Phone: (+356) 7947 1194 E-mail: [email protected] Web : www.devinkestates.com

DISCOVER MALTA GUIDE NOTE TO READERS

Thank you for downloading this Discover Malta Guide. Perhaps you are seriously considering a move for personal or business reasons or have Malta on your radar as one of several countries of interest. Now is the time to gather as much information as possible to make a balanced decision.

Rather than re-invent the wheel and provide the same information so many other organizations already have, we have opted to aggregate content from trustworthy sources. The purpose of this report is to save you time and effort in doing your research. Our aim is to provide a realistic and unbiased view – the Good, the Bad, and the Ugly – from a global, regional, as well as local perspective. For your convenience, we have organized the content into different sections. You can find the index on page 3 in case you want to select certain topics of interest rather than reading the entire brochure from beginning to end.

Lastly, I want to share my own personal view of Malta with you. I moved here from Holland in 2013. Since then, I have been working in the real estate industry, set up my own business, got married, rented a property, bought a house, and now enjoy raising two beautiful children. My ventures – or perhaps I should I say adventures – have helped me to gain insights on many different levels. I hope that my story, although not especially unique, may provide you additional perspective of what it’s like to be an expat in Malta.

We hope to become a trusted resource in the event you choose to consider investing in Malta.

Mark de Vink Owner, DeVink Estates

P.S. If we happen to source a commercial organization, this is in no way an endorsement of their products or services nor were we compensated to do so. DISCOVER MALTA GUIDE CONTENTS

1 MALTA: THE DESTINATION 5

2 MALTA LIFESTYLE 8

3 ENVIRONMENT & DEVELOPMENT 14

4 BUSINESS CLIMATE 18

5 FINANCE 24

6 REAL ESTATE 28

MEDIA & RESOURCE LIST 30-31

ABOUT US 33

3 MALTA OVERVIEW

Officially known as the Republic of Malta, many Europeans emigrate yearly to improve their standard of living. Their backgrounds and reasons vary: Highly educated people who choose to further their careers in the growing financial sector and online gaming industry; budding entrepreneurs who want to set up their own internet companies; young people who seek the challenge of learning or improving their English; and pensioners who desire to relax and enjoy their retirement years.

Regardless of motivation, they all benefit from Malta’s excellent climate, thriving economy, warm hospitality, and a culture that is rich in history and tradition.

Malta’s Economy

For years, tourism has been one of the primary sources of income for Malta. After gaining independence from the British Commonwealth in 1964, it was mostly the British who considered this former colony as a favourite holiday destination. In the last decade, Malta’s popularity has increased throughout other European nations and the number of tourists continues to rise steadily. Many also enjoy visiting the nearby islands of Gozo and Comino.

However, as an EU member state since 2004, Malta no longer solely relies on tourism. To achieve a more diversified economy, the government gradually invested in key sectors such as banking and finance, information and communications technology (ICT), maritime, aviation, and manufacturing. Thanks to a stable political climate, favourable business environment, and modern technology infrastructure, the service sector comprises approximately 75% of Malta’s economy today.

Malta GDP 2016 Provisional estimates indicate that the Gross Domestic Product (GDP) in 2016 amounted to €9,898.0 million, an increase of €622.2 million or 6.7 percent when compared to 2015. In real terms, GDP went up by 5.0 percent.

4 www.devinkestates.com 1 MALTA: THE DESTINATION

While it’s surprising how many people still don’t have a clue where Malta is, many are flocking here as a less expensive alternative to mainland Europe. It’s a picturesque location for the film industry as well as a popular port of call for luxury cruise ships. Regardless of the reason, Malta is increasingly on the radar for both business and pleasure.

TOURISM: WHO VISITS MALTA? 5 REASONS PEOPLE CHOOSE MALTA

INBOUND VISITORS (2016) 1. English Language. 1,965,928 The majority of Maltese people speak fluent A 10.2% increase over 2015 English and all governmental documents and contracts are available in English.

2. Easy Access. PURPOSE Malta’s international airport offers many direct 77% on holiday, not including flights to most countries in Europe and other visiting family and friends continents.

3. Excellent Healthcare. Malta’s healthcare system is considered one of TOURIST PERCEPTIONS the best in the world, with both public and private Welcoming, history and culture, hospitals and clinics. peaceful, hot, sunny, multicultural, variety 4. Low Crime. Malta is considered to be one of the safest countries in the world.

TOURIST FEELINGS 5. Diverse Lifestyle. Relaxing, warm, safe, The area is a true paradise for those who enjoy friendly, happy golf, sailing, scuba-diving, hiking, and biking – as well as a variety of unique cuisine and shopping. www.mta.com.mt/research

5 RELOCATION: WHO STAYS IN MALTA AND WHY?

The reality of living in Malta is quite different than vacationing here, but that can be said of most anywhere. There are a few trade-offs for the quality of life offered, which is why we attempt to present a fair-and-balanced view. In the end, we think Malta is a terrific place to work, invest, and to raise a family. At some point soon when our kids are old enough to talk, we’ll be sure to let you know if they agree.

Where Should London Bankers Relocate Post-Brexit? Movinga, a Berlin-based relocation brokerage company active in several European countries, has released a report rating 10 EU cities according to their desirability as a relocation destination. Movinga used 12 distinct criteria to rank the attractiveness of cities to London bankers, among them maximum income tax rate, English-language-friendliness, monthly rent for upscale flats through price of a house-cleaning, number of restaurants with Michelin stars, price of an evening cocktail, monthly price for luxury fitness studio access, price of a flex-ticket flight to London and flight-minutes from London.

