Malta & Cyprus Citizenship Programmes Compared

In this article, I set out to compare the programmes handled by our Malta and Cyprus offices. Whilst disclosing my citizenship of Malta, I endeavour to offer objective insight from my first hand experience of the two.

Investment Levels: Malta & Cyprus Compared

Cyprus’ Investment only routes

The Cypriot programme requires an investment of €5 million held in either one or a combination of:

  • bank deposits held by local banks and banking subsidiaries,
  • Cypriot Government Bonds (min. maturity of 3 years),
  • bonds or debentures issued by Cypriot businesses (min. maturity of 3 years),
  • real estate developments in Cyprus or
  • capital in Cypriot businesses (including banks) having a physical presence and employing at least 4 Cypriots.

The minimum direct investment is reduced to €2.5 million if five investors join to make a combined investment in the above direct investment methods.

Malta’s Contribution-Investment Mix

For eligibility under the Malta Citizenship programme or the Malta Individual Investor Programme, applicants must make a contribution to the Malta Social & Economic Development Fund amounting to €650,000 with smaller contributions of €25,000 for the spouse and dependent unmarried children under 18 and €50,000 for dependent children between the age of 18 and 26 and dependent parents over the age of 55.

Applicants must also make an investment in Government bonds in the amount of €150,000. They must also rent residential property in Malta for at least €16,000 per year for at least 5 years OR acquire property in Malta valued at €350,000 or higher.

Comparison

While Malta’s contribution is an outright, non-refundable contribution to the state, Cyprus’ €2.5m to €5m investment is significantly higher and ties up significant capital in an uncertain economy, not an issue for a discerning investor familiar with the Cypriot market or the ultra high net worth investor. The cash outflow required by the Maltese programme is significantly lower at €880,000 in the case of property rental to €1.1 million if one opts to buy property.

Convergence

Inspired by Malta’s mixed contribution and investment method, Cyprus has recently introduced a citizenship route consisting in €2m investment in the National Investment Company of Cyprus and a donation of €500k to the Research &Technology Fund.

Residency requirements

Malta’s Genuine Link Test

The Malta Citizenship programme offers citizenship within the European island of Malta after one year of sustained connections with Malta, concurrently with the maximum of 4 months’ processing time.

This ‘residency’ requirement is less uncertain than one might think. Malta earned the full approval of the European Commission after a thorough screening of its Citizenship programme by implementing the ‘genuine link’ test emanating from European Court of Justice jurisprudence. This requires an applicant to show a real connection with the jurisdiction over at least one year without imposing a specific minimum physical stay requirement.

It is not difficult to genuinely satisfy the normal badges of residence: a small price to pay for the EU’s unprecedented nod of approval and for new passport holders’ peace of mind.

Cyprus’ Minimal Presence

Cyprus does not require any presence except for a single visit to make a declaration on oath and to collect the passport.

One may worry about Cyprus’ non-conformity with the European Commission’s stated minimum of one year residence. The EC conversely endorsed the Malta Citizenship programme for upholding a one year minimum connection. However, under European law, nationality ultimately falls exclusively within the competence of the member-state and Cyprus may only suffer politically from criticism of its lax citizenship criteria.

EU Compliance

Malta’s EU Stamp of Approval

Malta has long pursued a policy of running a financial centre that is respected for its rule of law and recognised for its marked compliance with its European and international treaty obligations. It is in this light that Malta can boast of the only public approval of any citizenship programme by the European Commission after thorough scrutiny at domestic and European parliamentary levels.

Cyprus-EU Relations

Before the financial meltdown of Cyprus in 2013, Cyprus had ignored calls for its corporate tax system to be reformed in accordance with the EU’s Code of Conduct and the OECD’s Harmful Tax Competition Report. The terms of an international €10bn bailout included painful reforms including the raising of the corporate tax rate, of the Value Added Tax rate and other taxes.

