New MRVP-Rules Announced Today: Bond Investment Removed, Contribution Amount Raised

Courtesy of Malta-based Frendo Advisory, who shared the changes in real-time as they were announced during a briefing session for accredited agents today, IMI can today report that the Malta Residency and Visa Program (MRVP) is just weeks away from updating its regulations.

Until now, the MRVP’s financial requirements included three core elements:

  • Investment in government stock worth EUR 250,000 or other stock/equities listed and trading on the Malta Stock Exchange to be retained for at least five years;
  • A property purchase of EUR 320,000 (EUR 270,000 in South Malta or Gozo), or a property lease of EUR 12,000 per annum (EUR 10,000 in South Malta or Gozo);
  • A non-refundable government contribution of EUR 30,000 (of which EUR 5,500 constituted an advance payment of the government administrative fee).

If the changes as announced today are approved by Parliament, which there is every reason to believe they will be, the requirement for an EUR 250,000 investment in bonds would be removed entirely, while the minimum investments in real estate will rise to EUR 350,000 and EUR 300,000 (South of Malta or island of Gozo). Minimum rent levels will remain unaltered at EUR 12,000 and EUR 10,000.

Rather than asking investors to boost treasury liquidity by purchasing bonds, the government will increase the direct contributions requirement; the government contribution will rise from EUR 30,000 to EUR 68,000 (for those who buy a property) and EUR 98,000 (for those who choose to rent).

The government is also introducing an entirely new financial requirement; a mandatory EUR 2,000 contribution to a Malta-registered NGO.

Though the administrative fees (covering the work of processing, due diligence, etc.) for the main applicant, spouse, and children are covered by the EUR 68,000/98,000, an additional fee of EUR 7,500 for a spouse, a parent, or a grandparent will apply, as well as a fee of EUR 5,000 for any adult children.

FEE STRUCTURE Current Program New Program
Main Applicant Flat fee of EUR 30,000 Option 1 (purchase of property)
– EUR 40,000 admin. fee;
– EUR 28,000 govt. contribution

Option 2
(lease of a property)

– EUR 40,000 admin. fee
– EUR 58,000 govt. contriubtion

Parents/Grandparents EUR 5,000 EUR 7,500
Spouse of an already-approved main applicant Free of charge EUR 7,500
Spouse of an already-approved dependent EUR 5,000 EUR 7,500
Adult child dependent of main applicant after approval Free of charge EUR 5,000
Minor child of an already-approved dependent child and/or of his already-approved spouse EUR 5,000 EUR 5,000

Until now, the program has also mandated that main applicants demonstrate an annual income of EUR 100,000 and a net worth of no less than EUR 500,000. The minimum annual income requirement will now be discontinued, while the minimum net worth requirement remains. Furthermore, applicants must hold at least EUR 150,000 of their capital in financial assets.

A better deal, both for investors and for Malta
Somewhat paradoxically, the new regulations would at once both make the MRVP more economical for the applicant and more profitable for the government of Malta.

Under the hitherto prevailing rules, the minimum capital outlay for a single applicant choosing the absolutely cheapest option (renting in Gozo) would amount to EUR 330,000, of which only the EUR 250,000 bond-investment would have been recoverable, and even that only five years later with associated opportunity costs for locking up a quarter of a million euros in relatively low-yielding securities for five years.

Under the new regulations, a single applicant would be able to obtain a residence permit in Malta for a minimum outlay of EUR 150,000, of which nothing would be recoverable.

For the government of Malta, the new deal makes more economic sense; in recent history, all major ratings agencies have considered Maltese government bonds investment-grade, even during the height of the European sovereign debt crisis a decade ago. In other words, Malta has never had trouble getting financing at reasonable rates. Asking MIIP or MRVP investors to assist in this regard, therefore, was new necessary.

Under the new rules, on the contrary, the unencumbered revenue the government would raise (in the case of a single applicant) would grow from just EUR 30,000 to either EUR 68,000 or EUR 98,000.

More Policy Updates

The new regulations would, at once, both make the MRVP more economical for the applicant and more profitable for the government of Malta.

An unexpected turn of events in light of the bipartisan consensus in favor of continued publication that emerged in Malta some two years ago.

A transition period that will see the exclusion of metropolitan and coastal areas from the program will begin on July 1st next year.

 

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