Latest / IMI Podcasts / Regulator Attributes Decline in Malta Citizenship Sales to EU Legal Threats

Transcript

Regulator Attributes Decline in Malta Citizenship Sales to EU Legal Threats · IMI Podcasts

• 0:00
  SPEAKER_00: In the ninth consecutive report on Malta's citizenship by investment policies, prepared in June 2023 but released to the public only today, the program's regulator Carmel L.
• 0:10
  SPEAKER_00: De Gabriele said the European Commission's infringement procedures against Malta for operating citizenship by investment, also known as CBI programs, and its decision to refer the matter to the European Court of Justice had forced a number of applicants to reconsider their position about applying.
• 0:28
  SPEAKER_00: The data, which covers the calendar year of 2022, the latest data made public, show a precipitous decline in Malta CBI applications and corresponding revenues.
• 0:40
  SPEAKER_00: Malta received only 177 citizenship by investment applications in 2022, 175 under the MEIN policy, and two under the now defunct MIIP.
• 0:53
  SPEAKER_00: While this represents a nominal increase from the 23 MIIP citizenship applications received the year before, note that practically no MEIN-based citizenship applications were filed that year because of the new mandatory 12-month residency period.
• 1:09
  SPEAKER_00: MEIN-based citizenship applications only begin to show up in the data in earnest in 2022.
• 1:17
  SPEAKER_00: To grasp CBI application trends, therefore, 2022 is more appropriately compared to 2020, a year during which Malta received 317 CBI applications.
• 1:28
  SPEAKER_00: In other words, CBI application volume roughly halved following the implementation of new rules.
• 1:35
  SPEAKER_00: The lackluster application volume has translated into a third consecutive year of decline in revenues.
• 1:41
  SPEAKER_00: From a peak of nearly 400 million euros raised in 2016, Maltese CBI income had fallen to just 110 million euros in 2022.
• 1:52
  SPEAKER_00: About half that amount took the form of the mandatory contributions, a feature of both the MIIP and MEIN, while the lion's share of the remainder came in the form of real estate investment.
• 2:05
  SPEAKER_00: Since the beginning in 2014, Malta has raised 1.8 billion euros through its citizenship by investment programs, about two-thirds of it in the form of contributions.
• 2:16
  SPEAKER_00: Perhaps the most notable change observed in the nationality distribution of applicants for Maltese CBI in 2022 was the sharp relative decline in applications from Europeans, a collective term that includes nationals from Russia and Ukraine.
• 2:31
  SPEAKER_00: Whereas nearly half of applications in 2021 came from Europe, less than a quarter did in 2022.
• 2:39
  SPEAKER_00: Instead, the two largest applicant contingents in 2022 were Asians at 38% and North Americans at 30%.
• 2:48
  SPEAKER_00: As in previous years, the overwhelming majority of applicants in 2022 were men.
• 2:54
  SPEAKER_00: Under both the MIIP and MEIN, applicants must maintain a home in Malta.
• 3:00
  SPEAKER_00: This residence, however, may be either owned or rented.
• 3:03
  SPEAKER_00: More than 9 in 10 applicants consistently choose to rent.
• 3:07
  SPEAKER_00: Among those who decide to purchase, however, the tendency is to invest a great deal more than the stipulated minimum.
• 3:14
  SPEAKER_00: Figures show that the average purchase price for a home has been around 1 million euros.
• 3:20
  SPEAKER_00: In 2022, however, this figure soared to more than 3 million euros, though this uncharacteristically high amount is explained by just a handful of buyers.
• 3:30
  SPEAKER_00: The 27 million euros spent on property in Malta in 2022 came from only nine CBI applicants.
• 3:38
  SPEAKER_00: Malta has distributed all but 4 million euros of the€1.15 billion it has raised from mandatory contributions since the country first began selling citizenship in 2014.
• 3:49
  SPEAKER_00: More than half has gone into the National Development and Social Fund, some 403 million euros into the consolidated fund, effectively the government's checking account, 67 million euros to the agencies that operate the programs, and€55 million to Henley and Partners, the company that initially conceived of, implemented, and marketed the MIIP.
• 4:12
  SPEAKER_00: One notable development in 2022 was the first ever meeting between the Maltese Citizenship Regulator and the European Parliament's LIBE Working Group.
• 4:22
  SPEAKER_00: In previous annual reports, Regulator De Gabriele had lamented the European Parliament's undue criticism of Malta's CBI vetting work, particularly as the Parliament had never taken the trouble to contact him, to witness with their own eyes how my office is meticulously scrutinizing to the minutest detail the work performed by the MIIP agency, later CMA.
• 4:46
  SPEAKER_00: In 2022, however, after demanding an end to the program and threatening to refer Malta to the ECJ, causing significant economic and reputational damage to the program, the European Parliament finally scheduled a meeting with the regulator.
• 5:01
  SPEAKER_00: This interaction, noted De Gabriele, allowed him to present evidence of the country's rigorous due diligence process, which has often been the subject of undue criticism from EU institutions and international media.
• 5:14
  SPEAKER_00: Now that we are on the verge of a ruling in the ECJ case between the European Commission and Malta, De Gabriele indicated it was his quote, fervent hope that the ECJ will come to appreciate and acknowledge Malta's sincere efforts and seriousness in granting such citizenships.
• 5:31
  SPEAKER_00: Only to those individuals who are truly worthy of such nationality, not just because they have the financial means to acquire it, but more so because they possess priceless qualities in their behavior towards their brethren, whoever these may be, and pose no undue risk to them and to our brothers and sisters in the EU.
• 5:48
  SPEAKER_00: End quote.
• 5:51
  SPEAKER_00: This episode first appeared as an article by Christian Henrik Nesheim on IMIDAily.com.
• 5:57
  SPEAKER_00: Subscribe for free to the IMI newsletter for breaking news and updates from the investment migration industry, and upgrade your membership to IMI Pro to get access to our exclusive professional community, citizenship catalog, investment migration company Rolodex, private briefings, and more members only content.