Cyprus’ elimination of any presence requirements as a pre-requisite to acquiring Cypriot citizenship creates a further strain in relations. Whether the EU will exercise any political clout against Cyprus is yet to be seen.

Risks

Malta: Cash on approval

In my experience handling applications from beginning to approval, the Identity Malta Agency grants prior approval of proposals submitted by approved citizenship agents laying down the various connections that the applicant proposes to put in place to demonstrate his/her genuine connection with Malta. This entirely eliminates the risk of an applicant discovering he has failed to comply after the year has passed, losing more time. And this in line with Malta’s tradition of legal certainty and reliability.

Likewise, the contribution and investments need only be made one receipt of in principle approval of a Citizenship application and only €10,000 of this on application.

Cyprus: Cash in advance please

Evidence of the investments made under the requirements of the Cypriot programme need to be submitted with the rest of the applications documents, at the outset.

Malta vs. Cyprus Citizenship Timeframes

Malta’s In Principle Approval: 4 months

November 2014 saw the first applicants (clients of Chetcuti Cauchi) emerge from the first cycle of applications as approved applicants. This is when the significant investment needs to be made. This further eliminates the perceived risk and allows the applicant to invest with the comfort of a final ‘in principle’ approval in hand.

On making the contribution and investment in Government bonds and renting / buying property in Malta, applicants are entitled to receive their Maltese passport within their entitlement period.

This period is of 6 months from citizenship application date for applicants who have been resident in Malta already a year to date. Others need to wait for the passing of this one year in compliance with their pre-approved residence criteria.

At time of print, Chetcuti Cauchi represents clients in the final steps of the process and who are applying for the first passports ever to be issued under this program.

Cypriot Passport in 3-6 months

The upside of this is that Cyprus offers economic citizenship in between three to six months.

Socio-economics

Newly minted Maltese passports confirm their holders as citizens of an economically sustainable, politically stable Island, that punches beyond its weight in economic terms and competitiveness. New citizens enjoy the full effects of European Union citizenship and the identity of a culturally rich and diverse nation.

In addition to the Turkish occupation that has tormented Cyprus for some decades, Cyprus’ economy has been going through rough times lately. But Cypriots are resilient people and through initiatives like this economic citizenship program and thanks to new-found oil and gas reserves, will hopefully restore their economy.

 

Visa-free Travel Power

The Maltese passport is dubbed ‘one of the most powerful passports in the world’, enjoying 167 visa-free destinations for Maltese nationals, including the UK, US and Canada. Since Malta has fully implemented the Schengen Treaty in 2007, applicants enjoy access to the Schengen area through a residence card issued at the outset of the citizenship process.

Cyprus’ Citizenship by Investment programme, or Scheme for Naturalisation of Investors in Cyprus by Exception, has proved a valid alternative to the Maltese programme.

True, Cyprus is not part of the Schengen Area and the Cypriot passport offers slightly less visa-free destinations (157 compared to Malta 166), with the notable absence of the US from the list.

Success in Numbers

The Mediterranean islands of Malta and Cyprus have received over 400 and 700 applications under their respective citizenship by investment programmes. It’s clearly not a numbers game but the numbers are nonetheless telling in their own right. Both programmes pitch to the ultra-high net worth individual. Cyprus has an entry level of €5m, reduced to €2.5m for members of investor groups while Malta requires a mixed contribution-investment ranging from €880k to €1.1m.

Citizenship by Investment Race

Having witnessed both programmes perform from application to approval, I remain impressed by the seriousness of both governments in administering their citizenship programmes. Malta’s Identity Malta Agency, its one stop expatriates shop, can be commended for setting a precedent in VIP investor care. Similarly, Cyprus has managed to deliver on its promise of a speedy process.

At the end, the HNW individuals and families that we serve continue to enjoy the benefit of choice and the fruits of their new found identity as Euro-Mediterraneans…

…as Maltese or Cypriot.