The results, from top to bottom: Dublin, Amsterdam, Valletta (Malta), Luxemburg, Brussels, Frankfurt, Hamburg, Madrid, Paris, and Milan.

The Best and Worst Places for Expats in 2016 The newcomer Taiwan is this year’s winner, followed by an aspiring Malta….

#2 Malta: Fun in the Sun Malta, a newcomer in last year’s survey, has moved up one spot to claim second place, thus pushing Mexico, last year’s second-place winner, off the podium completely, but only down to fourth place. Similar to Taiwan, Malta is also in the top ten for every index that factors into the overall ranking.

This Mediterranean country performs best in the Ease of Settling In Index, coming in fourth place. It is first in terms of settling down, getting used to the local culture, and making new friends. Over 4 in 10 expats (41%) say it is very easy to settle down in Malta, well over twice the global average of 16%.

Malta fell from first place to fifth this year in the Working Abroad Index. It seems that expats working there are not as pleased with their work-life balance as they were in 2015, with only 22% completely satisfied (vs. 27% in 2015), which is still slightly above the global average of 17%. This is despite, or perhaps due to, the fact that 28% are part-time workers.

In the Personal Finance Index, Malta has made a quite significant jump, from 42nd to 6th place. One-quarter of respondents even quote complete satisfaction with their financial situation (global 15%)...despite the fact that one-third of working expats say their income is generally lower than back home.

Malta holds sixth place in the Quality of Life Index, with exceptional ratings for the climate and weather. Three-quarters of expats say they couldn’t be more pleased with it, and not a single respondent has something negative to say! With such glowing results, it’s perhaps no surprise that almost half the expats in Malta are planning to stay forever (49%), significantly higher than the global average of 31%.

NOTE: Malta fell to #7 in 2017

6 www.devinkestates.com MALTA, THE ISLAND NATION JUST BELOW SICILY, IS AN INCREASINGLY POPULAR STOPOVER (August 2017) For travelers today, Malta’s proximity to Europe’s glamour destinations is a definite plus — if not a widely appreciated one. Often experienced as a day stop on Mediterranean cruises, Malta greatly rewards a longer stay. The 17-by-8-mile island is packed with lovingly restored sites that bring history to life. Washington Post

MALTA FAST FACTS

DID YOU KNOW?

Malta’s capital city, Valletta, ranked #3 of “European cities best equipped to accommodate professionals relocating as a result of Brexit.”

7 2 MALTA LIFESTYLE

Malta is a small island of huge contrasts: An eclectic mix of long- time locals and change-seeking foreigners, quiet families, and off-the-charts partiers. Despite enduring traditions that cross boundaries, it also seems as if each town has its own personality. Knowing where you fit – or if you fit – takes a bit of exploring.

A Cosmopolitan Lifestyle in the Med More than just a smart place to invest, Malta is a multi-faceted jewel shining at the centre of the Mediterranean. This small, friendly and welcoming island contains everything you could want to strike that perfect balance between business and pleasure.

Customer Service: Many comment that customer service in Malta is not at the same level as in other countries. The Maltese are warm, hospitable people but there’s a difference in work ethic here. TIP: A bit of small talk really helps before getting to the point.

QUALITY OF LIFE INDEX

The Quality of Life Index (where higher is better) is an estimation of overall quality of life by using an empirical formula which takes into account purchasing power, pollution, house price to income ratio, cost of living, safety, health care, traffic commute time, and climate.

Malta Quality Score = 130.73 / High

For comparison: Denmark (180.40), Germany (179.07), Netherlands (178.93), Australia (172.97), United States (167.67), Sweden (161.67), U.K. (157.03), Japan (155.44), France (154.57), Israel (142.69), Malta (130.73), Serbia (116.33), and Russia (91.96) Research

Internet Penetration Rate 76.2%

8 www.devinkestates.com COST OF LIVING INDEX Check out average prices of restaurants, markets, transportation, utilities, sports and leisure, childcare, clothing, salaries, along with average rent and purchase prices. Research

MALTA IN THE EU Eurostat is the statistical office of the European Union. Click the link for an interesting infographic, a comparison of key indicators in Malta vs. the EU.

Highlights: • Malta has the lowest rate of road traffic victims: 2.6 per 100,000 inhabitants • Malta has by far the highest population density in the EU (1352.4 persons per km², in 2014) Research

EDUCATION Malta has a well-established educational system, based on the UK model, a reflection of the many years spent as part of the British Empire. Nowadays, one finds a mixture of state and private schools, providing qualifications up to post-graduate level, all fully recognised on an international level. International students fit in seamlessly into a system geared to meeting their needs. Research

Literacy Rate: 94.4% The World Factbook

MALTA HEALTHCARE Based on the British National Service model, the system in Malta is further boosted by a strong element of private health care for those who choose to go down this route. The overall quality of care is of the highest order and foreign residents draw comfort from the fact that all health care workers are very fluent in English, ensuring that communication between provider and patient is very straightforward. Healthcare Research

9 CULTURE

Valletta: European Capital of Culture in 2018 Awarded in October 2012, a European Commission representative said that “the title of European Capital of Culture is a prestigious one, which was awarded to a city rich in history and with the potential to further strengthen its cultural and socio-economical sectors.” Research

Traditions and Celebrations The Maltese Islands have an extremely rich culture, entwined with their eclectic history and dating back hundreds of years. As a result, the Islands are home to numerous lively activities and events, including annual feasts and special occasions. Research

Religion an Important Feature in Maltese Culture The main religion in Malta is Roman Catholicism, in fact, most Maltese claim to be Catholic and participate in Catholic religious services. The also establishes Catholicism as the state religion, however freedom of religion is guaranteed as a constitutional right and is generally respected. There is evidence of increasing secularisation and minority religions are growing as further ethnic groups settle down on the island. Research

Political Overview: A Parliamentary Representative Democratic Republic As the constitutional head of state, the has executive authority, while the Prime Minister, being the head of Government and the cabinet, has the control of the general direction of the . The Parliament has legislative power with the Speaker of the House presiding over the unicameral House of Representatives.

