Renewal permanent residence permits

Another mention of the scheme on the Times online today:

http://www.timesofmalta.com/articles/vi … ech.360529

But not much new information.

Hi all,

There is an interview with Finance Minister Fenech about the Permanent Residence Scheme in todays Times of Malta pointing towards discussions with the EU commission over the scheme.

Sadly the interview is in Maltese which really makes sense for a topic that many Expats are really interested in.

It seems that scheme members have opted for long-term residency after 5 years and are claiming the same rights as Maltese to free health care. It appears that the 'abuse' of the system is really a loophole and that for payment of 5 times the minimal tax of around 4000 € = 20.000 € you can buy yourself lifetime free health insurance in Malta and possibly other benefits too.

So we will have to see if or how the scheme can be saved with new conditions to plug the holes if that is possible under EU law.

Here is the link to todays article and video:

http://www.timesofmalta.com/articles/vi … ech.360529

Regards
Ricky

"Sadly the interview is in Maltese" - that's because the focus of discussion isn't on making sure foreigners thinking about PR are reassured, but about appeasing Maltese who due to a of lack of information believe the PR scheme is only of benefit to Maltese property tycoons.

Sadly the end result of this fiasco is likely to be
(1) non-EU citizens are put off taking up residency under PR, so a loss of revenue to Malta
(2) EU citizens will either be put off living in Malta, or will take up OR rather than PR, which would mean a loss of revenue to Malta
(3) giving extra ammo to the section of Maltese society who would rather Malta was for the Maltese only

Tweak the PR system, but don't destroy it through inertia, wilful or otherwise. Explain why PR is a positive to the Maltese people - publish a cost benefit analysis. Income tax isn't the only tax PR holders pay - how much VAT do they also pay ? how many jobs do they support ?

From the article a quote from the finance minister "We have to be careful we don’t end up with a situation where the country’s citizens, through their taxes, pay for extra services in return for a small amount of €4,000 the country was making in tax, apart from the investment in property,”  - I suspect 4,000 is more income tax than the average Maltese citizen pays, so its hardly a small amount, and suggests even if a PR holder had the same entitlements as a Maltese citizen, Malta still on average is a net beneficiary

hi quick update well ive arrived in Malta however my husband (moroccon) is now being messed around by the italian embassy in rabat ive been recieving emails from a lady advising us what to do and the actual embassys are contradicting her response now we are very confused at what to do, is it worth me contacting the immigration police here first as the embassy wont help they tell him he must apply for tourist visa and not family member of an eu national help please...... i need my husband here

Hi,

I'm sorry to hear about the problems. It is very difficult to give advice from the outside but as far as I experienced with my partner you have to apply for the family member visa`or residency. Your partner cannot do that himself! But I could be wrong.

But if that is the case that only leaves the tourist visa option . Any embassy or authority in Malta won't be able to help as you have to have the visa before you arrive and you have to apply for a visa at the embassy in your home country.

If the UK was part of the Schengen area it would probably be easier.

I hope you get things sorted out before you leave Malta.

Regards
Ricky

Ricky,

How do i apply for the family visa for him? i have jus contacted someone from the goverment in the hope they can enlighten me on course to take, the tourist visa ask for so much information I know we would be unable to provide as he quit his job in UAE with me to take care of his sick mother in Morocco now shes better he ready to join me, I just wish things were easier when you marry a foreigner lol, I will keep tackling this, shame about the weather today did you get rain your end? Melliah we had a beautifull waterfall ha ha

regards

si

Hi Si,

The family member of an EU citizen rules only apply when you are travelling together. If not,the usual Schengen visa rules have to be followed by your husband.

Your husband will have to apply for a Schengen visa in his country of residence . It is for 3 months and usually cannot be extended but in your case,as you are only staying for 5 months in Malta,you might be able to get an extension for 3 months when he is in Malta.

The fact that he is married to an EU citizen should make the issuing of the visa easier as the marriage details are asked for on the application form.

Of course there are are a few more conditions like adequate funds and health insurance coverage.

When here in Malta you can apply for residency for yourself and your husband. After 3 months stay in Malta you should apply anyway.

The Immigration department might just choose to extend your husbands Schengen visa for 3 months if you are leaving Malta after 5 months.

