Issue link: https://maltatoday.uberflip.com/i/699546
maltatoday, SUNDAY, 3 JULY 2016 6 News MATTHEW VELLA ARE the new citizens who ac- quired the Maltese passport for access to the Schengen zone and the United King- dom about to get less bang for their €650,000? Fear not, says Christian Kalin, the brains behind the 'citizenship-by-invest- ment' scheme promoted by Henley & Partners, and which Malta adopted and renamed as the Individual Investor Programme. There's little to suggest that holders of any EU passport will find it prob- lematic to obtain access to the UK. London has been a draw for 'non- doms' – a tax status for those liv- ing in the UK but whose father or grandfather was resident in anoth- er country when they were born, allowing them to avoid paying tax on money earned outside the UK. Supporters of the tax status, in- troduced back in 1799 for colonial traders, say it keeps capital and 'tal- ent' inside the British capital. But citizenship special- ist Christian Kalin pre- dicts that with Brexit negotiations soon to take place with the European Council, little might change for the free move- ment of labour in a fu- ture associa- tion agreement with the EU. "The UK will now simply need to decide how much it wants to separate itself from the EU, which is unlikely to restrict significantly access to the EU for UK citizens," Kalin says, listing as an example the European Economic Area (EEA) countries – Liechtenstein, Norway and Iceland – which still get the free right of settlement, or Switzerland – his home nation – which is part of the European Free Trade Agreement but not an EEA member. "It has opted for bilateral agreements with the EU which give its citizens the same rights of settlement throughout the EU." EU citizenship was introduced by the Maastricht Treaty in 1992 and affords rights such as the right to free movement, settlement and employment across the EU. "It is foreseeable that the UK will end up under an EEA-type of ar- rangement or acquire a status simi- lar to Switzerland's. In this case, a form of free right of movement and settlement would likely remain, in particular for entrepreneurs, inves- tors and financially independent people," Kalin says, suggesting a return for the UK to its pre-EU sta- tus, when it was a founder member of the EFTA. Kalin says there is nothing much to worry about for those who ac- quired or are looking to acquire Maltese citizenship. "In the unlikely event that the right of settlement vis-à-vis the UK is terminated with Brexit, this would damage the value of British citizenship far more than that of European citizenship," Kalin says, warning that the UK would poten- tially lose free access to 27 coun- tries. "We have no doubt that the UK will find some form of association with the EU which will, at least for financially independent citizens, continue to provide access to settle in the UK. "Brexit will of course not impair visa free travel between the UK and the EU countries, and also have no impact on the visa policy of either the UK or the EU as this has always remained separate with the UK set- ting its own short-term visa policy." Those who seek to reap rewards on corporate passporting by luring businesses from London to Malta, may have yet to wait for drastic moves. "On the corporate and investment side alone, Malta is very attractive and remains an interesting possibil- ity for multinationals. Brexit, how- ever… I don't think that changes much at all. Malta is still a very good EU base, as are of course other EU jurisdictions like Dublin, Luxem- bourg and Frankfurt," Kalin says. Christian Kalin PAUL COCKS MALTA should be promoting itself as a possible alternative base for the numerous international investment banks, online gaming houses and insurance providers currently head- quartered in the UK, the Institute of Directors president in Malta, James Satariano, has told MaltaToday. The island's apparent lackadaisical reaction to the Brexit result could see it lose out to a number of Euro- pean capitals that have taken a clear and conscious decision to poach fi- nancial institutions away from Lon- don. A number of European financial services capitals, including Luxem- bourg, Paris and Frankfurt, have been actively 'propositioning' UK- financial services institutions in a bid to lure them away from London amid the sector uncertainty that is predominant since the UK voted to leave the EU on 23 June. EasyJet has opened talks with EU member states' aviation regulators about relocating its headquarters from the UK. CEO Carolyn McCall signalled in private meetings this week that moving its legal HQ from the UK was almost inevitable. Last week, EasyJet signed a five- year servicing contract with SR Technics in Malta and announced it will be signing a similar contract with the Malta-based Lufthansa Technik, meaning most of the main- tenance on its 253 aircraft will be carried out in Malta. Malta, on the other hand, seems to have opted for the wait-and-see approach and seems