A total of €1.9 billion in undeclared assets have been regularised through various schemes offered by the government since 2002.

The Finance Ministry last Saturday announced that €455.8 million of undeclared assets were registered in the scheme that closed at the end of November.

Finance Minister Edward Scicluna had described that figure as “surprising”, given that so much had already been collected from previous schemes.

The amount registered can be put into some context by comparing it with the total household financial wealth as calculated by the Central Bank of Malta: €17.4 billion in 2013, representing currency and bank deposits (€9.4 billion), interest-bearing securities (€2.7 billion) and shares (€2.7 billion). To that figure must be added property owned by households.

This was the fifth scheme that offered an ‘amnesty’ for registering assets that had not previously been declared, in particular those held overseas. One scheme was specifically targeted at those who had undeclared liri stashed away, in the run-up to the changeover to the euro currency in 2008.

Those who came forward to register assets did not pay any penalties for not having declared them before, but did have to pay a registration fee. The government has collected €94 million over the five schemes, after paying any fees due to the agents involved in the registration.

The first scheme was clearly the one which generated the most registrations – €679 million – but the large amount brought to light by the latest scheme reflects the fact that both the EU and the OECD are tightening the noose around tax evaders by persuading more and more countries to sign multilateral agreements on the sharing of tax information.

However, the €1.9 billion could still be the tip of the iceberg. Sources said that in the 1990s, estimates based on the economic activity of the time indicated that as much as €7 billion worth of undeclared assets could be overseas.

Economist Philip Von Brockdorff believes that more of a stick is now needed.

“In my view, one needs to consider the reasons for an Investment Registration Scheme in the first place. It provides further evidence of both tax avoidance and tax evasion on a rather grand scale given the estimate of €7 billion in 1994.”

He said that, if the amount repatriated was in fact €2 billion, one could safely conclude that the amount referred to in 1994 was either over-estimated or most of the funds are tied up in long-term investment likely to be earning more interest than offered locally.

“My concern remains that successive governments have been very accommodating with the ‘big’ tax evaders and tax avoiders and therefore unwittingly perpetuating the ever-present shadow or underground economy which in relative terms and according the European Commission remains one of the largest in the EU.

“Given that with EU legislation it is supposedly less difficult today to track undeclared investment, we need to be less accommodating and start taking decisive action against those whose investments remain undeclared,” Prof. Von Brockdorff said.

Another problem is what happens to the money. While 85 per cent of the amount registered in this latest scheme was left overseas, the 15 per cent – €69.8 million – brought back could cause problems for the economy, driving up inflation.

The president of the Federation of Real Estate Agents, Ian Casolani, does not think that as much of the repatriated funds will end up being invested in property as it did before.

“Unfortunately no statistics exist to define what sort of amount actually went into the property market. However, it is safe to say that, as always, the repatriated money had a positive impact on the market to some extent, particularly the 2002/2003 schemes,” Mr Casolani said.

He said that the final withholding tax on rentals introduced last year would continue to attract investment into the buy-to-let market, while the repatriated funds would hopefully counteract the negative sentiment in the market after recent budget measures imposed an obligatory final withholding tax on all property sales, deterring investors.