Issue link: https://maltatoday.uberflip.com/i/1068299
3 maltatoday | SUNDAY • 6 JANUARY 2019 NEWS CONTINUED FROM PAGE 1 "A number of member states refused to engage with the Commission and did not even attend meetings," MaltaTo- day's source said, describing Malta as one of the member states that had been open and forthcoming in discussions with the EC. "The Commission will not take a hard stance but a more generic approach. They are probably less likely to be spe- cific recommendations or country-spe- cific ones, but more of general guide- lines. "They will indicate an adverse com- ment to the programmes and reaffirm concern, possibly even seek a discussion in the European Council, but it will stop there," the source said. The approach will probably disappoint the European Parliament, a segment of which has been a vociferous critic of golden visa schemes, but which were already dead-legged by the approval of Malta's programme by former justice commissioner Viviane Reding. The European Commission has no power to ban such a practice but Jouro- va had said the EC has an obligation to put high requirements on the member states to be careful. "They are granting citizenship for the whole of Europe." The EU states with "citizenship by investment" schemes include not only Malta and Cyprus, but also Austria, Greece, Hungary, Latvia, Lithuania and Portugal. EU member states are free to set their own criteria for citizen- ship. Malta charges main applicants €650,000 for their passport, and a man- datory property investment of €350,000 or a five-year lease at €15,000 annually, and an additional €115,000 investment in bonds and stocks. Jourova has previously been quoted as saying she was "especially alarmed by Malta's scheme". "It is a big concern when a Russian citizen who has worked his whole life in middle or senior management – where salaries aren't very high – suddenly has the money to buy citizenship in Malta," Jourova had told the FT. Malta's scheme, put in place in 2014, has brought €404 million to the coun- try's posterity fund and contributed an- other €174 million to Malta's consoli- dated fund. Globally, the value of all purchased property – 115 – since the launch of the IIP totals €110 million, while the rental value for the duration of the five-year contract for some 718 leased properties add up to €70 million. With that comes a total of €126 million in financial in- vestments in Malta Government Stocks. In 2016, 994,800 citizenship appli- cants were granted across the EU, ac- cording to Eurostat, with just 0.1 per cent of applications made under invest- ment schemes. But Malta's scheme remains conspicu- ous by virtue of its success, and in some cases, the publication of its naturalised citizens every year, which includes IIP citizens. In 2018, the OECD issued an alleged 'blacklist' of passport-selling na- tions, which claimed Malta was allow- ing the global rich to benefit from its fabled 'five per cent tax'. But the OECD statement was short on analysis, summing up its misgivings on the premise that so called 'high net worth individuals' can buy a second passport "to avoid income tax on off- shore financial assets in the CBI [citi- zenship by investment] jurisdiction" without physically living in Malta, but being merely tax-resident here. Maltese corporate service providers refuted the claim, saying the OECD was confusing tax residency and citizenship status. Malta's tax relief on dividends from profits booked in Malta works on the operative principle is that claim- ants of the relief are not tax-resident in Malta. "Anybody who is tax-resident in Malta is unable to claim the six-sevenths rebate on the tax paid on their global income. Which means IIP citizens who want to benefit from the rebate do not choose to be tax-resident in Malta. In- deed, their citizenship is not a condition for tax-residency," a bank director told MaltaToday. "They will indicate an adverse comment to the programmes and reaffirm concern, possibly even seek a discussion in the European Council, but it will stop there" EC report to contain general guidelines Malta IIP Revenues since 2014 • €404 million in posterity scheme and €174 for Malta's consolidated fund. Property sales • 115 for a total value of €110 million Rentals • 718 leased properties adding up to €70 million over five years. Investments • €126 million in Malta Government Stocks.