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MAY 2012 |www.opp.org.uk


MALTA


least 90 days a year and buy property worth at least €400,000 (£335,000) (or spend €20,000 (£15,000) a year in rent). If these conditions are met then foreign income will be taxed at 15%. The minimum tax payable is €20,000 (£15,000) a year and €2,500 (£2,000) per dependent.


“The scheme is one of the elements that is keeping the country’s economy ticking over,” said Dr Mifud. “With its ‘up-market’ revisions however, we’re also now seeing greater numbers of (HNWI) investors looking to do business on the island.”


And premium resort developments on Malta, such as Tigne Point and


“Infrastructure and restoration initiatives are drawing fresh interest from overseas buyers”


Portomaso, are refl ecting this sudden surge in high-quality investors. Both projects offer a mix of luxury homes, commercial outlets and leisure amenities. It is a model that other schemes on the island could use as a template says Douglas Salt, director of agency Frank Salt. “Infrastructure and restoration


initiatives such as the avant-garde remodelling of the Valletta Waterfront are also drawing fresh interest from overseas buyers, while Maltese banks have continued to offer home loans to foreigners, all of which is helping to sustain investor confi dence levels,” he says.


And home values remain competitive with prices comparing well with rivals like Italy, Cyprus and Portugal. The dip


in values in 2008 and 2009 is providing a lot of choice in high-end homes at good prices. This applies to both fi nished schemes and developments currently under construction in sought- after districts like Fort Cambridge in Sliema, or Pendergartens in St Julians. Here, entry-level prices start from £120,000.


“Activity levels in the construction sector remain high despite the current slowdown in price growth,” said John Cutugno of Homes in Malta. “But the island is also looking at ways to capitalise on its already sizeable expat base. 4.5% of residential real estate is foreign-owned, a large percentage of which is British.”


Where to Buy Villages like Naxxar, Rabat and


Lija appeal to retirees and ex-pat buyers with young families. Here, restored townhouses and period maisonettes sell from £200,000, and vintage palazzos complete with garden courtyards, mosaic pools and roof top terraces go from £375,000. “Older properties have a scarcity value,” says Salt. “Period homes are not only irreplaceable, they are also actually designed for the climate.” Another weapon in the island’s armoury has been its can-do approach to planning and regeneration. Malta’s Environment and Planning


Authority (MEPA) has worked hard to encourage “Special Designated Areas” (SDAs) - a key regeneration initiative launched in 2003 for high-end turn- key residential waterfront and marina developments. New projects coming on stream in the past two years include Madliena Village in Gharghur and the Ta Monita scheme in Marsascala, both


GENERAL OUTLOOK | 45


How does the PRS scheme work?


The 1988 Malta Permanent Residence Scheme was designed to attract high net worth individuals to take up permanent resident status in Malta. The scheme is especially attractive to retirees, authors, intel- lectuals and international consultants … or simply persons seeking to establish an alternative residence that suits their lifestyle and tax profile, explains legal firm Chetcuti Cauchi. The financial qualifications are easy to satisfy and permanent resi-


dents are entitled to the following benefits: • No minimum stay requirements; • A low annual tax liability of €4,230 (approx. US$4,900); • No world-wide income/wealth tax - tax only paid on income remitted to and kept in Malta; No need to purchase property - only a minimum annual rent of €4,230; • No minimum investment requirements; • No Inheritance/Wealth Taxes.


New Permanent Residence Schemes New applications under the PR Scheme were accepted between 1988 and 2010 and existing PR permits remain valid subject to compliance with the current rules applicable to their Permanent Residence Permit. New applications for permanent residence must be made under the 2011 HNWI Residence Rules that are available in two streams: one for European nationals and another for non-European nationals. Lke the original Permanent Residence Scheme, the new 2011 Maltese


HNWI Rules are designed to attract high net worth individuals to take up permanent resident status in Malta. The financial qualifications are easy to satisfy and permanent residents are entitled to the following benefits: • An annual tax liability of €20,000 to €25,000; • No worldwide income/wealth tax - tax only paid on income remitted to and kept in Malta; • No need to purchase property - only a minimum annual rent of €20,000; • No minimum investment requirements; • No Inheritance/Wealth Taxes; • No minimum stay requirements.


of which have seen more than 30% of their units sold to overseas investors. Prices here start in the region of


£130,000 for a one-bed apartment, to upwards of £1m for a luxury penthouse, with full property management services on hand.


Buying in Malta


And the buying process is simple too. Malta has one of the most reliable and straightforward legal systems in Europe, with contracts written in English and property transfers deemed unbreakable. Security of title is guaranteed. Indeed, once a property has been selected and price and conditions have been agreed, a preliminary contract is signed between the vendor and purchaser with a sum equivalent to 10% of the price lodged with the notary as a deposit.


Plain sailing | Malta has a transparent buying process and a reliable legal system


Overseas investors are only permitted to purchase one property, the


single exception being in SDA resorts where multiple sales are common. The exception to the rule is if you reside in Malta on a permanent basis for fi ve years, then you can purchase an additional stand-alone property. Malta charges no capital gains tax on property sales after three years of ownership, but any local or overseas income brought into Malta is taxable at a rate of up to 35%. Residents can however, take advantage of The High Net Worth Individuals Scheme, which charges a fl at tax rate of 15 per cent, subject to a minimum tax liability of €20,000 (£15,000), as mentioned before in this article.


Also, there is no inheritance tax in Malta. However, in the event of death, the benefi ciary is liable to a 5% transfer tax on the value of the property. If the property is jointly owned and one of the spouses passes away, the 5% is levied on half the value of the property.


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