, or for the children to study in Malta and in all cases, investors are not able to relocate overnight to start the IIP process.  The MIIP process is mindful of this and allows investors to start their residence with an initial visit to complete the biometrics formalities in person in Malta, to return again within the same year to fulfill their presence commitment in one or more visits.  We often find investors visiting again sooner than expected not because the programme requires it, but because their first visit exposes them to a culture, a way of life, a global connectedness and a business scene that they never imagined could be found in a country as small as Malta.  As their lawyers, we do our part to expose them to the opportunities for investing in Malta, setting up business in Malta, acquiring or funding local businesses, making Malta a home for their wealth structures, or setting up international asset holding entities in Malta.  At the end, clients invariably end up doing this, making Malta one of their preferred global footholds and this voluntary integration with Malta satisfies the residence (genuine link) requirement.

Publicly Listed Investment Holdings

The 2014 Malta Citizenship Programme requires a holding of Malta Government Bonds or other securities listed on the Malta Stock Exchange. Feedback from investors represented by the firm suggests that this is not a popular investment largely because of the relatively small size of the investment in proportion with the administrative burden of acquiring, administering and disposing of this holding for the five year term imposed by the MIIP.  We have proposed the removal of this investment component in exchange for a minor increase in the contribution.

Doing Business in Malta

At Chetcuti Cauchi, we have long maintained that true citizenship requires a true commitment to the host country granting citizenship even as part of an investment programme.  Throughout our experience since the introduction of the Individual Investor Programme, we have sought to localise our investor clients by introducing them to investment and business opportunities.  Our multi-disciplinary approach to the practice of law enables us to help our clients implement wealth management and business structures using Malta as their home-base. We have health investors invest in or wholly acquire business concerns in Malta as well as set up subsidiaries of their multi-national businesses in Malta, creating jobs where appropriate.

The existing Individual Investor Programme does already factor in business investments in its genuine-link rating of applicants.  We recommend that a new programme increases its weighting on business investments to encourage more business investments in Malta under the MIIP.

Charitable Contributions to Malta

Philanthropy has always been an important component of a genuine link profile that the investor family establish in Malta in the year leading to citizenship. We believe it should be retained in a new investor migration programme and that it should be encouraged more as we see the lasting benefits it creates to a number of local charities that would otherwise be left alone.

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Key Contacts

Dr Jean-Philippe Chetcuti

Senior Partner, Tax & Immigration

+356 22056411

Dr Antoine Saliba Haig

Senior Lawyer

+356 22056446

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