Malta’s golden visas - what problem are they solving and who benefits?

Abstract

Being a resident in the European Union, even without holding an EU passport, brings a number of privileges: no-questions-asked travel in the Schengen zone, family reunification, education and vocational training opportunities, and easier access to business and financial services. For many non-EU nationals hoping to reside in the EU, this means piles of paperwork and intrusive questioning by various immigration gatekeepers. For the more affluent ones, residence rights can be bought off the shelf and arranged by one-stop-shop type well-connected service providers. Authorities of the European Union, notably the European Commission, increasingly criticise and even try to prevent EU passport sales. In contrast, the sale of residency visas, also known as golden visas, receives far less attention. In Malta, which runs one of the cheaper golden visa schemes in Europe, the rules around golden visa access are benefitting a range of local actors – notably law and tax service firms, as well as real estate developers – with very limited trickle-down effect to the broader community in terms of income. According to a report presented by then Citizenship Parliamentary Secretary Alex Muscat, over three years, Malta’s residency visa programme generated fewer than 150 jobs in the country – where the unemployment rate is already low. However, from the number of visa applications we know that it created a demand for thousands of residential units, since buying or renting a property is a requirement for the golden visa. In contrast to other Southern European countries, where similar schemes were initiated to prop up their crashing real estate markets during economic downturns, the Maltese real estate sector was already overheating at the time when the golden visa was launched, and it is increasingly unaffordable for the residents. The minimum threshold for the golden visa is in the range of the largest rental segment in Malta, and our data shows that very few visa buyers went for more than the minimum. This report, written by the Daphne Caruana Galizia Foundation and supported by Transparency International, looks at the national and local impact of the golden visa programme (the Malta Residence and Visa Programme, MRVP, and its successor, the Malta Permanent Residence Programme, or MPRP), focusing on the actors that benefitted the most. From active ruling party political candidates serving in the responsible agency’s board to Chinese companies enjoying privileged access to Malta’s government, from offshore structures to landlords finding ways to extract profit both from golden visa buyers and from the booming tourism economy, the golden visa scheme has solidified the power of already highly influential actors. Documentation seen by the Foundation shows that former Prime Minister Joseph Muscat was engaged as a consultant to one company that provides both financial investment and real estate services to visa buyers.