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brexitfactsheet

FACTSHEET: Malta Government’s plans in case of a no-deal Brexit

UK nationals in Malta:

The Government's data suggests that there are roughly 13,000 UK nationals in Malta exercising their EU treaty rights, 5,000 of whom are in employment.

The Government has decided that insofar as the immigration position of UK citizens who are, or will be exercising their freedom of movement rights in Malta as EU nationals until 29 March 2019:

  1. The residence document they currently hold as EU nationals will continue to be valid until a new document is issued reflecting their new immigration position;
  2. A new document will be issued in the format specified by Regulation 1030/2002 (the uniform EU document laying down the standard specificiations for third country nationals), as suggested by the European Commission;
  3. The application for a new residence document, and the issue of the document will be free of charge; 
  4. The new and special immigration status of such UK nationals shall be valid for a 10 year period.

The document shall be renewed when it expires, providing the criteria continues to be met.

Identity Malta will be facilitating matters to ensure a smooth and streamlined process for those in possession of a residence document as EU nationals, and can prove that they were residing in Malta on the withdrawal date.

UK Nationals will have full access to the labour market for a 10 year period and are exempt from the need for an employment licence. 

The Government has decided to give UK nationals moving to Malta after 29 March 2019 residence documents valid for 10 years, as long as they satisfy established criteria. Fees currently applicable to third country nationals will apply.

Continued application of the Health Care Convention with the UK:

The Health Care Convention, catering for reciprocal coverage of health care (Malta/UK) dating back to 1975 and applied in practice on a daily basis remains applicable.

Medical training:

The Foundation Programme (a compulsory, two-year post-qualification training programme for doctors), should be unaffected by Brexit since the certificate is issued by the Maltese authorities.

Access to medicinal products:

The supply chain for medicinal items could be disrupted because of changes to the UK regulatory framework. Therefore, alternative sources to procure medicinal products from within the EU are being sought, and the Government is stockpiling medicines so supplies do not run out.

The Government will temporarily resort to direct acquisitions/negotiations, whenever there may be a problem with the sourcing of medicinal products while working in the most economical way possible.

The Malta Medicines Authority and the Ministry for Health are working closely on this.

Erasmus:

Maltese higher education institutions, VET institutions, schools, and youth organisations will be constrained to find other avenues outside the UK in order to reap the benefits of student exchange and mobility under the Erasmus+ Programme and the European Solidarity Corps.

The authorities are preparing internally for the eventuality of finding cooperation alternatives to make up for the UK not being able to participate.

Status of UK students in Malta, Maltese students in the UK, and tuition fees:

Students will retain the fee status in force before 29 March 2019.

For applications submitted after this date, the Ministry for Education will enter into reciprocal agreements with England, Northern Ireland, Scotland and Wales to agree fee structures.

Pending such agreements, the fees applicable to third country nationals, whose country does not have a reciprocal arrangement with Malta, will apply for UK citizenship.

EU funds:

Should a gap in funding in the 2014-2020 Multiannual Financial Framework be created by the UK's withdrawal, and needs to be made up for by other member states, the Government's estimate is that this would amount to some €14 billion (without taking account the UK Correction, a form of refund to the UK). The Government would therefore have to pay an additional €12 million annually, but would also be excused contributing around €6 million to the UK Correction. The net cost to Malta would be about €6 million annually.

Elections:

Amendments will be proposed to the European Parliament Elections Act to remove UK nationals from the European Parliament electoral register. They will still be able to vote in local council elections.

Direct taxation:

UK individuals who successfully applied for tax status under the High Net Worth Individuals and Residency Programme will no longer qualify, and will be offered registration on other programmes that apply to non-EU citizens at no cost. They would not lose the benefit of paying tax at a 15% rate, with a minimum amount each year.

VAT:

The UK and Maltese Tax authorities will no longer be obliged to assist each other in the exchange of information on fraud, evasion of tax, and on recovery of claims of tax from persons in their respective territories. The Maltese authorities will therefore enhance the due diligence process on persons, established in the UK, who apply to register for VAT in Malta. 

UK tourists will become eligible to claim a refund of VAT on items that they buy from Malta and which they carry with them to the UK, subject to the necessary certification by Customs. Therefore, the claims for refund by tourists will increase and consequently the amount of VAT revenue might be affected negatively. The system to cater for such refunds is in place.

Customs:

The overall administrative burden for Customs is expected to increase considerably. Customs' declarations for all consignments imported from, or exported to the UK, as groupage cargo, containers, fast parcel, postal service and airfreight will have to be lodged in the Customs IT systems and risk analysed. A percentage of these consignments will then be selected for physical control by Customs' officials.

In terms of passenger traffic, Customs will have to deal with 12 additional inbound, and 12 additional outbound flights, with 160 passengers each every day, plus an increase in the monitoring of accompanied cargo brought through these flights. 

The increase in flights to and from the UK may also require some infrastructural changes at the Customs arrivals and departures outstations.

Current IT systems are deemed to be adequate to cater for this increased workload. The department intends to initiate a road show during the first two weeks of March, and from 14 March a Customs desk will be established at the Business 1st one-stop-facility to serve the business community.