Your husband will not be allowed to work in Malta with a Schengen visa.

Hope this helps you a bit.
Ricky

thanks Ricky, see the eu website says he can come in on a spouse of an eu member if hes going to join me so many websites have said diff things hence the confusion, when hes here no problem we can deal with the extension but its getting him here thats the problem as the embassy in his country is now saying they only issue visas for tunis (Italian Embassy) noone in Morocco seem to know anything if hes not allowed to work no problem, il update you if i get some luck.

Kind Regards
Si

Hi,

The main problem seems to be in the fact that the UK residence regulations do not apply to the Schengen area as the UK is not a member state.

Does your husband have stamped in his passport that he is the spouse of an EU citizen ?
If not, then there will probably be no way for him to be accepted as spouse of an EU citizen. He will need his own visa.

As Malta is your husbands destination the Maltese embassy in Morocco is the place for him to go. Malta is represented through the Italian embassy though so they should issue the visa.

Did you marry in Morocco? If so you might also have a problem with the recognition of the certificate.

Maybe the solution would be to go and get him from Morocco -)))

I wish you luck and success.

Ricky

well if nothing works then i may have to go get him, no we married in UAE but was legalised for international recognition. noone told us about stamphing his passport as if known we could have done that and not faced such difficulty. luckily now he has an appointment tomorrow at the italian embassy so fingers are crossed it works out.

thanks for your advice.

si

Hi si,

I wish you both luck that it can be worked out tomorrow.

Hope to see you both soon in Malta.

Regards
Ricky

The Finance, Economy and Investment Ministry is still drawing up a new permanent residence scheme,
John Huber, said that he is satisfied that the government is being receptive to the stakeholders’ feedback regarding the reinstatement of the permanent residence scheme.

A government spokesperson explained that consultative meetings are ongoing and suggestions from stakeholders are being evaluated.

The scheme had been suspended on 24 December 2010 affecting all foreign nationals originating from outside the European Union and inside the EU

A permit issued to non-EU and EU citizens through the Residents Scheme Regulations provides the permit holder with the right to reside on a permanent or indefinite basis in Malta. Resident permit holders qualify for a 15 per cent flat rate of income tax and access to Malta’s taxation treaty network. A residence permit does not confer Maltese domicile.
    

Having frozen the issuing of resident permits for all EU nationals and non EU nationals it is said they are contemplating changing their tax system for foreigners which up to now has been very generous on a 15% remittance tax on earned income derived outside the island that is brought into the Island.
Although every article  says non EU nationals the tax expert that I spoke to assures me it also at present applies to EU nationals.

Estate Agents and Developers are very worried as so many people moving to the island are putting all their decisions on hold and this has been in this stalemate position for five months.

One Estate Agent has one  buyer prepared to spend up to 6 million but can not proceed until the situation is clarified.
Apparently many people have said that the EU is pushing hard for them to increase their taxes on non Maltese residents and it is said that they try to appease at every opportunity.
.

Alexandra - most foreigners living in Malta (I'd guess 90% plus) don't use this scheme, but are ordinary residents, and are subject to the same tax rates as Maltese citizens (albeit not on worldwide income).

Most of the people I know all use this scheme and would be looking to move from Malta if they have to pay tax on their World wide income.
Many places in the World are offering many schemes if Malta do not act quickly the property market will crash which for the last few years has contributed to the wealth of Malta

who doesn't use PR
(1) practically all EU citizens
(2) anyone employed

There are 15-20,000 foreigners living in Malta - at a guess 1,000 max are PR, but thats only an educated guess - does anyone have the actual figure ?


"Having frozen the issuing of resident permits" - they've only frozen PR not ordinary residence permits - your post gives the impression that all foreigners are being impacted by this.

"Most of the people I know all use this scheme and would be looking to move from Malta if they have to pay tax on their World wide income." - I'm not surprised to hear that. This would also apply to the vast majority of foreigners who are ordinary resident. If worldwide taxation came in for them, the number leaving would, I suspect, be far greater than PR permit holders leaving.

