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Tonio Ellul. Investing in Mediterranean Real Estate Malta 07.06.2013

Tonio Ellul. Investing in Mediterranean Real Estate Malta 07.06.2013






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    Tonio Ellul. Investing in Mediterranean Real Estate Malta 07.06.2013 Tonio Ellul. Investing in Mediterranean Real Estate Malta 07.06.2013 Presentation Transcript

    • Distance from Moscow - 2808 km Where is Malta?
    • Where is Malta? Malta is situated in the centre of the Mediterranean  80 km (50 mi) south of Sicily (Italy)  284 km (176 mi) east of Tunisia (North Africa)  333 km (207 mi) north of Libya (North Africa)  1510 km (937 mi) west of Greece
    • Political milestones Independent from the UK since 1964 Republic since 1974 Member of the European Union since 2004
    • Facts and figures Area - 316 km2 (122 sq mi), making it one of the world's smallest states Coastline: 140km long Malta is 27km (16 mi) long and measures 14km (8 mi) at its widest point Population: 452,515 (2011) Capital city – Valletta (European capital of culture in 2018) Time zone – CET Official languages are Maltese and English – other languages such as Italian, French and German are widely spoken
    • Facts and figures  Very Reasonable Cost of Living  Modern communications infrastructure  Excellent connectivity with daily flights to major European airports  Politically stable – elections are held once every 5 years  Highest concentration of UNESCO World Heritage Sites per m2  Safe  Easy and relaxed lifestyle  National healthcare system voted as 5th best worldwide in 2012 by WHO  Voted 3rd Overall for Quality of Life by International Living 2011 AND  The Maltese are constantly voted as one of the Happiest People In Europe!!!
    • Climate Warm Mediterranean climate with mild winters and hot summers with a cool sea breeze Daily temperatures range from 15° C (59F) in winter to 32 ° C (90F) in summer Approximately 330 days of sunshine every year
    • Maltese Landmarks
    • Economy  Currency – Euro since 2008  GDP in 2012 – 8.6 billion Euros  Economic growth in 2012 – 1.2 % - EU forecasts that Malta will register the second highest growth among the 17 members of the Eurozone  Unemployment in April 2013 – 5.5%  Rating: “A+” (Fitch - April, 2013)  Lowest effective tax rate in the European Union
    • Economy Main contributors to GDP:  Tourism (35%) - over 1.3 million visitors annually  Industry (27%)  Financial services (15%) - over 7,000 employed. In the next few years, this is expected to increase to 25% of GDP
    • Economy Malta’s financial stability. The European Commission has stated that:  The large financial sector poses limited risks as the majority of financial institutions present on the island were internationally oriented and did not do any business in Malta  Malta’s financial system is generally safe and sound  Domestic banks are rather conservative and rely mainly on resident deposits for their funding ; they have low loan to deposit ratios  This, and the stable deposit base thanks to Maltese households’ high propensity to save, helped core domestic banks cope with the financial crisis and the volatility on international wholesale markets  The Government has not experienced any problems with debt financing thanks to high domestic demand for issued securities
    • Economy  LONDON (Standard & Poor's) April 24, 2013: Standard & Poor's Ratings Services believes that “the combination of factors behind Cyprus' difficulties is not currently replicated in other small, financially- focused eurozone economies”. Taken from Report titled "Small Countries, Big Banking Systems: How Malta And Luxembourg Differ From Cyprus," published on April 23, 2013 on RatingsDirect.
