FINANCE

On Maltese shores

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With the world having becoming a far smaller place in recent years—with more cross-border trade, easier travel, single currencies in regions, and other factors—South Africans are enjoying the benefits this brings. One result of this trend is that those with large disposable incomes are looking for a range of investment opportunities both within the country and beyond our borders.

Investors now have access to a wide variety of different markets around the world, as well as to diverse types of asset classes. In addition, offshore investment is definitely a positive strategy to limit the impact of currency decline of the type we have experienced in South Africa.

Financial and retirement planning, especially for high net worth individuals, is informed by a range of factors, with many investors requiring flexibility to travel for business. South African business people engaged in international business require the ability to travel without having to apply for visas. However, holders of a South African passport cannot travel to many of the countries we trade with without a visa, such as the European Union (EU), the United Kingdom, the United States and China.

Henley & Partners, the global leader in residence and citizenship planning, advises high net worth individuals and their families, as well as their advisors, about the opportunities to invest overseas and, at the same time, to obtain a second citizenship or residence in a ‘safe haven’ destination where the currency suffers from less volatility. Detailed legal and financial information about 18 offshore locations is available to private bankers, tax consultants, lawyers and those offering fiduciary services in the 5th edition of the International Real Estate Handbook, a valuable resource for individuals considering the purchase of property outside South Africa.

Securing citizenship in a foreign country, alongside a property investment, is a solid asset with far-reaching benefits for individuals, businesses and families. This allows for visa-free travel (an invaluable tool for regular business travellers), greater flexibility in international tax planning and more privacy in investment and banking, and access to world-class education for your children.

The Malta Individual Investor Programme (MIIP)—a modern citizenship-by-investment program designed by Henley & Partners for the Maltese government under a Public Services Concession—is among the most attractive and comprehensive options in the world.

According to Sandra Woest, Senior Manager at Henley & Partners South Africa, “Malta is currently growing faster than the rest of the Eurozone, seeing steady growth of over 3% in 2015 and a thriving property market. In fact, demand for property is increasing on this island destination, which means that Malta offers solid opportunities for an investor to let out a property bought as an investment. Rental income would be earned in Euros, which is another hedge against the declining value of the Rand.”

Strategically situated between Sicily and the North African coast, Malta has evolved into an international business hub with reputable infrastructure over the past decade.

“This economic picture means that an offshore investment in Malta makes sense—your investment will increase in value over time, based purely on economic expansion, and will probably grow further when you look at the investment’s value in Rand terms,” says Woest.

Looking at the benefits of citizenship, a Maltese citizen gains the right of establishment in all 28 member states of the European Union, as well as visa-free travel to more than 165 countries around the world. With your South African passport, on the other hand, you can travel visa-free to only 97 states. Malta is ranked 9th in the world by the 11th Henley & Partners Visa Restriction Index, released in February 2016, while South Africa is placed 54th.

Malta is also ranked first among citizenship-by-investment programs worldwide by Henley & Partners in their Global Residence and Citizenship Program 2015 Report. The country offers relocation flexibility, transparency, compliance—with best practice in processing procedures—and visa-free access which allows for investor mobility.

The due diligence standards for the MIIP are the most rigorous of all the programs in the world, and so only the most respectable applicants are successful. The process is transparent, predictable and trustworthy.

Maltese citizenship is also a way of opening up access to education systems in other locations. In addition, Malta is an environment with very little crime, and has a good climate—one of the best in Europe—and is ranked among the top five providers of healthcare in the world by the World Health Organisation.

The MIIP requires investors to contribute a non-refundable donation to the National Development and Social Fund of EUR 650 000 (approximately R11.5 million) for the main applicant, and an additional contribution of EUR 25 000 (R44 000) for a spouse and each child under the age of 18.

Applicants are also required to meet additional investment requirements and obligations, including a period of residence, the purchase or rental of a residential property and undertaking an Oath of Allegiance. The process to achieve a certificate of naturalisation under the MIIP takes between six months and two years from the initial date of the application.

For South Africans who previously transferred assets to offshore locations but did not disclose them to the South African authorities, the time is ripe to regularise their affairs. The Minister of Finance announced in his recent National Budget Speech that there would be an extension of the period for applying for amnesty for such assets.

“Following this process means that a South African does not have to worry about legal action against him by the South African authorities if they identify that he has undeclared offshore assets.

“With greater co-operation among governments today to prevent tax evasion, it is more likely than ever that this could happen,” Woest explains.

Any South African investing for the future should consider some form of offshore investment, and for those with the means to pursue the citizenship-by-investment route, the Malta Individual Investment Program is a highly attractive proposition.

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