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Citizenship residency is 183 days in calendar year
Agreement reached between Malta and European Commission based on six-month residency taxation requirement.
30 January 2014, 12:00am
Jurgen Balzan
Jurgen Balzan
2 min read
The international tax model, which Malta uses, employs a 183-day period over 12 months, or six months and a day
The Maltese government and the European Commission's agreement on effective residence is being based on the 183-day residency from the so called 'international tax law model' as the requirement for prospective applicants under the Individual Investor Programme, MaltaToday is informed.
This newspaper received a confirmation that applicants purchasing the €650,000 Maltese passport through the IIP will have to spend 183 days in Malta, over a calendar period: six months and one day.
They will also have to commit themselves to buy a €350,000 property which they will retain for a minimum of five years, or rent one at €16,000 per annum; and invest €150,000 in government bonds.
The EC yesterday brokered the residency requirement with the Maltese government, two weeks after the European Parliament condemned the sale of citizenship in a resolution.
Under the 183-day model, wealthy applicants applying for Maltese citizenship would be required to live in Malta for a period of six months in a calendar year.
International tax law principles stipulate that individuals who spend six months in a particular country are considered residents for tax-related issues. Each country has its tax legislation and Malta's law is set at 183 days as well.
In a press release issued yesterday, the European Commission said "the amendments include genuine links to Malta through the introduction of an effective residence status in Malta prior to the possibility to acquire Maltese naturalisation."
Moreover, the statement said that no citizenships will be issued unless the applicants provide proof that they resided in Malta for a period of at least 12 months, immediately preceding the day of issuing of the certificate of naturalisation.
The ambiguity of the term "effective residency" and Prime Minister Joseph Muscat's vague explanation and insistence that applicants would not need to live in Malta for a full year, has raised more questions than they answered.
However, MaltaToday is informed that the EC and the government's deal is based on the international tax residency requirements: a 2011 Ernst & Young global report on taxation, social security and immigration says that "in practice, individuals generally are considered resident in Malta if they spend more than 183 days in a calendar year in Malta. Individuals are considered ordinarily resident if Malta is their habitual residence."
A Commission spokesperson did not reply to questions on whether there's any truth in these reports.
However, the Commission expressed its satisfaction at the outcome of the negotiations which followed Commissioner Viviane Reding's statements in the European Parliament when she said that citizenship should not be linked to cash.
A spokesperson for Reding today told MaltaToday that the Commission will be "closely monitoring" Malta's implementation of the newly amended scheme.
Jurgen Balzan was a MaltaToday reported from 2011 to 2017.
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Sorry there never of ambiguity especially to anyone versed in financial and legal matters!
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Who is this spokesman? Does he has a name?
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This reding should be monitoring as well the thousands of illegal imigrants our 124 sq mile island is inundated with ! but that's like asking a bear to s... down a WC.
Priscilla Darmenia •
The 183 days mentioned relate to residency for tax purpose, however even this does not apply to everyone. For example a holder of a Permanent Resident Permit has a different tax regime, he pays a minimum of € 4,192 income tax and if he wants he will not spend 1 day residing in Malta. Still he is considered as a resident of Malta for income tax purpose.
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Any way you slice it, the IIP scheme remains unclear, unsettled and most importantly unfairly represented to the Maltese people to judge its worthiness.
The Prime Minister is free to trumpet its monetary contributions, but unless the whole IIP scheme is laid out in its full transparency, there remain certain questions and rightful debates from the EU, the leader of the opposition and most importantly the Maltese tax payers that will either benefit or finance this scheme.
If the Prime Minister and his cabinet had the insight to study and research well this scheme before it was irresponsibly introduced, this administration would have found a more pleasant sailing rather than the storm that brewed in Strasbourg and Brussels.
To all this embarrassment, the Maltese people ought to thank Joseph Muscat who in order to fulfill his election promises without a clear vision how to pay for them, he rushed into this undertaking by placing all his eggs into his one economic basket which is leaking like a sieve and is looked upon by disdain from the other side of the aisle and the concerned members of the EU parliament
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'A spokesperson for Reding today told MaltaToday that the Commission will be "closely monitoring" Malta's implementation of the newly amended scheme.' We all hope that the Commission will be 'closely monitoring' all members' implementation and not just Malta's!
Joseph MELI •
Wonder what those EU Treaty and International laws that Reding alleged we were violating and which have now become 'unviolated?'