    • The Maltese Property Market Due to the limited space available for construction, purchase of real estate in Malta has always been considered to be one of the best investments Since 2000, the property price indexincreasedby 70.1% Period Total 2000 100.0 2001 105.1 2002 114.2 2003 129.3 2004 155.6 2005 170.9 2006 177.0 2007 178.9 2008 174.1 2009 165.3 2010 167.1 2011 169.3 2012 170.1
    • Why do properties retain their value in Malta?  High demand for property by local and foreign buyers  Very good rental market meeting the needs of an ever growing expat community working and living in Malta  Maltese buyers constitute the bulk of the market  Very cautious and stable banking system The Maltese Property Market
    • The Maltese Property Market The Rental Market  90% of the properties rented in Malta are rented by non- Maltese  Annual gross rental return has averaged 5% during recent years  There has been a recent boom in the commercial market which in turn has further stimulated the residential market  Foreigners rent due to work, residence/tax purposes, or as a holiday home  The rental market has adapted itself to the needs of foreign tenants
    • Apartments
    • Houses of Character
    • Palazzos
    • Villas
    • Why do foreigners buy property in Malta? Residence – for tax and other purposes Holiday homes Retirement Investment appreciation To develop residential or commercial real estate for a return
    • Property purchase by foreigners  No permit required for EU citizens wishing to reside permanently in Malta; if, however, the property will be used as a holiday home, a permit is required  Non-EU citizens must acquire a permit prior to purchase, irrespective of whether it is a residence or holiday home  Application fee for permit is EUR235  Only one property can be purchased, unless situated in a Designated Area  More properties can be purchased by EU citizens after 5 years of living permanently in Malta  EU citizens doing business in Malta can purchase any number of properties related to their business
    • Procedure  Once a property is chosen and conditions are agreed to, a Promise of Sale Agreement is entered into  This agreement safeguards and binds both parties during the period in which the vendor’s good title to the property can be ascertained. It also allows time for other verifications to be made, including financial considerations for the Buyers  The purchaser normally pays the vendor a deposit equivalent to 10% of the final price, as well as duty equivalent to 1% of the purchase price
    • Procedure  The Promise of Sale Agreement is normally valid for three months during which either party can withdraw from the sale, should one or more of the conditions listed therein does not verify itself  If the purchaser terminates the agreement for no good reason at law, or refuses to buy the property, the 10% deposit which he would have paid would be forfeited  If the vendor terminates the agreement for no good reason at law, or refuses to sell the property, he would have to return the deposit plus an amount equivalent to the 10% deposit
    • Procedure  Once all the title searches have been completed, necessary permits obtained, and full financing for the purchase arranged, the final contract of sale would be drawn up by a Notary Public, who will then publish the contract and register it in the Public Registry  At this stage the remaining duty of 4% of purchase price is payable
    • The future of the Maltese property market Indications of the real estate market in Malta show : Growth in the commercial sector driven by: EU nationals relocating and opening businesses in Malta Increase in Malta based financial services providers and i-gaming companies. Growth in the residential sector driven by: Increased interest in up-market properties by locals and foreigners Increased interest by non-EU citizens wishing to benefit from various residence schemes available  Continued investment in real estate by the Maltese Increase in buy-to-let properties due to a surge in the rental market
    • Residing in Malta
    • Residing in Malta ■ It is possible to reside in Malta as: ■ an Ordinary resident ■ a holder of a permit under the Global Residence Programme ■ a Highly Qualified Person ■ a Retiree
    • Ordinary Residence ■ No minimum amount of time to be spent in Malta: however, to be considered to be tax resident in Malta, one must spend in excess of six months per calendar year in Malta ■ No minimum value property requirement: unless an AIP Permit is required ■ The qualifying criteria vary according to whether the individual seeking to obtain ordinary residence in Malta is an EU/EEA national or a third country national
    • Ordinary Residence ■ Citizens of the EU/EEA may apply for Maltese residence on various grounds, including:  economic self-sufficiency - minimum capital of € 14,000 or a weekly income of € 92.32 for single persons, and at a capital of at least € 23,300 or a weekly income of € 108.63 for married couples; in case of dependants, €8.15 weekly is to be added to these amounts for every dependent  employment  self-employment