On the other hand, judicial power remains with the Chief Justice and the Judiciary of Malta. Since Malta got its independence in 1964, the party electoral system has been dominated by two main parties: Christian democratic Nationalist Party (Partit Nazzjonalista) and the social democratic (Partit Laburista). Third parties have failed to gain enough success to be considered as significant. Research

10 www.devinkestates.com DRIVING

When you ask most anyone about the major cause of stress here, there’s much agreement that the roads are challenging. Remember, Malta is a small island, not a major metropolitan area. While there are regular attempts to improve the roads, there are lots of vehicles, constant construction, and aggressive drivers. That said, the public transportation is good and foreign drivers eventually become successful at learning the “Maltese way” of getting around town.

Two Sides to Every Story

Here’s the sugar-coated government perspective. Here’s the reality.

Tips on Malta Warnings or Dangers – Stay Safe A helpful guide on the realities of living in Malta. Suggestions included in the areas of driving, walking, public transportation, and beach hazards.

Malta’s Car Population Hits Worrying Record (September 2014) You don’t need statistics to prove that Malta has a car problem but they make for eye opening reading anyway. A staggering 329,053 motor vehicles are currently licensed in Malta, 58,000 more than were licensed ten years ago. 10,333 vehicles were licensed between June 2013 and June 2014 alone, an average of over 28 a day.

Malta Ranks Second for Highest Number of Cars Per Inhabitant in EU (June 2017) Malta has the second highest number of cars per inhabitant in the European Union, according to research collected by Eurostat in a report titled ‘Passenger Cars in the EU’, which analysed the number of passenger cars per inhabitant in European countries. According to the report, Malta has 634 passenger cars per 1000 people , holding second place after Luxembourg, who topped the list with 661 cars per 1000 inhabitants. Italy follows Malta at third place with 610 cars per 1000 people.

Malta to Establish Cut-Off Date for Sale of Diesel and Petrol Vehicles (September 2017) With vehicle emissions still the biggest source of pollution in Malta, the government will soon be launching a consultation process to establish a cut-off date beyond which all new cars on the road would need to be electric or similar.

DID YOU KNOW? Hailing a taxi on the street is not common or easy. While you may find it easier in the tourist areas, they are rarely seen elsewhere. Your best bet is to pre-arrange taxi service with a company like eCabs.

11 CRIME

In general, Malta is a very safe place. Depending on your appetize for after-hours adventure, there are some parts of town that deserve extra care. Keep in mind that percentages can be misleading as actual incidents remain comparatively low. While law enforcement is quite visible, you won’t see a lot of police activity or traffic enforcement. In many areas, the small-town nature of the Maltese islands seems to help the community police itself.

Valletta’s Crime Rate on the Rise… Business is Booming, So is Criminality.

(February 2017) The number of crimes reported to the Valletta police station increased by 44 percent between 2014 and last year. The biggest contributor is pickpocketing, with the number of people reporting it having jumped from around 100 in 2014 to some 320 last year. Nine reported muggings were also investigated, while more than 20 snatch- and-grab cases were brought to the police’s attention. Valletta has experienced a surge in commercial activity in recent years as it gears up to take on the status of European Capital of Culture next year.

CRIME IN MALTA SAFETY IN MALTA

Level of crime : 25.72 (Low) Safety walking alone during daylight: 87.67 (Very High) Crime increase in past 3 years: 67.81 (High) Safety walking alone during night: Worries car stolen: 13.51 (Very Low) 70.89 (High) Problem corruption/bribery: 56.51 (Moderate) Research

WELCOME TO MALTA: A TRUE STORY

Shortly after arriving in Malta, Jenny and I got stuck in a lift in the apartment complex we stayed in. We were set to go on an exclusive boat trip to Gozo when the lift suddenly stopped. The alarm button made a sound but it wasn’t connected to an operator. Fortunately, there was a telephone number we could call. The person answering the phone asked us where we were trapped. The address I gave was unknown to him; he couldn’t find it in any directory (which wasn’t so strange since the street was completely new we later found out). The lift registration number was of no use -- he said that this company didn’t register the installation to a specific address or perhaps he had no access to it. Luckily a neighbor heard the alarm button -- or maybe it was Jenny’s screaming -- and he freed us after being trapped for 20 minutes by manually opening the doors. Then he welcomed us to the neighborhood. After our escape, we ran to the docks hoping to catch the boat. Although 10 minutes late, we were still in good time and had an amazing day. A day we won’t soon forget. - Mark de Vink

12 www.devinkestates.com MALTA IMMIGRATION

Foreigners from many different nations find themselves in Malta, many from the EU as well as “third-country nationals” from outside the EU. Some are looking for work, others for a better quality of life, still others are true refugees. With a low unemployment rate, many foreign workers are needed in the hospitality and construction industries. While Malta’s location between northern Africa and the European continent would appear to be a targeted destination for migrants arriving by the boatload, it really isn’t.

