EU Court Declares Malta’s Investor Citizenship Scheme Illegal – Inward/ Foreign Investment – Malta

Overdue:

Key Findings of the Judgment

A. Transactional Nature of the Scheme

The Court found that Malta’s program established a “transactional procedure” whereby nationality was “essentially granted in exchange for predetermined payments or investments.” This approach was deemed fundamentally incompatible with the concept of citizenship as representing a “special relationship of solidarity and good faith between a Member State and its nationals”.

B. Lack of Genuine Link

The Court emphasized that the scheme lacked provisions for establishing a genuine connection between applicants and Malta. The minimal residency requirements and the ability to expedite naturalization through additional payments undermined any serious claim of a real connection.

C. Violation of EU Principles

By operating such a scheme, Malta was found to have violated the principles of sincere cooperation and mutual trust among EU Member States. The Court stated that the scheme jeopardized the mutual trust necessary for the proper functioning of the EU, particularly concerning the recognition of national decisions on citizenship.

Comparative Perspective: Cyprus’s Experience

Cyprus faced similar scrutiny over its investor citizenship program. In response to EU concerns, Cyprus terminated its scheme in November 2020 and subsequently revoked the citizenships of 39 individuals. This proactive approach allowed Cyprus to align with EU expectations and avoid legal proceedings.

Commentary from AGPLAW

The CJEU’s decision underlines the importance of aligning national citizenship laws with EU principles. Cyprus’ experience demonstrates that while the termination of such programs may have short-term economic implications, it also opens avenues for developing alternative investment strategies that comply with EU law. For instance, Cyprus has since focused on enhancing its residency programs and attracting foreign investment through transparent and lawful means.

Malta now faces a critical juncture. By studying the Cypriot model, Malta can explore compliant avenues to attract foreign investment without compromising the integrity of EU citizenship.

Conclusion

The CJEU’s ruling marks a significant development in EU citizenship law, emphasizing that citizenship cannot be commodified. Member States are reminded of their obligations to uphold the principles of sincere cooperation and mutual trust. As the EU continues to explore the complexities of citizenship and investment, this judgment serves as a precedent for ensuring that the acquisition of citizenship remains a process grounded in genuine connection and adherence to EU values.

Source: EU Court Declares Malta’s Investor Citizenship Scheme Illegal – Inward/ Foreign Investment – Malta