Malta or Cyprus?

Comparing the two programmes, colleagues have jumped to conclusions and have been quick to side with one or the other. I quite disagree that there is a straight winner if this is a race. My more restrained opinion is that no one size fits all and each programme has its merits, addressing different aspirations of different investor profiles.

The Author

Interview of Identity Malta CEO, Justice Minister & immigration attorney Dr Jean-Philippe Chetcuti by Radio Télévision Suisse

Dr Jean-Philippe Chetcuti is one of the founding partners of Chetcuti Cauchi Advocates. Dr Chetcuti heads the firm’s Private Client practice, specialising in private client tax planning, wealth structuring and citizenship and residency planning.

Dr Chetcuti is a key advisor on the Malta Citizenship by Investment, the Cyprus Citizenship by Investment, the Malta Global Residence Programme and buying property in Malta and, holding licence IIP 001, he was the first to be licenced by the Identity Malta Agency and to directly file citizenship by investment applications under the Malta Individual Investor Programme.

Within his tax planning and wealth structuring function, he specialises in the use of Malta holding companies and Malta’s Participation Exemption, Malta royalty companies, Malta trusts and Malta foundations and Malta Professional Investor Funds.

  • Member, American Immigration Lawyers Association (International Chapter)
  • Member, IBA International Bar Association (Immigration & Nationality Law Committee)
  • Member, Malta Chamber of Advocates, International Tax Planning Association, International Fiscal Association.
  • Chairman, Society of Trust & Estate Practitioners, Malta Branch
  • Executive Committee Member, Institute of Financial Services Practitioners
  • Co-founder, Secretary, Malta Association of Family Enterprises.

Chetcuti Cauchi Advocates

Chetcuti Cauchi is a law firm serving successful entrepreneurs, business families and institutions using the financial centres of Malta and Cyprus, and their advisors around the globe.

With offices in Malta, Cyprus and London, we advise clients seamlessly on their business and private legal needs both at home and abroad.

Our unique multi-disciplinary set-up of over seventy lawyers, tax advisors, accountants, company administrators and relocation advisors allows us to provide the full spectrum of legal, tax, company formation, immigration, corporate relocation and fiduciary services to clients using Malta and Cyprus in international tax planning, cross-border business structuring and wealth management solutions.

This cross-functional arrangement appeals to discerning clients that range from High Net Worth individuals and families, entrepreneurs as well as blue chip companies. The firm serves as a trusted advisor to international law firms, tax advisors, accountants, private bankers and family offices worldwide.

We maintain key strengths in corporate law, international tax, intellectual property, immigration law, property law and trusts.

Despite being a top five law firm by size, the partners and seniors continue the firm’s tradition of providing specialised legal services of unrivalled quality, responsively, but rendered more valuable through their delivery in a personalised environment built around our clients’ personal or commercial realities.

The firm has built a name for serving today’s and tomorrow’s industries with significant commercial awareness, including the financial services, online gambling, pharma, life-sciences, digital games, aviation and super-yacht industries, combining specialist business law and international private wealth advice.

Jean-Philippe Chetcuti

Jean-Philippe Chetcuti

Managing Partner at Chetcuti Cauchi Advocates

Email: [email protected]
Tel: +356 22056200

Dr Jean-Philippe Chetcuti is one of the founding partners of Chetcuti Cauchi Advocates, a leading law firm with offices in Valletta, Nicosia and London. Dr Chetcuti heads the firm's Private Client practice, specialising in private client tax planning, wealth structuring and citizenship and residency planning.

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About Jean-Philippe Chetcuti

Email: [email protected]
Tel: +356 22056200
Dr Jean-Philippe Chetcuti is one of the founding partners of Chetcuti Cauchi Advocates, a leading law firm with offices in Valletta, Nicosia and London. Dr Chetcuti heads the firm's Private Client practice, specialising in private client tax planning, wealth structuring and citizenship and residency planning.