The Migrant Crisis: BBC

(2015) Malta has one of the highest per capita refugee acceptance rates in the world. NGOs on the Mediterranean island underlined the need to dramatically shift the goalposts if the surge in deaths is to be stemmed. But their proposed solutions are unlikely to resonate with many of Malta’s 420,000 inhabitants, who feel European states have ignored the migration problems in the Mediterranean for too long. The sun-drenched tourist haven of Malta disguises the tragedy unfolding at its doorstep, though many are uneasy about the chaos engulfing Libya just 354km (220 miles) away. Sensational media claims that radical Islamists could infiltrate boatloads of migrants have served only to inflate irrational fears.

Another View of Migration: The Economist

(November 2015) Malta is both the EU’s smallest state and its most densely populated one. Maltese feel they should have to take fewer migrants than larger states. Yet strangely, without anyone much noticing, they seem to have got what they want. Malta is barely 200 miles from Libya, still a major transit country for refugees though no longer as important as Turkey. But the flow to Malta has virtually shut down—and no one knows why. Over 140,000 migrants arrived in Italy by sea in the year to November 10th; in Malta, since the end of January, the number is just 20. Meanwhile, the economy has been thriving. Malta has succeeded in becoming something Viktor Orban, the eurosceptic Hungarian prime minister, might dream of: an EU state with enviable growth figures and almost no migrants.

The signs of prosperity are everywhere. Winter sun-seekers throng Republic Street, Valletta’s main thoroughfare. Everywhere one looks, sandstone palazzos are being converted into plush offices for foreign firms. Tower cranes dot the horizon. The Maltese economy grew in the second quarter at an annual rate of more than 5%. Unemployment is the third-lowest in the EU. The budget deficit this year is expected to be 1.6% of GDP.

13 3 ENVIRONMENT & DEVELOPMENT

Malta’s voracious appetite for growth puts a strain on its limited natural resources. While some checks and balances are in place, there are many debates about this very hot topic. The older locals will tell you that this is not the Malta they remember and prefer – yet their children and grandchildren more readily embrace the changes. The island is definitely experiencing growing pains.

Much of Malta is More Brown than Green Malta’s most significant environmental problems include inadequate water supply, deforestation, and the preservation of its wildlife. The country’s extremely limited fresh water resources have led to increasing dependence on desalination. The nation’s agriculture suffers from lack of adequate water for crops due to limited rainfall.

Just Because It’s an Island, Doesn’t Mean There’s Water (January 2015) Malta is on the list with Bahrain, Jordon, Kuwait, Libya, Maldives, Qatar, Saudi Arabia, United Arab Emirates and Yemen as being the ten poorest countries globally in terms water of resources per inhabitant.

Managing a Precious Asset The Water Services Corporation is the public entity responsible for the complete drinking and waste water cycle in the Maltese Islands. The WSC produces and distributes potable water and collects and treats the wastewater of over 250,000 households, businesses, industries, hotels, etc. serving over 420,000 people.

The WSC operates reverse osmosis, sewage treatment and polishing plants, pumping stations, reservoirs and boreholes all over the country. The Corporation is also at the forefront of leakage detection and water re-use technologies.

14 www.devinkestates.com ENVIRONMENTAL CHALLENGES

Approach to Enforcement of Environmental Law

In a country such as Malta with a high population density, decades of environmental inaction and a high dependence on tourism, the need to ameliorate environmental awareness, protection and enforcement is paramount. The authorities are fully aware of this. Within the last decade we have seen a notable increase in enforcement, with some difficult decisions needing to be taken between the protection of the environment on the one hand and the need, on the other hand, to ensure that development is sustained and that the requirements of the country are not stifled. Although the general perception is that environmental enforcement still has a long way to go, a more objective analysis is that in recent years, progress has been achieved and enforcement has indeed been strengthened. Enforcement of environmental law in Malta remains a highly contentious subject – not least given Malta’s population density. Environmental authorities frequently organise campaigns intended to disseminate information that demonstrates the benefits of environmental protection and serves to sensitise the population to various environmental issues.

“Although the general perception is that environmental enforcement still has a long way to go, a more objective analysis is that in recent years, progress has been achieved and enforcement has indeed been strengthened.” - GANADO Advocates

15 Environment, Climate Change and Renewable Energy Sources

The primary role of EU funds in supporting energy efficiency and renewable energy sources is that of rewarding their environmental benefits when compared to conventional power sources. Another role is that of overcoming those barriers which investors (such as households, enterprises, voluntary organisations and public institutions) tend to encounter in the shape of market imperfections and lack of capital to make the initial investment. Number of projects: 23 Value: €55,000,000

Three New Solar Panel Schemes Announced

(May 2016) EU Funds parliamentary secretary…said the subsidy schemes were part of a bigger €58 million investment in sustainable energy. No other details about this figure were forthcoming. He added that the government was optimistic about reaching its sustainable energy targets.

