Charlotte: Actually, we have actually lowest effective corporate tax rate in the EU. So, the corporate tax rate itself is set as 35%, which is quite high. However, by way of a tax refund mechanism, we can reduce this tax rate to an effective rate of 5% or 10% in some cases. There's also something that we call participation exemption whereby qualifying holding companies may also reduce the effective tax rate to 0%. So, it's an extremely attractive tax environment for a business.

Interviewer: Welcome to the "Investment Immigration Podcast" by Uglobal.com with weekly in-depth interviews with the world's leading investment immigration professionals.

Welcome to the show again, everybody, and today we are gonna focus on Malta's immigration program. Today, we have a very distinguished guest with us who will guide us about what's happening in the country. As you know, the country has been in the news, in the immigration news for some time. And there's a lot of things happening, especially with the startup visa, which has been launched. They're going to learn about the residency program there, how to gain citizenship there, and a whole bunch of other things. So, without further ado, I would like to welcome our guest, Charlotte here. Charlotte, welcome to the show.

Charlotte: Hi, thank you very much for having me, and thanks for the very nice introduction.

Interviewer: Thank you so much. And, Charlotte, our listeners would love to know about yourself, about your journey into the investment immigration space, about your company that you work for. So, please give us a little background of yourself and your firm.

Charlotte: Sure. Vistra, as a group, we are the third largest trust and cooperate service provider in the world. I work from Vistra Malta. So, we are a firm...a corporate service provider in Malta. I firstly joined Vistra in Malta in 2018 as a residency and citizenship officer. So, I used to handle the application for the residency and citizenship program, and I used to assist my clients, high net-worth families, with their application. Slowly my role expanded over the years, more into business development. So, now, I take care of [inaudible 00:02:31] for the investment migration department, but also for our trust and corporate division.

Interviewer: Very nice. Now, we are going to dive into the meat of the matter, which is Malta has recently launched startup residency program. What can you tell us about this program? And please, also let us know, why was the need felt to launch a separate program solely focused on startups?

Charlotte: So, over the years, we have noticed that Malta, the government is very pro-business government in general. So, there's a lot of attraction to Malta for foreign investors. Malta Enterprise, which is an agency that assists and provide financial assistance to companies in Malta, already provides some incentives for startups. So, it was only natural that they team up with Residency Malta Agency, which is the regulator for some of the residency program that we have in Malta, because Residency Malta Agency also has witnessed young entrepreneurs wanting to relocate to Malta to set up their companies in Malta and grow their business, etc. So, this partnership came, they have been working on it for the last year. And this is a new program that was very well welcomed by the public, and I think would be very successful.

Interviewer: I see. And can we also say there was a huge demand for this startup residence program?

Charlotte: Yes, absolutely. Because we do have a lot of foreign entrepreneurs that, as I said, the business environment in Malta is already very attractive. So, a lot of people wanted to set up their business in Malta. And with that program, they would be able to reside along with their family in Malta, so it's just perfect.

Interviewer: Great. And you talked about how foreigners are applying for this program. So, they will be very interested to know about the criteria that they have to meet in order to qualify for this program. So, if you could talk about that because a lot of people don't know about this because it was launched just recently, right?

Charlotte: Yes, absolutely. It was launched just a couple of weeks ago. The main criteria would be to be an innovative startup or scale-up. So, any startup under the age of seven years old would be eligible, but it needs to be innovative. So, there would be an application review by Malta Enterprise, so they would review the business plan, financial projection to ensure that the company...the startup will be flourishing in Malta. There is also a second criteria, which is to be noted that there is a minimum investment or share capital of €25,000 for the startup, but that needs to be in place to be eligible for this program.

Interviewer: Right. And this capital that they need to have, can it be in their own accounts, in their home countries, or do they have to bring that money first to Malta? How does that work?

Charlotte: It will need to be invested in Malta. So, the company would need to either be domiciled a company in Malta or set up a very brand new startup in Malta or a branch. They have different ways, but obviously, the sum would need to be invested in Malta's economy.

Interviewer: That makes sense. And can one become a permanent resident and perhaps even a citizen of Malta via the startup residence program, and how many years would it take?

Charlotte: So, Residency Malta Agency may grant long-term residency after five years of legal residency in Malta under this program. However, there is no specific route to citizenship with this program. It's purely a residency program. If one would want to apply for citizenship in Malta would need to go through the usual channels, which will be to permanently reside in Malta for at least six years, and go through the whole process with the authorities. But this will be completely separate from the startup visa program.

