Cyprus vs Malta: Tax & Investment Considerations
Malta and Cyprus undeniably have the most favourable citizenship by investment programmes in Europe. Many individuals are using such schemes as a means of significant wealth protection and gaining dual nationality; while smaller economies within the EU receive financial compensation for the privilege.
This article will compare the passport programmes on offer by Cyprus and Malta, as well as the differences in the tax regulations for both countries.
Both Cyprus and Malta have property and real estate investment options, which is preferable to only business assets or shares as it represents a tangible asset as well as citizenship.
For the Maltese Passport and Citizenship Program, your investment is divided into three parts, plus fees. To gain Maltese citizenship through the programme, you have to contribute EUR €650,000 into Malta, plus EUR €25,000 per child or spouse. Next, the investor must purchase real estate totalling EUR €350,000 or enter into a rental contract totalling €16,000 per year for 5 consecutive years. Finally €150,000 must be invested into government-approved bonds for a 5 year period. Therefore there is a total investment amount of around EUR €1.2 million to gain citizenship.
Cyprus compares similarly, with total investment amount starting from EUR €2 Million. This can be made up of investment into property, or €2.5 Million of which €2 Million must be invested into a Cyprus based business and EUR €500,000 into property.
Which Citizenship-by-Investment Scheme is Better?
The Cyprus programme is definitely the quickest programme for visa free access into Europe out of the two. Applicants generally receive their permanent residency card within a month, then permanent citizenship and the new passport within six months approximately.
The application process is simple too. There are transparent, objective rules that oversee approval, it is simply applying, investing, and then waiting for your new passport to arrive.
By contrast, the Maltese schemes take longer. The Maltese Passport and Citizenship Program takes around one year before receiving the passport. However applicants do receive Schengen Residence status for one year before the passport arrives, and you’re eligible from your application date. So although you don’t have the complete package for a year, you do have freedom to travel throughout Europe, Switzerland and Norway within a relatively short timeframe.
Tax Considerations & Comparisons
Cyprus is known for its highly favourable tax rates. The country has one of the lowest corporate tax rates in Europe, at 12.5%, and non-domiciled residents only pay tax on income generated within Cyprus. There are also exemptions on offer including capital gains, foreign exchange gains and inheritance tax.
Malta also taxes based on domicile and residence rather than citizenship, so like Cyprus you’re not considered tax resident in Malta unless you reside on the islands for more than 183 days per year. Maltese residents aren’t subject to tax on foreign source income unless remitted to Malta.
Companies in Malta are taxed at a flat rate of 35% however a refund system means the actual tax rate will be closer to 0% to 10%. Some businesses also qualify separately for tax incentives under the Maltese Global Residency Programme, which allows a flat rate of taxation at 15% on remitted income. Malta also has double tax treaties with over 60 jurisdictions, to avoid being charged twice.
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