    • ■ Personal income tax is charged at progressive rates up to a maximum of 35 per cent, as illustrated by the following tables: * Will be reduced to 29% in 2014 and to 25% in 2015 SINGLE MARRIED Rate % Chargeable income Chargeable income 0 0 – 8,500 0 – 11,900 15 8,501 – 14,500 11,901 – 21,200 25 14,501 – 19,500 21,201 – 28,700 32* 19,501 – 60,000 28,701 – 60,000 35 60,001 and over 60,001 and over Ordinary Residence
    • Ordinary Residence  In the case of ordinary residence, Malta tax at the above-mentioned rates is charged on:  Income and capital gains arising in Malta  Foreign income remitted to Malta  Capital gains arising outside Malta and remitted to Malta are NOT taxed in Malta
    • Global Residence Programme (GRP)
    • Global Residence Programme  This programme replaces the High Net Worth Individual scheme  Officially launched on 1 June 2013  Rules and regulations will be issued by 30 June 2013  However the salient features have been announced
    • Global Residence Programme Property requirement  Own property in Malta costing not less than €275,000 (or €220,000 if situated in the South of Malta or in Gozo) or  Rent property in Malta at not less than €9,600 per annum (or €8,750 if situated in the South of Malta or in Gozo)
    • Financial resources and insurance requirements  Applicant must be in receipt of stable and regular financial resources sufficient to support himself/herself as well as any accompanying dependants  Applicant and dependants must have adequate health insurance covering the EU territory  Applicant must satisfy a “fit and proper test” Global Residence Programme
    • Taxation  Flat rate of 15% on foreign source income remitted to Malta with a minimum annual tax of €15,000  Foreign capital gains can be received in Malta tax free Application procedure ■ A one-time registration fee of €6,000 payable to the Malta Government ■ Application must be filed by an Authorised Registered Mandatary (EMD is so authorised) ■ A permit holder must submit a tax return annually which should include any material changes that affect the beneficiary’s tax status. Global Residence Programme
    • Highly Qualified Persons
    • Highly Qualified Persons  Applicants must hold an ‘eligible office’, that is, employment with a company which is licensed and/or recognized by:  the Malta Financial Services Authority (MFSA)  the Lotteries and Gaming Authority (LGA)  Transport Malta (TM) as an undertaking holding an air operator’s certificate (AOC)  Employment income from such ‘eligible office’ will be subject to a flat rate of tax of 15 per cent if the income amounts to at least €75,000 per annum. In the event that the income exceeds €5 million, the excess is exempt from tax  Why? To attract expatriates who work within particular specialised sectors to relocate to Malta, thereby continuing to increase Malta’s attractiveness as a reputable services centre of excellence
    • Highly Qualified Persons Beneficiaries of this incentive must:  Derive employment income which is subject to tax in Malta in respect of work carried out in Malta or in respect of any period spent outside Malta in connection with such work  Be professionally qualified and have at least five years experience.  Not have benefitted from any other deductions available to expatriates working in the field of investment services  Have a contract of employment which is subject to Maltese law for the purposes of carrying out genuine and effective work  Fully declare all income derived from the contract of employment in the Maltese personal income tax return, and  Not be domiciled in Malta  Non-EU/EEA/Swiss applicants cannot purchase immovable property in Malta
    • Highly Qualified Persons Malta Financial Services Authority Lotteries and Gaming Authority Transport Malta Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer and Chief Technology Officer; Chief Executive Officer, Chief Risk Officer (including Fraud and Investigations Officer), Chief Financial Officer, Chief Operations Officer, Chief Technology Officer and Chief Commercial Officer; Chief Executive Officer, Chief Risk Officer, Chief Financial Officer, Chief Operations Officer, (Including Aviation Accountable Manager) and Chief Technology Officer; Portfolio Manager, Chief Investment Officer, Senior Trader, Senior Analyst (including Structuring Professional), Actuarial Professional, Chief Underwriting Officer, Chief Insurance Technical Officer; Odds Compiler Specialist, Head of Research and Development (including SEO and Systems Architecture); Aviation Continuing Airworthiness Inspector, Aviation Flight Operations Inspector, and Aviation Training Manager; Head of Marketing and Head of Investor Relations Head of Marketing (including Head of Distribution Channels) and Head of Investor Relations Head of Marketing