Interviewer: Okay. So, for example, if during the launch of the startup visa, a person comes there, you know, the business is good, but for some reason, let's assume their startup is not functioning that well for whatever reason that could be, I'm trying to find out how it would work in that situation where they're not meeting the criteria in a certain year, do they then immediately lose their residency or do they have...? Because, you know, the startup business is a risky business. Sometimes it doesn't work. So, is there space for them to continue operating to make their business plan work?

Charlotte: I think this is absolutely possible. I mean, Malta Enterprise obviously works with a number of startups, so they would know how startups work and expect that it might not be completely flourishing in the next couple of years. But under this program, the founders and co-founders would have a maximum of, if I'm not mistaken, five years of residency. So, I think it gives them ample time to start the business and see how it works.

Interviewer: That's good to hear they have some space to figure things out because it's also a huge challenge for entrepreneurs who start a new business in a new country to discover the rules. I mean, it can get complicated. So, thank you for sharing that. And now, let's talk about the taxes that one needs to apply when setting up a new startup and business in Malta. So, I've heard the country has some of the highest corporate tax rates in the EU. Firstly, is that true? And what kind of taxes apply on new businesses?

Charlotte: So, actually, we have actually lowest effective corporate tax rate in the EU. So, the corporate tax rate itself is set as 35%, which is quite high, as you mentioned. However, by way of a tax refund mechanism, we can reduce this tax rate to an effective rate of 5% or 10%, in some cases, or some income. So, it's actually one of the lowest in the EU. There's also something that we call participation exemption, whereby qualifying holding companies may also reduce the effective tax rate to 0%. So, it's an extremely attractive tax environment for a business. When it comes to the startup residence program, I believe that such businesses will go under the normal tax rate will apply for these businesses.

Interviewer: Okay, and could you also share a little bit about the process? Every new entrepreneur, every foreigner is scared of the bureaucracy that they have to face. How's it like that in Malta? Does this take a lot of paperwork? Is it like big hassle? Could you share a little bit if it's a smooth process, or how the process works actually?

Charlotte: It's been years that this process is in place, so professionals in Malta, such as our office registrar [SP] Malta, would be able to process the tax refund mechanism and tax refund application on a yearly basis very easily. It's something we do for every client of ours. It's basically linked to the tax payments. So, the tax payments will need to be made after the subsequent financial year is finished, and the audited financial statements will be submitted. And after that, the refund will be processed by the OCCs very quickly. So, in a matter of a couple of weeks, usually, the refund is received by the shareholder of the company.

Interviewer: Oh, wow. So, things can be resolved in a matter of weeks. In some places, it could take months or maybe even years. So, that's an encouraging sign. Thank you for sharing that. Okay, now, so let's move on to the number of residency programs that Malta offers. So now, from my understanding is that with the launch of the new startup residence program, the country now offers around 10 residency programs. And what I would like to know is what is the least risk-averse residency option for investors and entrepreneurs if they apply for one today?

Charlotte: So, as you mentioned, yes, we do have many residency programs, and they apply for various profiles of investors, entrepreneurs, and families. In general, all the residency programs in Malta are very stable. Some of them have been going strong for years. But to name a few, I would say that the least risk-averse maybe would be the Malta permanent residence program or the global residence program, or even the very new nomad residence permit as well.

Interviewer: The reason why I asked this also is because a person who doesn't know much about the residency programs in Malta might get a bit confused by the options, so they would all look so attractive to them. So, for example, if I want to choose the right residence program as, say, I mean as a high net-worth individual, so which would I go for? Like, for example, would the Malta permanent residence program be best for me, or the global residence program would be the best for me? Because they both seem quite similar to me.

Charlotte: So, yes, as I said, every program has their own specific criteria and advantages. For example, the nomad residence permit targets, specifically, digital nomads. We also have a tax residency for pensioners. But in this example between the Malta permanent residence program and the global residence program, the difference is mostly that the GRP is a tax residence program. So, it offers a special Malta tax status with a very advantageous tax rate for the individual. On the other hand [SP], the MPRP is not a tax program. So, under this program, one is not automatically taxable in Malta. The MPRP is more a permanent residency that is granted to the applicant for life, and that can be passed on to future generations. So, in my opinion, I find it very targeted for families, although we also have businessmen or ultra-high net worth individuals that use this to travel within the Schengen area for their business, for example.

Interviewer: Right. That's a important point because the nature of the client's needs can be different. Like, not everybody's may be wanting to move their family. Maybe it's just for purely business reasons. So, let's also now talk about which [SP] residence program. I think you have partly answered this question already. But which one is the most popular in Malta right now? Especially, I'm interested to know, the one popular in your company, in your firm, what are you seeing?

