Permanent Residency Scheme in ‘three-month limbo’

Ian Casolani was speaking during a press conference where the Real Estate Business Section voiced concerns about the Permanent Residency Scheme – a scheme suspended in December last year "without warning or consultation."

He said that in 2010 alone, 151 non-EU citizens purchased property in Malta at a value of over €35 million. This does not include EU nationals.

“These people not only buy property, they furnish it, visit Malta regularly and spend money on entertainment – bringing friends and family to Malta, the list goes on,” said Ian Casolani, chairman of the Real Estate Business Section within the Malta Chamber of Commerce, Enterprise and Industry.

He added that as many as 12,000 jobs could be at risk, aside from those at risk from the loss of revenue for the whole economy. “So many people benefit, the furniture industry, builders, entertainment venues, and estate agents, amongst others.  The tangible economic benefits are endless.”

He warned that the news of this abrupt halting spread like wildfire and is raising concerns among influential business figures that Malta is unstable and unreliable.

“The irony is that during 2010, the government, through Malta Enterprise, financially supported those who ventured beyond our shores to attract Permanent Residents to Malta,” John Huber said.

He added that while individuals in government who normally handle the documentation have been given instructions to not process further applications. “At the same time, government is still advertising the scheme on the Inland Revenue website,” he remarked.

He said that questions about exactly why the scheme was stopped, when it would start, or why the government is instating in perpetuating this uncertainty, have gone ignored. He said that when stopping the scheme, government had voiced concerns of potential abuses. "Abuses are not abuses until they happen," Casolani said.

He referred to the one case that the government has cited - an EU citizen who was reportedly "abusing" of Malta's free healthcare. "Given that the EU citizen could have been receiving the free healthcare through another residency scheme," Casolani said, "it is not even confirmed whether he was abusing of the scheme that government opted to shut down."

He also said that government also voiced concerns of Iraians who were reportedly attempting to "abuse" the scheme. “In the last two years the Permanent Residency Scheme and the spill over effects it has on our economy was one of the major factors that kept the economy ticking along successfully - and this despite all the turbulence of the global economic crisis,” Casolani said.

He added that this was one sector of the local real estate market that was doing well at a time when the local market was depressed and many international overseas markets are in disarray.

“In the meantime, while the scheme is suspended, Malta’s competitors such as Cyprus and Portugal are all creating incentives to bring foreign investment their way,” he warned, “whereas we are about to turn it away after years of heavy investment to attract it in the first place.”

Casolani said  the industry was informed of the scheme’s suspension due to “certain abuses linked to the low minimum rental obligation”, as well as concerns by government that holders of Permanent Residence would automatically become long term residents after five years in Malta.

In this regard, Casolani said the section offered proposals, which government agreed would curb such abuse. “However despite this agreement, we have been waiting for word from government for the past three months, yet we don’t know what is going to happen.”

Among its proposals, the Section recommended: A looping system to restrict Permanent Residence holders from clocking the five yrs and becoming long term residents. Any tax incentives shall be lost if a non-EU national applies for long term residence and moreover, their tax liability in Malta become more onerous; Permanent Residence holders are obliged to possess a substantial health insurance cover; The low minimum rental obligation being immediately raised to €12k annually from the current inadequate €4150 p.a., in order to curb abuse. 

Despite having reached agreement on the way forward, the suspension remains to be lifted. “In the meantime we are financially committed to attending fairs overseas without any information at hand on how a person can come to live in Malta. We continue to market Malta, without being able to answer even basic questions on our residency options and attractions,” said John Huber, Officer within the Malta Chamber, also speaking during the conference.