Reference is made to the OECD’s automatic exchange portal where a list of residence and citizenship by investment schemes has been published. The OECD claims that such schemes are legitimate in themselves but potentially may pose a high risk to the integrity of the Common Reporting Standard (CRS). Malta’s Individual Investors Programme and the Malta Residence and Visa Programme (the Malta Programmes) are included in this list.

PRESS RELEASE BY THE MINISTRY FOR FINANCE

In response to the OECD letter sent on the 23rd of March 2018 concerning the Malta Programmes, the Minister underlined the fact that Malta, as an EU member state, abides by the EU agreed directive on automatic mandatory disclosures. Furthermore, Malta has not only cooperated in the discussion and compilation of information on such schemes, but also made a number of commitments so as to further mitigate any potential risks. This shows Malta’s commitment to ensure that the Malta Programmes are not used for the purpose of circumventing the CRS.

In particular, the Ministry has clarified that “persons benefitting under the IIP and the MRVP do not automatically become resident for tax purposes in Malta nor are they granted any tax-related benefits once a person obtains citizenship/residence through such schemes”. For the purposes of the CRS, therefore, Malta Financial Institutions cannot conclude that an individual is tax resident in Malta, and consequently not disclose information, purely on the basis of such individual’s qualification under any of the Malta Programmes.

The determination of residence for tax purposes is a facts-based exercise; under the Maltese Income Tax Act, an individual would be considered resident for tax purposes in Malta depending on that person’s physical presence in Malta. Furthermore, an individual would become liable to taxation in Malta once such an individual becomes resident in Malta for tax purposes and is not given any beneficial tax treatment purely on the basis of qualification under any of the above-mentioned Malta Programmes. These factors do not seem to have been sufficiently considered in the analysis of the Malta Programmes.

The Ministry maintains that the listing of the Malta Programmes can only be a result of a misunderstanding. The Ministry looks forward to further engagement with the OECD so that +a proper analysis is carried out and the Malta Programmes are removed from the stated category.

Thursday 18th October 2018