Last November, the European Commission had said Malta was unlikely to reach its 2020 targets. A UN report published last March also found that Malta was a laggard when it came to renewable energy production. Malta generated just 4.7 per cent of its energy from renewable sources in 2014, according to Eurostat. It has committed itself to generating 10 per cent of its energy from renewable sources by 2020. Times of Malta

Malta Increasing its Efforts to Address Energy Efficiency June 2017 Press Release Highlights Malta is increasing its efforts to address energy efficiency, and the Energy and Water Agency within the Ministry for Energy and Water Management is not only launching incentive schemes for energy efficiency measures, but also placing great efforts to drive investment in this area and to make sure that industry includes energy efficiency measures in investment plans. The Minister stated that Malta, being a small and, until recently, completely isolated energy system, realized that it had to address its heavy dependence on oil, and the structural inefficiencies which were keeping energy prices well above average.

16 www.devinkestates.com GROWTH AND STRATEGIC PLANNING

This small island has large, complex growth challenges. The government is working hard to address them, although many citizens are vocally opposed to their approach. The mission of Malta’s Planning Authority is to balance these concerns, trying to create an environment that, while pleasant and desirable, is also reasonable and sustainable.

MALTA PLANNING AUTHORITY’S STRATEGIC ENVIRONMENTAL ASSESSMENT

In its report of July 2015, conclusions and recommendations included:

The environmental assessment identified that the development required to reach the growth targets of the country is expected to result in significant environmental concerns relating to Waste, Landscape and Townscape, Biodiversity and Water.

Furthermore the impact on Air, Noise, Soil, Energy, Human Health and Material Assets is also of concern.

The Plan seeks to address these concerns through three main policy thrusts:

1. Integrating environmental safeguards in the growth promoting policies themselves

2. Inclusion of policies specifically targeted at addressing the above issues

3. Integration with other Government plans and policies that are directly intended to protect the environment & those which include environmental safeguards

17 4 BUSINESS CLIMATE

Despite being the EU’s smallest member state, Malta has been one of the most exciting countries to watch and invest in. Over the years, the island’s leaders have been on a mission to make Malta a magnet for financial services. It was their vision to turn the island intoa platform for international business and to develop a model economy, which has regularly been considered among the best in the EU.

3 REASONS TO CONSIDER MALTA Central Recession Committed to Location. Proof. Business.

Located at the centre Malta stands alone as Malta’s parliament of the Mediterranean, an oasis of financial recognises the the Maltese Islands prosperity in a Europe importance of business lie virtually midway desiccated by the success to the nation’s between Europe and financial crisis. From prosperity. This is North Africa, some 90 a financial standpoint, why Maltese political kilometres south of Sicily Malta is proof that leaders are committed and 300 kilometres north you do not have to be to developing key of Libya. This makes a big country to be a industries, such as the island an excellent big player. Home to a finance sectors, ICT gateway for business population of just over and aviation, as well as between Europe, Africa 421,000 people and just encouraging more direct the Middle East and Asia. 316 square kilometres foreign investment. The capital city, Valletta, in area, the island prides Over the past years, is the administrative and itself on being one of both government and business centre of the the best performing opposition have worked country. Eurozone economies, hand-in-hand to create registering healthy the right legislative and economic growth and regulatory framework low unemployment. for financial services firms to grow and prosper. 18 www.devinkestates.com International Transport

Cargo services, both inbound and outbound, are catered for by an extensive network of both air and sea routes which connect the island to the rest of the world via its airport and the Malta Freeport, which is the third largest in the Mediterranean, handling in excess of 3 million units per annum.

Attracting Business to Malta: Support Measures

Malta Enterprise provides incentives for enterprises demonstrating commitment towards growth, an increase in value added and employment. Enterprises engaged in manufacturing, ICT development activities, call centers, healthcare, pharmaceuticals, biotechnology, aviation and maritime services, education and training, logistics and more may benefit from these incentives.

Deloitte Malta Factsheet: A Summary of Facts and Figures

The advantages of operating from Malta are various and are by no means limited to the competitive nature of Malta’s tax regime. The island has in fact succeeded to build a solid reputation in a variety of business sectors, spanning from regulated areas such as banking, insurance, wealth management and remote gaming to consumer business and from R&D and high value added manufacturing to shipping and aviation. Particularly interesting has been the positive local experience of those entrepreneurs placing a strong emphasis on e-commerce within their business model.

19 GLOBAL VIEW

While considered a jewel in the EU, how is Malta viewed in the larger context? Although this perspective is by no means exhaustive, the numbers do help to tell a story. What Malta lacks in some areas is surprisingly strong in others. It’s worth the time to dig deeper on those areas that interest – or concern – you the most.

INDEX OF ECONOMIC FREEDOM Malta World Rank #50

(2017) The Index covers 12 freedoms – from property rights to financial freedom – in 186 countries. Malta’s overall entrepreneurial environment supports the development of a dynamic private sector. The judiciary, fairly independent and efficient, provides strong protection of property rights. The financial market is small but sound and has become more open to competition. The financial sector has weathered the global financial crisis relatively well.

Despite notable institutional competitiveness, Malta is weak in several areas of economic freedom. Tax rates and government spending, for example, are relatively high. Lingering corruption and rigid labor regulations add to the cost of doing business. The maintenance of fiscal health will require reasonable containment of the wage bill, social transfers, and pension funds.

20 www.devinkestates.com CIA WORLD FACTBOOK

Malta’s free market economy – the smallest economy in the euro zone – relies heavily on trade in both goods and services, principally with Europe. Malta produces less than a quarter of its food needs, has limited fresh water supplies, and has few domestic energy sources. Malta’s economy is dependent on foreign trade, manufacturing, and tourism. Malta joined the EU in 2004 and adopted the euro on 1 January 2008.