Aviation:

The Commission has issued two proposals related to the aviation sector to serve as a contingency to be used in case that a withdrawal agreement between the UK and the EU does not enter into force. The proposed regulations concern: (a) aviation safety, (b) air transport connectivity.

Whilst Malta has no particular issue with regard to the proposed regulation on aviation safety, and has no objections to its implementation as it ensures business continuity, the other proposal on air transport connectivity is being monitored closely. The latter is very important to ensure continued connectivity, and the Government is currently engaging actively in discussings at EU level on this.

Tourism:

A weak sterling and declining economic performance resulting from a no-deal Brexit is bound to negatively affect the British travelling public's spending power in Europe and could shift business to cheaper destinations such as Turkey, Tunisia and Egypt.

Tourist arrivals to Malta from the UK are expected to be 50,000 lower than the baseline value in 2020. Within the overall volume of tourist arrivals in Malta, a 50,000 drop from baseline performance would be notable but not of an alarming nature. Brexit has the potential to negatively affect around 300 jobs and 0.4% of GDP as compared to baseline values.

In order to overcome an expected 50,000 loss in arrivals in the no-deal Brexit scenario, an increase in marketing/route support budget of around €3 million over a 12-month period is being considered.

The EU passport for UK pets is no longer valid. A communication campaign will be launched to inform UK travellers of these implications.

Internal security:

Exchange of information and intelligence, as well as the mutual cooperation that currently takes place through EU set-ups, will cease.

The Malta Police Force is preparing to take on new challenges. Indications are that there are no current pending cases with the UK at the moment.

Border control:

Although the UK is not a Schengen country, and UK citizens already go through non-Schengen border points, minimal checks are usually carried on arriving UK citizens. This will cease, and UK citizens will go through the same checks third country nationals go through at our airport and seaport.

Products imported from the UK would also be subject to border controls.

Gaming:

The UK's departure from the EU may have a significant impact on the gambling sector in Malta. More than 80 online gaming operators established in Malta provide services in the UK, and restrictions on their freedom may lead to a direct impact on the Maltese Government's taxation streams (including corporate tax, income tax and VAT). Malta may no longer be a suitable place for UK-facing operators to conduct their business.

Malta Financial Services Authority:

The MFSA has engaged extensively with each sector in the financial industry falling under its remit. Impact does not appear to be substantial, except for a few specific entities which are taking action.

Foreign Direct Investment:

The Malta-UK Business Promotion Task Force is having one-to-one meetings with potential investors and companies which may relocate to Malta. The sectors targeted include pharmaceuticals, aviation and financial services.

Consumer affairs:

If the UK's European Consumer Centre stops receiving EU funds it will close down. This would be to the detriment of Maltese consumers, who make significant purchases from UK companies. Losing direct contact with the UK Consumer Centre is to be mitigated by reverting to the pre-accession contact methods.

Office of the Attorney General:

Brexit may give rise to, and increase in litigation relating to Customs. It may also impact areas such as European Arrest Warrants and the service of court documents in the UK.

Enforcement of court judgements:

The method and requirements for enforcement of UK judgments in Malta, and of Maltese judgments in the UK, will cease to be regulated by EU law. There will be a return to pre-accession methods using the Code of Organisation and Civil Procedure, the British Judgments (Reciprocal Enforcement) Act, and the Maintenance Orders (Facilitates for Enforcement) Ordinance.

This would make reciprocal enforcement of judgments lengthier and more uncertain. Cooperation in the criminal and civil law fields will also be complicated when EU instruments cease to apply, and reliance would have to revert to that based on methods contemplated by the Council of Europe and Hague Conventions.

The current organisational set-up should be able to cope, at least until the extent of increased workflow can be gaged.

Environment:

Within the waste, trade, protected species of wild fauna and flora, plus ship recycling sectors, no serious implications are envisaged, but an added burden is expected on authorities with increased permitting requirements.

Sanitary and phytosanitary issues:

The UK cannot remain as the EU Reference Lab used by Malta, and a lab in another country will need to be identified. The financial impact of this is still to be determined depending on the revised list of EU reference labs to be announced by the Commission.

Moreover, the UK would need to be considered as a third country pegged with such provisions on issues of animal health and plant health (SPS measures). This means a significant increased burden on the authorities.

There are 141 veterinary medical product providers from the UK registered with the Veterinary Regulation Directorate. A few will be adversely affected, but the general impact is not expected to be substantial. Authorisations granted on the basis of marketing authorisations in the UK will remain valid until their expiry date and will not become automatically invalidated on 29 March 2019.  

There is lack of clarity on the ban on imports of certain varieties of plant propagation material in view of the removal of the UK from the EU Common Catalogues of Varieties of Agricultural Plants and Vegetables, and from the EU register of fruit tree varieties.

Maltese in the UK:

The Ministry for Foreign Affairs and Trade Promotion, with the help of its High Commission in London, has been running an outreach campaign to maintain constant contact with the Maltese community in the UK.

