For ultra-high net worth individuals around the world, the most valuable asset money can buy isn’t a yacht or private jet—it’s a second passport. These “golden passports,” formally known as citizenship by investment programmes, allow wealthy foreigners to gain citizenship in a new country by investing a specified amount, usually in real estate or government bonds.
Why a Second Passport?
Obtaining a second passport gives the wealthy a variety of advantages:
- Global mobility: A second passport allows easier travel access to more countries. Some passports are more powerful than others in terms of visa-free travel.
- Tax benefits: Some countries have no taxes on foreign income, wealth, inheritance or capital gains for citizens.
- Security: Having a second passport provides a plan B if conditions deteriorate in their home country due to war, economic collapse or political instability.
- Status: An alternate citizenship gives bragging rights and status for some ultra-high net worth individuals.
The Fall of European Golden Passport Programs
In the past, the most popular programmes were in Europe. Portugal, Greece, Cyprus and Malta in the EU offered golden passport programmes. However, concerns around corruption, security risks and housing inflation have led to a decline in these programmes.
Portugal shut down its golden visa programme to new applicants in January 2023. Similarly, Ireland closed its programme for wealthy investors in December 2022. The programmes offered residence permits and passports in exchange for real estate investments or other large financial contributions.
This leaves Malta as the only EU country still offering a direct citizenship by investment programme. But it too is facing pressure to end the scheme.
Malta Becomes Top Choice for Americans
With options dwindling, Malta’s golden passport programme is now the second most popular among wealthy Americans looking to obtain dual citizenship.
According to the 2023 Henley Passport Index, the number of American applicants to investment migration programmes has skyrocketed, now accounting for over 50% of applicants globally. The report cites concerns over rising inflation, political tensions and declining middle class jobs as factors driving Americans’ interest in buying citizenship in Malta.
Malta offers visa-free access to 186 destinations worldwide—offering greater mobility—and a low tax environment attractive to foreign investors.
According to experts, real estate investments are the most appealing route to Maltese citizenship for Americans. Malta’s programme allows citizenship within 12-36 months for those who invest in residential real estate.
How Malta’s Programme Works
To obtain citizenship in Malta, applicants must meet several specific requirements:
- Investment Options: Applicants can choose to invest either €700,000 in real estate, €600,000 in government bonds, or €750,000 as a contribution to Malta’s National Development Fund.
- Commitment: Applicants must commit to holding the investment for at least 5 years.
- Residence Requirement: Applicants must prove their ties to Malta either through a 36-month residence period or by buying/renting property.
- Additional Contributions: There are additional contributions totalling around €40,000, which cover due diligence fees, passport fees, and more.
- Thorough Background Checks: Applicants and their dependents will undergo comprehensive background checks.
The total investment cost typically ranges from €800,000 to €900,000 for property investors.
The Lengthy Application Process
Gaining Maltese citizenship through investment is not a quick process. It involves several detailed steps:
- Submitting an extensive application with background documents.
- Undergoing several rounds of due diligence checks that dig into criminal records, source of wealth, tax compliance and more.
- Local agents visit the investor’s home country to verify assets and documents.
- Making the required investment in Maltese real estate or other options.
- Obtaining residence status in Malta through the purchase or lease of approved property.
- Passing tests on Maltese culture, history and language basics.
- Oath of allegiance ceremony held in Malta.
The entire process takes a minimum of 12 months for real estate investors, and up to 3 years in some cases. Applicants must be prepared for an exhaustive vetting process.
The Controversies Around Golden Passports
Despite their popularity among the wealthy, golden passports are highly controversial. Critics argue:
- National security risks – Criminals can gain access to the EU and escape sanctions. For example, Russian oligarchs have used golden passports to bypass sanctions imposed due to the Ukraine invasion.
- Race to the bottom – Countries compete to attract investment, lowering requirements. Standards have declined as countries try to boost foreign investment inflows.
- Housing unaffordability – The extra real estate demand drives up property prices, making housing unaffordable for citizens. Locals struggle to compete with foreign property investors gaining citizenship.
- Lack of ties to the country – Investors gain citizenship despite minimal time physically present or cultural ties to that country.
- Tax evasion – Just using a golden passport as a tax avoidance strategy, without meaningful links to that country.
- National identity concerns – Dilutes the meaning of citizenship when it can be “bought” by the wealthy.
The EU has scolded Malta for its programme and ordered reforms. But Malta insists it helps grow its economy, and has so far kept it open. More oversight and vetting have been added, but critics say loopholes remain.
Outlook for Malta’s Programme
Malta is holding strong as the last EU country where citizenship by investment is possible directly. Demand among American investors seeking dual citizenship is higher than ever.
But pressure from the EU over national security risks means the programme’s future is uncertain. Malta is likely to introduce tighter background checks and restrictions to appease EU concerns.
For now, wealthy Americans seeking a powerful second passport from an EU nation still have a narrow window of opportunity in Malta. But it may not stay open forever.