Charlotte: On the long term, we have seen some programs going strong for years, such as the GRP that has been in place since 2013. However, recently, with the pandemic, we have seen a surge of applicants for the MPRP. Most of the time, they would consider Malta as their contingency plan in case of lockdown, so they will have permanent residency in Malta and can come to Malta in case their country of origin is shut down. There's also... Again, thanks to the pandemic, the normal residence permit has completely grown. And simply with the rise of the remote working, digital nomads can work from anywhere and choose Malta to work from.

Interviewer: So, speaking of the digital nomad program, I've heard that Malta, it's so attractive for the reason is that the minimum income threshold for digital nomads is not that high. It's quite reasonable, isn't it?

Charlotte: Absolutely. It targets very large number of individuals that candidates can apply for this program. If I'm not mistaken, it's less than €30,000. So, yes.

Interviewer: Great. Yeah, that's also what I read. And you have people from all over the world coming to apply for this program, because of this attractive nature. But I also want to know, a lot of people, especially investors are putting their money and commercial entities in, like, hotels. And I want to know if that's an option for them in Malta. So, for example, if I want to put my money in a hotel in Malta, and also gain permanent residency, is it possible to do that, or would that be more complicated a process, and you would say, why don't you just buy a residential Villa or something?

Charlotte: Typically, one will not be eligible for permanent residency simply by investing in a commercial property. All the residency programs that are available in Malta would require some kind of investment in private residences. But Malta is one of the few if not the only one actually country that simply renting an apartment or property in Malta to fulfill this requirement. So, what we have seen is that applicants who do not know much about Malta at first would rather rent a property rather than purchase a property. And then when they are comfortable in Malta and know the market, they would purchase if they like the place. So, it's a very attractive requirement that applicants really appreciate with the Maltese program.

Interviewer: But in terms of investment in commercial entities like hotels, that's not an option right now, you're saying?

Charlotte: Not under any of the programs, no.

Interviewer: I want to understand why is Malta not putting that on the table, because a lot of investors from what I've heard, they're interested in things like that, especially in the hotels and hospitality sector.

Charlotte: It is a good question. I think that mostly we are because it is residency program, the country wants applicants to have an actual residence in Malta. Also, from a practical point of view, residency cards in Malta are linked to a residential address. So, for the authorities to just tell the residency, they actually need a residential address. So, I think that's the main reason. But investing in commercial property in Malta might also be good to get a link with Malta and to invest in the Maltese community and society as well.

Interviewer: Right. So, I get your point, and it makes sense. Okay, so let's now also talk about the investment immigration trends that you're seeing in Malta. So, I want to know, for example, where are the high net worth individuals coming from mostly these days in Malta? Is there one particular country or two or three countries where you're seeing people? And, of course, our listeners want to know, if more Americans are coming to Malta.

Charlotte: There are two main countries I think that we have noticed over the past couple of years. One of them will be the UK, following Brexit, simply because now that they are out of the European Union, they would want some kind of other residency or citizenship. But we have seen a rise from the UK. Also, not only from ultra-high net worth individuals but simply for the Nomad Residence Permit, for example, people just prefer the Maltese climate to work from, for example. But when it comes to America, absolutely we have witnessed an increasing number of U.S. citizens wanting to obtain Maltese citizenship, and subsequently, even renounced to their own us passports due to the political climate in the U.S., but also the taxation system in the U.S. So, it's something that is happening.

Interviewer: And is it also you're seeing people from other parts of the world...? For example, China has always been a huge market for investment immigration. Are you seeing people from that part of the world, or even maybe, say, from Hong Kong that people are applying, do they come to Malta?

Charlotte: Absolutely. I mean, China and Hong Kong has been very strong market since the beginning for these programs. It has slowed down during the COVID pandemic, obviously, because of the strict lockdown there because it was very difficult for them to obtain documents to process their application in Malta. But absolutely, Hong Kong, a very strong market, Southeast Asia as well, and Middle East is quite strong as well. These are the main markets.

Interviewer: I see. And in terms of the people who are coming from U.S., could you tell us a little bit more about that if you have that information? Like, are they coming with families mostly? Is it just the business investor who's just there to set up a small business or a big business and then just move on? If you can share a little bit more information about American investors.

Charlotte: It's a mix of everything. Although I would say that business investors would be the majority. But as I said, it's quite recent. And I think it's still increasing. And I'm sure that we will see even more profile in the coming years.