Malta has weathered the euro-zone crisis better than most EU member states due to a low debt-to- GDP ratio and financially sound banking sector. It maintains one of the lowest unemployment rates in Europe, and growth has fully recovered since the 2009 recession. In 2014 through 2016, Malta led the euro zone in growth, expanding more than 4.5% per year.

Malta’s services sector continues to grow, with sustained growth in the financial services and online gaming sectors. Advantageous tax schemes remained attractive to foreign investors, though EU discussions of anti-tax avoidance measures have raised concerns among Malta’s financial services and insurance providers, as the measures could have a significant impact on those sectors. The tourism sector also continued to grow, with 2016 showing record-breaking numbers of both air and cruise passenger arrivals.

Malta’s GDP growth remains strong and is supported by a strong labor market. The government has implemented new programs, including free childcare, to encourage increased labor participation. The high cost of borrowing and small labor market remain potential constraints to future economic growth. Increasingly, other EU and European migrants are relocating to Malta for employment, though wages have remained low compared to other European countries. Inflation remains low.

Openness to and Restriction on Foreign Investment

(February 2017) Malta actively seeks foreign direct investment (FDI), providing financial, tax, and other investment incentives to attract investment in high-tech manufacturing (especially health technologies such as pharmaceuticals, manufacturing, and life sciences), information and communications technology (ICT), R&D, aerospace & defense/ aviation maintenance, registration of ships and aircrafts, electronics, transshipment and related service industries, finance services, and digital gaming. Foreign investment plays an integral part in the GoM’s policies to reduce the role of the state in the economy and increase private sector activity.

Malta’s comparative advantages include:

Membership in the EU, the Eurozone, and the Schengen Zone; competitive wage rates (even though the standard of living is high, labor costs are relatively low compared with other EU countries); a highly skilled, English-speaking labor force; proximity to both European and North African markets; a fair and transparent business environment; and excellent telecommunications and transport connections.

21 CORRUPTION

As with other local controversial subjects, there are greatly varying viewpoints on how business is conducted here in Malta. The highly charged political landscape adds to the controversies. Want to start a bar fight? This is a sure-fire way to do it.

Malta Corruption Report

(December 2015) Corruption does not represent a challenge for businesses operating in Malta. This is attributed to the country’s transparent administration and economy, low levels of official impunity, and small room for arbitrary spending of public funds. Inefficient government bureaucracy and the country’s shadow economy, which constitutes nearly a quarter of the entire economy, are the largest obstacles to business. Connections between the local elite and political figures also threaten fair competition. The Maltese Criminal Code criminalises active and passive bribery, abuse of office, extortion and embezzlement, among other corruption-related offences, and the law is effectively enforced. Businesses report bribery is rare in Malta, and the legal framework criminalises facilitation payments and receiving gifts.

You can find other helpful overviews in the following areas: Judicial System, Police, Public Services, Land Administration, Tax Administration, Customs Administration, Public Procurement, Natural Resources, Legislation, and Civil Society.

Businesses report bribery is rare in Malta, and the legal framework criminalises facilitiation payments and receiving gifts

22 www.devinkestates.com 2016 Overview of Corruption and Anti-Corruption

(February 2017) Malta’s strategic geo-political location, along with its stable economy and skilled workforce has enabled it to establish itself as a successful financial centre. However, patronage and clientelism in the form of ‘korruzjoni’ and ‘klientelizmu’ persist. Despite having substantial legal mechanisms in place, Malta has been rocked with a number of corruption scandals in the recent years, which has “tarnished” its incumbent presidency of the Council of Europe.

Notable integrity challenges include procurement irregularities, unresolved conflicts of interest among serving government ministers, and the revolving door between the island state’s close-knit political and business class. Malta is also the only country in the European Union to have an incumbent minister named in the Panama Papers revelations in 2016. Additional Research

Despite having substantial legal mechanisms in place, Malta has been rocked with a number of corruption scandals in recent years

PM in London: Malta Declares Concrete Actions to Fight Corruption

The Maltese Government signed the final document of the summit called by the British Government with a commitment to fight corruption. Prime Minister Joseph Muscat, who attended the summit, also made a declaration on the concrete actions that Malta will be taking to fight corruption. In the declaration, the Maltese Government is binding itself to take steps to reveal corruption by, among other things, the setting up of a central registry of companies registered in Malta and also committed itself to provide information on the beneficiaries according to the European Union directive that will come into force next year. Additional Research

23 5 FINANCE

Malta has a long history of welcoming foreigners to live, work, and invest. While initially the British were, by far, the largest group to settle here, many more individuals from other European countries followed when Malta joined the EU in 2004. Special tax schemes provide foreign companies an incentive to open offices. And while low corporate taxes may initially attract these companies, other factors – including a highly skilled labour force at relatively competitive wages, infrastructure, socio- economic and political stability, strong institutions, and corporate laws protecting businesses and investments – keep them here. It’s not just about the 300 days of sun. Many other elements contribute to a truly favourable corporate and foreign direct investment climate in Malta.

European Commission Country Report Malta 2017

Summary highlights include:

• Buoyant GDP growth, unemployment below 5%

• Trade balance improved amid favourable competitiveness developments

• High administrative burden in certain areas, skills shortages and insufficient capacity to innovate continue to weigh on private sector investment

• Limited progress in the long term sustainability of public finances

• No excessive deficit

• Draft Budgetary Plan 2017 assessed as broadly compliant with the rules of the Stability and Growth Pact

National Statistics Office: Economic and Financial Data

Includes information on real and fiscal sectors, central government operations and debt, banking data, and reserves.