    • Highly Qualified Persons ■ The reduced tax rate applies for a period of 5 consecutive years for EU, EEA and Swiss nationals, and for a consecutive period of 4 years for other nationals ■ Any rights will be withdrawn with retrospective effect if the beneficiary is a non-EU/EEA/Swiss national who either physically stays in Malta, in the aggregate, for more than 4 years, or directly or indirectly acquires any immovable property, including any rights thereon, situated in Malta
    • Malta Retirement Programme
    • Malta Retirement Programme ■ The Malta Retirement Programme Rules 2012 introduce a new tax status for pensioners who are EU/EEA/Swiss Nationals ■ Beneficiaries have the right to pay tax at a flat rate of 15% on foreign source income received in Malta by them or their dependants, subject to a minimum tax payment of €7,500, with an additional €500 per dependant and special carer, if any ■ The Scheme also confers the right to claim double taxation relief ■ Any income arising in Malta would be taxed at 35%
    • Qualifying Criteria – Purchase or rent property  Applicants must purchase or rent immovable property in Malta and such property must be solely occupied by the applicant, his/her family members and any special carers accompanying them  Such property must serve as the applicant’s habitual place of abode worldwide  If property is purchased its value must be of not less than €275,000 (€250,000 if in Gozo)  If property is rented, the minimum payable must be not less than €9,600 per annum (€8,750 if in Gozo) Malta Retirement Programme
    • Qualifying Criteria – Receipt of pension and insurance  The applicant must receive the full amount of the pension in Malta and this pension must constitute at least 75 per cent of the beneficiary’s chargeable income in Malta.  Applicants and accompanying dependants must also be covered by a health insurance policy, providing coverage for all risks across the EU. Malta Retirement Programme
    • Other Qualifying Criteria  Applicants must be domiciled overseas, and should not have the intention to establish their domicile in Malta within 5 years from the date of submission of their application.  Applicants must not be in employment, or benefit under any other Malta scheme conferring a special tax status, and must hold a valid travel document.  However, they may be non-executive directors of companies resident in Malta, or participate in activities related to any institution, trust or foundation of a public character, or any similar organization or body of persons, also having a public nature, engaged in philanthropic, educational or research and development work carried out in Malta. Malta Retirement Programme
    • Malta Retirement Programme Other Qualifying Criteria cont.  Applicants must spend in excess of 90 days per calendar year in Malta, averaged over a period of 5 years, and may not spend more than 183 days in any other foreign jurisdiction.  Applicants must satisfy a fit and proper test.
    • Malta Retirement Programme Qualifying Criteria ■ The qualifying criteria must be complied with on a yearly basis. Therefore, beneficiaries must retain their property or lease as per the above requirements annually, renew their pertinent health insurance policies on a yearly basis, and comply with the minimum stay requirements during each year of their holding such status. ■ An application fee of €2,500 is payable to the Maltese authorities, and applications may only be filed through the services of an Authorised Registered Mandatory (ARM).
    • Inheritance and wealth tax ■No death tax is payable in Malta. ■ However, duty on documents and transfers is payable by the heirs of the deceased or the purchaser on real estate situated in Malta, and upon the inheritance or purchase of shares in Malta companies, unless exempt. ■ Duty on documents is 2% but if the majority of the assets of the company are immovable property, this would be 5%. ■ No wealth tax is levied in Malta
    • And this is why I love Malta. I want to live in a place that's beautiful. Ilene Springer – Diary of An American in Malta Author of “The Diary of an American Expatriate” ISBN-13: 9781782341253
    • Thank you For further information kindly contact: EMD - Malta info@emd.com.mt +356 2203 0000
    • Disclaimer This presentation has been prepared for general guidance for matter of interest only and does not constitute professional advice. You should not act upon the information contained in this presentation without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy and completeness of the information contained in this presentation, and the firm does not accept any liability and disclaims all responsibility for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this presentation or for any decision based on it.