The EU Parliament on tuesday has voted to adopt the TAX3 committee report and called for singling out Malta and Cyprus due to weak due diligence which offer citizenship and golden visa schemes for investment.
This despite Malta and Cyprus already announced tightening the C/RBI schemes with more security checks and enhanced due diligence practises. Malta applies the best due diligence practise in the investment immigration industry and has provided full working model of vetting process.
The EU report further said about 20 out of 28 member states offer visas for investment and of that at least 5 000 non-EU citizens have obtained EU citizenship through citizenship by investment schemes; notes that, according to a study2, at least 6 000 people have been granted citizenship and almost 100 000 residence permits have been issued;
The TAX3 final report adopted by the EU, addresses several concerns with the CBI/RBi schemes
- The investments made under these programmes do not necessarily promote the real economy of the Member State such schemes jeopardise the attainment of the Union’s objectives and are therefore in breach of the principle of sincere cooperation;
- CBI and RBI schemes of some Member States have been used profusely by Russian citizens, also as a means to avoid EU sanctions
- CBI/RBI programmes regularly involve tax privileges or special tax regimes for the beneficiaries and such schemes undermine CRS and also give a taxpayer access to a low personal income tax rate of less than 10 % on offshore financial assets. Some EU Member States have implemented tax schemes to attract HNWIs without creating real economic activity;
In 2018, OECD announced citizenship and residence schemes Malta and Cyprus as high risk to the integrity of CRS. The golden visa schemes in Portugal, Greece, Spain, United Kingdom, Ireland were excluded by OECD from the list
The TAX3 report stressed the importance of customer due diligence and AML standards carried out by member states.
- Member States should require physical presence in the country as a condition for benefiting from CBI and RBI schemes, and should properly ensure that enhanced CDD on applicants for citizenship or residence through these schemes is duly carried out, as required by AMLD5;
- AMLD5 imposes enhanced CDD for politically exposed persons (PEPs);
- Calls on Member States to ensure that governments bear the ultimate responsibility for performing due diligence on applicants for CBI or RBI;
- Commission to monitor rigorously and continuously the proper implementation and application of CDD within the framework of CBI and RBI schemes until they are repealed in each Member State;
- Duly verify the character of the applicants and refuse their application if they present security risks, including money laundering
- Dangers posed by CBI and RBI schemes associated with family reunification, whereby family members of CBI or RBI beneficiaries can acquire citizenship or residence with little or no checks;
- Member States to compile and publish transparent data related to their CBI and RBI schemes, including the number of refusals and the reasons for denial to ensure better data collection and exchange of information among Member State
The European Commission’s to set up a group of experts to address matters of the transparency, governance and security of these schemes
Read the full report here