Driving licences:

Driving licences from third countries may be used in Malta for up to a year.  EU acquis allows for the conversion of non-EU licences to EU ones.

Social security:

Contributions paid in the UK after 29 March 2019 shall no longer be considered for assessing Maltese pensions entitlement.

On the other hand, contributions paid in the UK prior to 29 March 2019 will still be taken into account for pension purposes, even for future pension claims. Contributions paid in other EU member states besides Malta and the UK shall be aggregated as well. This provision shall apply independently from the country of residence of the person concerned (whether in the UK, Malta, or any other country). 

Malta will continue to pay its pensioners (Old-Age, Survivors, Invalidity) resident in the UK, despite the fact that it will be a third country.

On the other hand, export by the United Kingdom of Survivors and Invalidity Pension is limited to the EEA/CH, and third countries that have social security bilateral agreements with the UK. Malta would initiate contacts to confirm that the UK will honour the provisions of the bilateral agreement in this regard.

Other benefits:

Benefits, which are currently covered by the EU Social Security coordination rules, shall no longer apply in the case of UK nationals who are in a cross-border situation between the UK and Malta. This applies for family benefits, maternity benefits, sickness and unemployment benefits. These cases are very limited in number.

Registry of companies:

A no-deal Brexit should not have an immediate and direct impact on the Registry of Companies' operations. The Registrar would not be able to apply EU company law statute to UK companies. For example, cross-border mergers between Maltese companies and UK companies would no longer be possible. Similarly, a European Company (Societas Europaea) registered in Malta would not be allowed to transfer its registered office to the UK, or vice-versa. 

However, such operations with UK companies have to date been very limited. As regards to the registration of new companies, the Registry of Companies already registers companies which have a shareholding from third countries, and would therefore still be able to register companies with UK residents as shareholders.

IP and patents:

It will not be possible to protect a trademark, a design or invention in the UK using an EU Trademark, Community Design and Unitary Patent (once in force respectively). In addition, certain elements of Copyright covering only EEA member state will not be extended to the UK.

These are EU-wide rights, and right holders will be notified that a new UK right has been granted by the UK IP Office. Any business, organisation or individual that may not want to receive a new comparable UK registered trade mark or design will be able to opt out.

Recognition of professional qualifications:

Malta will follow other member states and treat new applications for professional recognition of qualifications on the same lines as any third country application.

EU agreements override national agreements, so engaging the EU in medical recognition agreements is a necessity.

Internal security:

An important obstacle to continuing cooperation with the UK are the data protection rules. Bilateral agreements between the EU and the UK would have to be sought in order to overcome this obstacle.

Data protection:

Since the UK will be considered a third country, it would have to start undertaking the so-called 'adequacy procedures'. Should there be problems in this regard, this would affect the transfer of personal data to the UK, and vice-versa. This may impact a number of operators in all sectors. Preparations are being made, and further direction from the European Data Protection Board is expected.

Climate change:

Some issues are envisaged with regards to the existing regulations and the Commission is in the process of amending all necessary regulations. Malta would need to comply to the amended regulations with immediate effect.

Agriculture:

Issues envisaged with the Common Agriculture Policy relate to EU budget issues because the UK has been a net contributor to the CAP budget. Malta's main imports from the UK are cereals, which in Malta are not used in the agricultural sector but in the manufacturing of food and beverages (particularly barley), wholesale and retail. An indirect effect would be lesser access to UK markets by other EU member states. This may result in excess supplies, thereby possibly increasing the import of agricultural products into Malta.  

Road haulage:

As of 30 March 2019, there would be no basis in EU law for the provision of road freight transport services (haulage) between the UK and member states by road haulage operators.

The multilateral quota system of the European Conference of Ministers of Transport would become the only framework on which the continuation of such services could be based, but the current distribution quota will not suffice to maintain the current volume of road haulage operations between the UK and member states.

The Commission's proposal for a regulation ensuring basic road freight connectivity between the EU and the UK, aims to lay down temporary measures to govern road haulage between the UK and member states from the date of withdrawal, until the end of 2019.

Maritime:

The UK would no longer be in a position to participate in the Article 8(1) assessments of Regulation 391/2009 for those organisations for which the UK acts as the 'sponsor' member state.  A proposal to amend regulations would transfer the sponsorship of ROs from the UK to all the Member States authorising these ROs.

Certificates issued to seafarers by the UK can no longer be presented for an 'endorsement attesting recognition' by an EU-27 Member State under Directive 2005/45/EC.

Shipping companies and seafarers should ensure early renewal of endorsements issued by EU27 Member States on the basis of seafarers' certificates issued by the UK before 29 March 2019.

Posting of workers:

Workers who are in a cross-border situation between the UK and Malta (such as mariners working on Maltese-flagged vessels), and who by virtue of EU law are subject to be insured under the Maltese scheme, shall cease to be insurable under the latter scheme. 

UK nationals resident in the UK will no longer be insured in Malta. The same applies for posted workers from the UK to Malta and vice-versa. In this case, workers will remain insured in their country of residence.