24 www.devinkestates.com MALTA FINANCIAL SERVICES AUTHORITY: 2016 ANNUAL REPORT HIGHLIGHTS

The Maltese economy continued to show great resilience despite the global shocks. In recent years growth continued strongly, averaging 4% per annum. In 2016, GDP was around €10 billion and the forecast is for continued growth. Malta’s GDP is forecast to reach 97% of the EU average in 2017. This robust growth led Standard and Poor’s to upgrade the country’s sovereign rating from BBB+ to A-. The country ratings by Moody’s and Fitch are A3 and A4 respectively.

The financial sector continues to remain a strong contributor to the economy. According to the National Office of Statistics, during the first six months of 2016, Foreign Direct Investment flows in Malta increased by €0.5 billion over the corresponding period in 2015 with the main contributors being financial and insurance activities, which accounted for 95%. Furthermore, direct intermediation represents more than 7% of GDP.

Regulation and supervision remains robust with the World Economic Forum Competitiveness Report 2016-2017 placing Malta 16th out of 140 countries for the soundness of its banking system.

Tax Highlights

Corporate tax. A Maltese incorporated company is considered to be ordinarily resident and domiciled in Malta and is subject to Maltese tax on its worldwide income at the nominal rate of 35%. However, upon certain conditions being met, the shareholder of a Maltese company could be entitled to certain tax credits and refunds of all or part of the tax paid by the company on its profits. Through the application of this refund mechanism, the combined overall tax burden in Malta can be reduced to between 0% and 10%.

Personal tax. Foreigners may also take up residence and be subject to the normal rates of income tax with no minimum. There are no wealth or real estate taxes in Malta. Capital gains tax is applied to the sale of immovable property in Malta, but this does not apply to the sale of a main residence if the property is owned and occupied for at least three years.

DID YOU KNOW? “Malta has weathered the euro-zone crisis better than most EU member states due to a low debt-to-GDP ratio and financially strong banking sector.” -The World Factbook

25 FOREIGN DIRECT INVESTMENT

EY’s Attractiveness program focuses on insights derived from understanding growth from a foreign direct investment (FDI) perspective into countries and regions across the globe. EY conducts custom research to explore markets around the world.

2016 Report Highlights:

FOREIGN INVESTOR CONFIDENCE REMAINS STRONG An overwhelming majority (87%) think that the country is currently attractive for FDI, and more than half believe that it will remain so in the future. Expansions and a long-term presence in the country are envisaged by a majority of current FDIs. Malta’s access to the EU market, the relative stability of its political and economic environment, its skilled, English- speaking labor force and its attractive fiscal regime are key features that continue to be highlighted by many respondents.

VARIOUS ATTRACTIVE FEATURES Corporate taxation, stability of social climate, and stability and transparency of the political, legal and regulatory environment are the top-ranked Malta FDI parameters for respondents. Domestic or regional market, R&D and innovation environment, and transportation and logistics infrastructure are considered to be the least attractive FDI parameters in Malta.

KEY GROWTH SECTORS iGaming, ICT and telecoms, and financial services are considered to be the key sectors to drive Malta’s growth in the next five years. EY Research

MALTA: A LEADING FINANCE CENTRE “Malta’s rise into the ranks of Europe’s leading finance centres has been driven by the island’s reputation for stability, predictability and security which has made it an exception among other global financial centres. A robust, EU-compliant regulatory framework, diverse ecosystem and deep talent pool also helped financial services companies from around the world find opportunities for doing business in Malta.” Finance Malta

26 www.devinkestates.com Government Investment Schemes Malta has a number of schemes, or government programs, designed to facilitate foreign investment and residency. There are many local service providers who can help you with these programs. Ask us for a list of trusted recommendations.

INDIVIDUAL INVESTOR PROGRAMME

Malta’s Individual Investor Programme is the first programme of its kind to be recognised by the European Commission which has acknowledged that the programme is legal. The programme is designed to facilitate Maltese Citizenship Malta Residency by Investment to non- and Visa Programme Maltese nationals and their dependents.

The Malta Residence and Visa Malta Launches Programme Regulation was Controversial launched in 2015. It provides Citizenship-By- Investment Scheme international investors with residency rights. These rights will apply only for non-EU / EEA / (November 2013) High-net- worth individuals from outside Swiss Nationals. the European Union can now become Maltese citizens, thanks to a controversial law approved earlier this week by the Maltese Parliament. Forbes Research

27 6 REAL ESTATE

Location, location, location. You’ve heard it before and the Maltese housing market is no exception. Due to current demographic changes – booming businesses and a growing expat community – the need for property has risen sharply. Especially in commercial areas where the demand for rental apartments and offices is the highest. The Maltese have always invested in real estate, owning multiple houses for their families to live in. Now that they can make a good profit renting to expats, many have converted their existing properties to satisfy the growing market. Need evidence? Look at the sales statistics, price increases, and new building permits for popular areas sauch as St. Julians, Sliema, and Swieqi. Investing in property – particularly in a foreign country – requires significant knowledge of the market and, just like any other country, Malta offers the good, the bad, and the ugly. Before you even consider buying a house, it’s advisable to know the ins and outs.