Unless you have the exact figures it is difficult to assess how many people it will impact on certainly all the major developments like Portomaso, Tigne Point and many upmarket developments will be hit if the rules go the wrong way and there would be a knock on effect for the economy.
Already there has been a slump in sales of properties and rentals and with so many hedge fund operators looking at the Island the one thing financial people do not want is uncertainty.
I hope this wonderful Island does not have a property crash but if Malta is bullied by the EU there is only one way for the Island to go.
Ireland has the same identical rulings on personal tax but will not be bullied on the issue of corporation tax the only thing Ireland is lacking is the sunshine

Many people feel that this situation should be dealt with as soon as possible on many levels it does leave this subject open to much speculation on searching the web there were many comments on a property market that could become critical please follow link
housepricecrash.co.uk/forum/index.php?showtopic=69629

Hi alexandra_44,

Welcome to the forum.

I get the feeling from your posts re the property market in Malta that you are not impartial in your opinion. They are very one-sided in support of the already existing and ongoing overdevelopment all over the island but especially in the area I live - Sliema. Anybody walking the streets can see with their own eyes the sheer numbers of unused/unoccupied new and old town houses ,apartment buildings ( finished or just in 'shell') form) or just holes where townhouses have already been demolished.

There are high-rises with more than 20 floors planned next to the existing Tigne Point site and a huge multi-story hole in Gzira awaiting building start apart from the more than 30 apartment buildings going up on or near Tower Road/Dingli Str. Not to talk about the rest of the island and even Gozo.

Well, if the investors were counting on the Permanent Residence Scheme to sell all those thousands of apartments I guess that is bad luck or maybe a bad investment decision. The link you added has a first comment on the problem dating from 2008, but the trend has been around for as long as money has been cheap and the house prices were seen to be going only in one direction - up.

In the end this model didn't work in the US, Irland,UK, Spain and many other countries.Why should it work in Malta?

Most people I talk to - Maltese and Expats - are just amazed by what is going on and you have to wonder how long the property market/building will keep on going before collapsing due to lack of money and buyers.

The Permanent Residence Scheme will not be the big fix ,if it ever returns.

Regards
Ricky

I would agree with you it is a great folly to keep building as unless you are a major city in the World like London, New York, Paris, which has an enormous demand it is a very dangerous game the basics of economics is supply and demand.
If you take central London prices are at an all time high with a very clear shortage but if you take Leeds, Manchester, Birmingham there has been a very large slump due to speculative building without the demand.
Getting back to the PR scheme it is madness to suspend a very competitive tax situation which every Estate Agent pushes to high net worth individuals and although there are many empty buildings compared with many other areas of the World it is a very attractive scheme.
In Monaco a studio flat could cost you £1,000,000 although there is a zero tax I think many people under estimate how many people look at Malta where without this scheme they would not be interested if it is not in place.
I know many wealthy individuals that have moved to Malta and made heavy investments because of this scheme.
Just a few years ago many wealthy Scandinavians have moved to the Island and this figure of 1000 people is way off the mark.

If 1,000 is way off the mark, how many PR permit holders do you think there are ? I know several hundred foreigners living in Malta, and (AFAIK)way less than 10% are PR, but it quite likely these people are not representative of the type of foreigners who are PR as PR often live in the special designated residential areas like Tigne Point, or only live in Malta in name only. I suspect its the last category which concerns the EU - offering low tax rates to people who aren't really resident

The justification for PR shouldn't be about supporting the property market (and its by no means clear if the property market should be supported - despite a 20% fall in prices, property is still way over-valued), but about the overall impact on the Maltese economy. The game changed when Malta joined the EU as all EU citizens could move to Malta as a right, and weren't dependent on getting PR to guarantee a residence permit.

I agree PR should be reintroduced. The last few months has been a marketing cockup by the Government. They will need to announce the new scheme conditions ASAP, and just as importantly, announce that they will be fixed for say the next 10 years. Malta needs to decide what it wants from PR - if its to attract high net worth individuals, then the current property needed to be purchased to satisfy the conditions is way too low.

An Estate Agent has informed me that he has heard for EU and Non EU people the new purchase price for purchase of property on the PR system will be between £300,000-£500,000 minimum and the minimum tax rate will double. This could be the wrong decision as it will widen the gap where other places such as Monaco, Cypress, Ireland, Gibralter, might come into play.  Of course it just might be speculation.

