An attractive business climate, liberation from visa-related formalities, protection of assets and personal security guarantees – it is no wonder that passport programs of Cyprus and Malta are so popular. Which program holds more advantages in terms of the cost, investment options and requirements to obtain citizenship? Today’s article will cover all these questions and more.
Why do majority of investors wish to obtain an EU passport?
Here are 5 main advantages of an EU passport:
- Freedom from territorial restrictions. Along with an EU passport, a foreign investor is given a set of rights and freedoms of an EU citizen, including the right to reside, study and work in any member state of the European Union.
- Broad map of visa-free travel destinations. EU passport holders are released from visa-related formalities and are free to travel to more than 150 states and territories around the world.
- Opportunities for scaling a business. The EU passport opens new horizons for the development of one’s own business, and an attractive tax system facilitates business operations.
- Access to a progressive healthcare system and leading European universities.
- High standard of living, social and legal protection. In the list of countries with a high standard of living prepared by the UN, Cyprus is ranked 32nd, and Malta holds 37th position.
How much will the EU citizenship cost?
To obtain a Maltese passport an investor is required to make a donation of € 650,000 to the special government fund, but there is more than this. A program participant will also have to:
- purchase a real estate in the territory of the country with a market value of € 350,000 or more. As an alternative, there is an option of renting a residence for at least € 16,000 per year during 5 years;
- invest € 150,000 in government bonds.
If we take into account the additional fees, the investor will have to pay € 888,200 (the option of renting real estate during five years) to obtain the passport of Malta. If an applicant chooses to buy a real estate item, the cost of obtaining citizenship will be € 1,158,200. In the first case, the non-refundable part of the expenses for obtaining a citizenship will reach € 738,200, while in the second case, it will be € 658,200. The total cost of obtaining citizenship will depend on the number of family members and their age.
The most in-demand areas in Malta are Sliema, St Julians, St Paul’s Bay, Qawra; the most rapidly developing ones are Qawra, Marsascala, Birzebugga.
An application for the citizenship of Cyprus may be submitted by individuals who have resided in the country for at least seven years. Another, faster option is to obtain a Cypriot passport by investing:
- at least € 2 million in real estate of any type. The purchase of both a real estate object and a building plot is acceptable. Also, an investor may build a real estate portfolio consisting of several objects;
- at least € 2 million into an operating business or one’s own business project. There are no restrictions in terms of the business area.
A combination of the options is also acceptable. In this case, the minimum amount of investments shall be € 2 million (purchase of government bonds for € 500,000 + investing € 1.5 million in other assets).
Obviously, the costs of obtaining a Cypriot passport are much higher, but it’s possible to return the investment. In 3 years, assets can be sold and the money may be returned in circulation. The only condition is that the investor is required to purchase real estate worth € 500,000 for life.
Cyprus or Malta: which program has more advantages from a long-term perspective?
One of the key conditions of Malta’s economic citizenship program is that an investor who purchased housing cannot act as a lessor. Accordingly, he will not be in a position to rent out, let’s say, a villa to tourists and receive additional passive income.
An investor may expect that housing will be more expensive to resell in 5 years when the mandatory ownership period expires. There is every reason to believe that this will be the case. The real estate market in Malta is rather stable in recent years. The country is small, most of the territory is occupied by monuments of architecture, new buildings are rarely built because there is not enough land for building. Therefore, housing prices are rising.
There is also an option to make money on government bonds. According to official data, the average annual return on securities varies from 2 to 7%.
Most of the program participants are more willing to invest in real estate. Why? Residents of Cyprus are required to own real property on an island worth at least € 500,000 for life. By the way, real estate on the island is a valuable asset: housing may be leased thus bringing a profit.
As of 2017, there was a 24% growth in real estate sales in Cyprus
An island’s real property attracts residents of Russia, CIS countries, the Middle East and Asia. These particular countries annually provide a good inflow of foreign investment. The positive dynamics in the Cyprus real estate market is also confirmed by the data provided by the Department of Land and Surveys of Nicosia. According to the department’s assessment, Cyprus property sales have been growing steadily for the fourth consecutive year.
Did Cyprus gain any benefits from the launch an economic citizenship program? Yes. For the first time, experts noted an increase in sales by 20% after the crisis in 2014 when the program “Cyprus Citizenship by Investment” was launched.
Opportunities for visa-free entry and residence
Maltese and Cypriot passports are equally powerful. In the Global Quality of Nationality Index which takes into account the possibilities of visa-free travel, Malta and Cyprus are holding 25th and 26th positions, respectively. Holders of Maltese and Cypriot passports can freely enter the territory of the UK, Hong Kong, Australia, Japan and other countries without being burdened with visa formalities.
The main difference is that residents of Malta can freely travel to the United States while Cyprus citizens need a visa to travel to this country. By the way, the latter are eligible for applying for a 10-year visa to the United States.
Timeframes of citizenship application procedures
Participation in the Cyprus passport program is the fastest way to obtain the EU citizenship. The entire process of passport application from the moment the case is filed takes up to six months.
Applying for Maltese citizenship takes up to 14 months.
Requirements for applicants
Both programs are known for the loyalty and simplicity in obtaining the second passport. The countries offer a clear scheme for acquiring an EU citizenship, provided an applicant is ready to invest a substantial amount of money into the country’s economy. Only adult investors are eligible to file documents for citizenship. Tarnished reputation, prior convictions and serious illnesses are weighty reasons for refusal. Applicants undergo a rigorous due diligence procedure that helps to screen out unreliable candidates.
Who can obtain citizenship together with the main applicant?
The persons entitled to file documents for the citizenship of Malta together with the main applicant include a wife/husband, dependent children under 26 and parents aged 55 or above.
The Cyprus program entitles spouse, dependent children under 26 years of age, and parents to acquire citizenship provided that they own a property in Cyprus worth at least € 500,000.
It is worth mentioning that the possibility of including parents in the list of applicants for citizenship in Cyprus appeared only in 2016, when the government made respective amendments to the immigration laws. In Malta, this opportunity has always existed.
Important organizational nuances
- The Government of Malta sets strict quotas for granting citizenship. Only 1800 foreign investors can become the country’s residents. To date, citizenship has been granted to 566 applicants that is 31.4% of the established quota. The program of economic citizenship of Cyprus has no such limitations.
- The term of retaining investments in Malta is 5 years, in Cyprus – 3 years.
- The citizenship of Malta, like the citizenship of Cyprus, has no expiration date. But! To meet the requirements of the program, residents of Cyprus are required to own personal property worth € 500,000 for life.
- Obtaining passports of both countries does not mean that an investor becomes a tax resident in a certain jurisdiction. To change tax residency in Malta one has to stay in the country for at least 183 days per year. In Cyprus, this period has recently been reduced to 2 months. In all other respects, there are no requirements for permanent residence in the territory of the countries.
- Both Cyprus and Malta recognize dual citizenship.
- Investors, as well as their family members, are not required to pass language proficiency test and exam in history of the country.
In summary, application procedure for obtaining the citizenship of Malta takes minimum 14 months, and to change tax residency it is required to stay in the country for 183 days. Applying for a Cypriot passport takes up to 6 months. To change residency one needs to reside in a country for 60 days. Indeed, in Cyprus, substantial investments are required (at least € 2 million), but there is no need to make a donation of € 650 thousand, as in Malta. At the same time, the passport of Malta allows you to freely enter the United States without having to obtain a visa.