RENTAL MARKET

Rental Demand in Business-Friendly Malta Offers Investment Opportunities in the Property Market

(May 2014) Though economic crisis has plagued much of Europe over the last six years, this stable and peaceful haven in the Mediterranean has escaped untouched. “You could make a safe and stable, annualized return, both in good times and bad, on this little island nation in the sun,” reports McMahon. “Despite what’s happening elsewhere in Europe, Malta is open for business— and business is booming.”

PROPERTY TAXES Property taxes are due only when you purchase property in Malta. No additional property taxes are due on an annual basis.

28 www.devinkestates.com SPECIAL DESIGNATED AREAS

To avoid speculation on the housing market, Malta applies a one-property-per- foreigner policy. However, an exception is made with some of Malta’s most prestigious complexes – commonly referred to as Special Designated Areas (SDAs). Since the scale of SDAs is much larger, the Maltese government introduced a special scheme where foreigners can buy an unrestricted number of units. The goal? To inject the selling phase with capital and secure the investment. If you desire a comfortable standard of living or wish to rent to others who do, SDA complexes are well-known landmarks among the locals and worth considering.

Real Estate Agency Perspective Special Designated Areas is a status granted to qualifying developments that allows both EU and non-EU nationals to purchase property in Malta with the same acquisition rights as Maltese citizens, and without the need to obtain an AIP (Acquisition of Immovable Property). Therefore there are no limits on the amount of properties a buyer can purchase and once acquired the owner can also lease the property without restrictions (any rental income is taxed at 15%). As a result these developments are extremely popular with international investors as well as the Maltese.

Developer Perspective This means that non-Maltese citizens or citizens who have not resided continuously in Malta for a minimum period of five years can purchase property within the same rights as Maltese Citizens. No government permits are required, and an individual is able to purchase more than one property unit in the name of an individual/s or a company or trust. Properties in these Special Designated Areas are exempt from the restrictions set out in the AIP Act, and so an individual/s, company or trust is free to lease any property that they own.

Government Perspective There are defined zones in Malta, referred to as special designated areas, where there are absolutely no restrictions to acquisition. There is also no restriction on acquisition through inheritance and there are also several other special exemptions. Different rules apply to the acquisition by bodies of persons.

Here are links to two of more than 10 SDAs in Malta/Gozo:

Portomaso, St. Julians, Malta

Kempinski Residences, San Lawrenz, Gozo

29 MEDIA & RESOURCE LIST

Valletta 2018 - European Capital of Culture https://vimeo.com/79378027

National Geographic Shares Gorgeous Video of Malta https://lovinmalta.com/lifestyle/video-1/watch-national-geographic-shares-gorgeous- video-of-malta

Another Cool Malta Video https://www.youtube.com/watch?v=zXbQWXSaM5w

Malta’s National Newspapers www.timesofmalta.com/ www.maltatoday.com.mt/ www.independent.com.mt/

Government Services and Information www.gov.mt/en

Identity Malta www.identitymalta.com/

Identity Malta executes the functions and duties of the Public administration in matters relating to passports, identity documents, work and residence permits for expatriates, land registration and registration of public deeds, acts of civil status and individual investment programmes.

Official Tourism Website www.visitmalta.com/

Malta Tourism Authority www.mta.com.mt/

Malta Enterprise https://www.maltaenterprise.com/

Malta Enterprise is the country’s economic development agency, tasked with attracting new foreign direct investment as well as facilitating the growth of existing operations. Business First is Malta Enterprise’s single point of contact for businesses.

FinanceMalta www.financemalta.org/

FinanceMalta is the public-private initiative set up to promote Malta as an International Financial Centre.

30 www.devinkestates.com MEDIA & RESOURCE LIST Malta Financial Services Authority www.mfsa.com.mt/

The MFSA is the single regulator for financial services activities in Malta, supervising credit and financial institutions, investment, trust and insurance business. It also houses the country’s Companies Registry.

Inland Revenue Department www.ird.gov.mt/

Information about Malta’s income tax system.

National Statistics Office www.nso.gov.mt

The NSO is the executive arm of the Malta Statistics Authority. It is responsible for the collection, compilation, analysis and publication of a wide range of statistical information and related matters.

Malta Planning Authority www.pa.org.mt/

The Planning Authority acts on behalf of the community to provide a sustainable ‘land use and planning’ system.

Malta Public Transport www.publictransport.com.mt/

Find information on how to buy temporary and long-term bus passes as well as plan your travel.

Taxi Serivice: eCabs www.ecabs.com.mt/

A reliable, customer-focused transportation service with 24/7 availability and a great smartphone app. A well-maintained fleet of executive cars to larger people movers.

TV and Internet in Malta www.expat-quotes.com/guides/malta/shops-and-telecom/tv-and-internet-in-malta.htm

Helpful third-party information.

Malta Uncovered www.maltauncovered.com/

Gem of a website about Malta, developed by a Dutchman who stayed and documented.

31 A FINAL WORD

While we did everything in our power to develop an interesting report about Malta, please know that we are not perfect, nor are the sources we consulted. None of this information should be relied upon to make investment decisions. We’ve only tried to whet your appetite and encourage you to take next steps, with or without our help. (Hopefully with.)

32 www.devinkestates.com ABOUT US

DeVink Estates is a property advisory service and real estate agency that specializes in helping clients throughout Europe relocate to – and invest in – Malta. www.devinkestates.com [email protected] (+356) 7947 1194

33 Phone: (+356) 7947 1194 E-mail: [email protected] Web : www.devinkestates.com