willing to wait for the UK to make its position clear during negotiations with the EU be- fore promoting itself as a possible alternative base. "Malta should follow the example of Luxembourg and Paris, both of whom were aggressively targeting London-based financial services im- mediately after the UK referendum result was announced," James Sa- tariano said. "They were quick off the mark. We are more respectful, but the bottom line is that Malta should be moving on this opportunity to capitalise on the situation." Satariano even insisted it was a national duty to advocate measures where Malta can attract jobs, pro- mote growth and achieve a more competitive positioning. He said now was the time to try and capitalise on Malta's positioning, on the country's strong economy and the favourable tax legislation. "Our economy is strong," he said. "We were the only economy, along with Germany, that weathered the recession with growth while all the southern European economies fal- tered. And Malta marches on, with the lowest unemployment figures in Europe and a 6.3% GDP growth last year." Satariano noted that with Moody's forecasting a 5.9% GDP this year, this should give Malta added value when trying to lure financial services away from the UK. "We have a solid financial services jurisdiction and a respected regula- tor," he said. "I am sure that the markets are aware of Malta's status as an OECD White List jurisdiction and they will no doubt have it on their hori- zon." Satariano said the IoD believed Malta has every opportunity to position itself as the jurisdic- tion of choice for all banks, lending house and in- vestment firms. But the opportunity for Malta and other European capitals following the UK's decision to leave the EU hinges on one simple process that Malta could easily take over from the UK: passporting. Passporting al- lows British-based financial institu- tions such as banks, fund managers and insurers to seamlessly sell their services across the 28 EU nations without having to get regulator ap- proval or set up subsidiaries in each member state. In the UK, banks use it to expand their customer base in the union, while EU firms use it to tap into the international financial markets via London, as a global financial hub. It is a financial springboard for the top 14 global firms in London which at the moment employ between them more than 60,000 people: big names like JPMorgan Chase, Gold- man Sachs, Bank of America Mer- rill Lynch and Credit Suisse all do business with the entire EU, with the benefit of only having to set up a base in one place. In an internal memo to its staff, and seen by MaltaToday, JPMorgan Chase chairman Jamie Dimon told his employees: "In the months ahead, we may need to m a k e changes to our Euro- pean legal entity structure and the location of some roles. "We recognise the po- tential for market volatility over the next few weeks and we are ready to help our clients work through it. As of today, there are no changes to the structure of our clients' relationships with JPMorgan Chase or their ability to work with our firm, but again this may change in the coming months or years." Amy Rajendran, head of financial communications at Credit Suisse, told MaltaToday: "There will likely be a two-year period before the UK exits the EU; over this time period, there are likely to be extensive nego- tiations with EU member states and domestic UK legislative reviews." UBS, the lending bank and invest- ment firm, was more succinct in its comment to MaltaToday: "As a Swiss organisation, we're used to preparing our business for change in line with the democratic will of the public. We are now at the start of a multi-year process and we will approach this in the same way we would in our home market. At this point there is nothing to add to this." But banks are not the only Lon- don-based companies currently considering setting up offices in other EU countries. The gambling industry in the UK could also take a large hit and could also be a very at- tractive target for Malta. "Right now, very few people are concerned about the impact of the Brexit vote on the gambling indus- try," Satariano said. "Online casinos, poker rooms and bookmakers in the UK have good reasons to be wor- ried." The UK, Gibraltar and the Isle of Man host some of the biggest gam- bling operators, who rely on pass- porting to be able to offer remote gaming across the EU. "They cannot afford to lose ac- cess to the EU markets and it is very likely that these UK-based gaming companies operating in EU markets might choose to relocate to Malta where they can enjoy the best of both worlds," Satariano said. EU finance hubs lust for Brexit's spoils of war No Brexit risk for global rich James Satariano IoD Director James Satariano says Malta should be more aggressive in marketing the island to Brexit 'casualties' Henley chairman Christian Kalin says UK's future with EU will do little to curb right to settlement for those seeking to buy an EU passport