Interviewer: Okay, now I'm going to go to a topic, which is contentious, which is something we cannot ignore, and why Malta has been in the news for many days. And for our listeners who might not know about this, but the European Commission has its sights on Malta's immigration program. Its investment immigration program is under scrutiny and there's talk of the commission taking the program to court. There's a lot of things are happening. And a lot of investors who might be reading this kind of stuff would be a little unsure about let's say if they should pursue residency in Malta or not. And in this climate, how do you convince them that Malta remains a good long-term investment option for them and their families?

Charlotte: First and foremost, I think it's important to mention that this matter is related to the obtention [SP] of citizenship. So, it does not affect any of the residency programs that we have available in Malta. So, when it comes to citizenship, it's also good to know that it is a matter of constitutional law and that every member state has their own right to grant citizenship to whomever they deem fit. As far as we're concerned, no case has been submitted yet so far. So for us, it is business as usual. Obviously, we would recommend to proceed with the program because this is a successful program in Malta, and it has been going on, but we do not have any more information at this stage.

Interviewer: I understand. Thank you so much for sharing that. But I also want to understand from you as a practitioner in the investment immigration space about the challenges that you and your firm must have faced following the pandemic, and now, what's happening in Europe, this big war that's happening. And I want to understand, like you also mentioned this earlier in the interview, that sometimes with chaos with things happening, business does increase. Like, the pandemic has been good for many investment immigration programs in many countries. So, is it right to say that the business has increased with this kind of developments on your end, or has it somewhat been of a mix? What would you have to say?

Charlotte: I think, mostly, business has increased. Ultra-high net worth individuals and their families, as I said, want to secure their plan B in case of another pandemic, for example. This applies for residency, but also for citizenship because it provides greater mobility. Of course, as things currently stand, application for Russian nationals are suspended from any program in Malta, however, for now, we have seen a stronger income of applicants for those programs.

Interviewer: I see. Okay, and what about the high-net-worth individuals from Ukraine, they must be also looking at options. I mean, of course, many have been taken as refugees in other countries and all that, but the people who can afford to invest, are you also seeing them coming towards Malta?

Charlotte: We have seen some of them, but the number is quite limited for now from Malta, in my opinion.

Interviewer: And in terms of the challenges you have to face in the post-pandemic, I saw this in other programs where people had to digitize more. Their business model was very paper-based, it had to be in-person, and now they change it to more Zoom calls, and the whole nature of their business strategy changed. So, how did you guys adapt? Was it a huge challenge? And did you have to change your process a lot more? Has it become easier, or has it become a little more complicated in a digital way?

Charlotte: Absolutely. Actually, if I can mention, again, Residency Malta Agency, they have really worked on the application process. So, they have make it easier to obtain documents from abroad to have it signed from embassies, or they have also accepted some documents certified. So, they also have extended some deadlines when applicants could not even travel to Malta to get their residency card. So, they've been very flexible with these restrictions that we have, unfortunately, had to live with.

Interviewer: Right. And this digitization is such a blessing. A lot of people... I mean, if the process becomes smoother that way... Sometimes even I wonder why didn't this happen say 10 years ago, the technology was there. But we needed maybe the pandemic to push us that way. But I'm glad to hear that things are also great in Malta because of that. And now, we are coming towards the end of the show, and I'm going to ask you, how do you see the future of Malta's residency program and investment immigration? Do you think it would continue to grow? Will it have more different types of programs? What would you say to the high-net-worth individuals if you have the space right now?

Charlotte: Well, I think that Malta has repeatedly proven that investors and experts are welcome in Malta. We have a number of programs and incentives in place for them. Also, it is important to note that the programs are a great source of revenue for the country. It is reinvested in the community, especially during COVID, for example, discounts went to help the businesses that had to shut down to help maintain wages for employees that had to stop working for a while. So, it is something truly helping the community in Malta. So, of course, we do not know what tomorrow is made of, but I remain confident that in this industry, it is going strong and the Maltese programs are very attractive for a ultra-high-net-worth individual that wants a new way of life, and maybe why not relocate to Malta?

Interviewer: Yeah, indeed. Why not? Thank you so much for sharing your views with us and your insights into Malta's investment immigration program. I'm really grateful to you for taking out the time for us. Thank you so much, Charlotte.

Charlotte: Thank you very much for having me.

Interviewer: And a last shout-out to our listeners of the show, I want you to all stay tuned to our podcast. There'll be more guests talking about more programs from all around the world. So, please stay tuned, and thank you so much.

You've been listening to the "Investment Immigration Podcast" by Uglobal.com. Join us again soon for more in-depth conversations, exploring investment immigration opportunities from around the world.

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