Hi all,

While I was waiting for our dog barking case to be called in the Valletta court I took the chance to talk to somebody in the real estate business about the situation with the Per. Residency scheme. I was told there was nothing new on it but that it was hinted that the possibility of renting a property could be dropped altogether and that the minimum price for buying a property could be 500 000 €. If so , that would certainly increase the price tag on Permanent Residency by a major amount.

Regards
Ricky

The no renting (or at least doubling the rent to 1K/month) and 500K purchase price seems to be the most popular rumour - it would certainly weed out a number of the number of PR applications, but that appears to be what the govt wants. Would be interesting to see if its applied retrospectively to current PR holders

Its a joke, can see how they are trying to prop up a property market based in fantasy land. Now the apartments which are all 100k get flogged to the qualifying foreigner for 500k

countdown to a property market crash anyone ?

Eagle wrote:

Now the apartments which are all 100k get flogged to the qualifying foreigner for 500k

why would a foreigner pay 500K for an apartment worth 100K, when they can buy one worth 500K for the same price

True , however numbers I've seen circulating are that tourism is roughly 30% GDP , 30% construction with services at 15-20%.
I believe the government is trying to prop up an ailing construction sector / property market by putting an artificial bid on the minimum in some sectors of the property market.

It creates a distortion when there is a buyer who cannot drop his/her price to whatever the market reality is IMO.

Lets get this into perspective in terms of the property market - the vast majority of foreigners looking to move to Malta use OR not PR, and foreigners are not the only people who buy property in Malta.

Eagle wrote:

It creates a distortion when there is a buyer who cannot drop his/her price to whatever the market reality is IMO.

There are plenty of apartments and houses priced above 500K currently - most of these are bought by non-PR holders

That could be, and i am sure that there are objects which are worth the value, but if you look at the amount of supply on the market at the moment. My personal view is that most are overly inflated.

And its only a matter of time as interest rates start rising, when developers start feeling the squeeze, and need to bail out ala Ireland, Spain etc

Eagle wrote:

Its a joke, can see how they are trying to prop up a property market based in fantasy land.

By imposing a high minimum if anything they will have the opposite impact, as many potential PR holders will decide to live elsewhere.

Eagle wrote:

My personal view is that most are overly inflated.

agree

georgeingozo wrote:

By imposing a high minimum if anything they will have the opposite impact, as many potential PR holders will decide to live elsewhere.

Yes I think its going to have the opposite effect long term, but I guess thats where the debate is

if it will prop it up artificially in the short term and create some kind of demand from those that are in the pipeline and are sitting on the sidelines.

Because PR doesn't require residency (unlike OR), I'd suggest PR is much more price sensitive (price meaning property and tax rates), whereas OR is more lifestyle sensitive.

If the rumoured new PR criterion do come in and they are applied to existing PR holders, I believe the short term impact will also be negative on the property market

Tonio Fenech, the Finance Minister, spoke at a presentation by the accountants Blevins Franks last week.  He quoted, if memory serves me. a figure of about 800 for the number of current PR scheme participants.  This is in the same ballpark as George's estimate of 1000.

Thanks for that John - so less than 5% of the foreigners living in Malta have PR (not all PR holders actually live in Malta, as residency isn't a criterion for maintaining PR status)

The latest mention of the ongoing discussion about the Permanent Residence Scheme was in this article in MaltaToday yesterday Monday 13 th June.

http://www.maltatoday.com.mt/news/%E2%8 … -the-works

There's no real new information.

John Huber says that they are " seeing the light at the end of the tunnel " but he doesn't say how long the tunnel is.

Regards
Ricky

ricky wrote:

John Huber says that they are " seeing the light at the end of the tunnel " but he doesn't say how long the tunnel is.

Regards
Ricky

...and maybe that light is an on-coming train!

Looks like we have to make up for parliments 500euro per week raise.


Chad

Thanks for the link Ricky!
It really is  good news knowing that it's John who is working and questioning  the permanent resident scheme on behalf of the Chamber.With John's expertise on the subject , I am confident that goverment will find  no further  excuses .
http://www.maltatoday.com.mt/news/‘revi … -the-works

What's sad is that  John is the only local professional that has been following up on the  PR suspension  and  insisting on its reinstatement.  The other tax advisors don't seem  at all bothered  evidently  because they prefer the corporate tax sector  as  corporate charge out rates are far higher