Malta’s controversial golden passport scheme, which allowed wealthy individuals to buy EU citizenship through significant investments, has been declared unlawful by the European Union’s highest court. The scheme, which required payments of at least €690,000, sparked widespread criticism and raised security concerns. This decision marks a pivotal moment for the European Union and the member states considering similar programs.

Malta’s Golden Passport Scheme Under Fire

Malta’s golden passport program allowed non-EU nationals to acquire Maltese citizenship in exchange for a hefty financial investment. The most common path to citizenship involved either contributing to a national development fund or making substantial investments in real estate, businesses, or government bonds. While Malta claimed that the scheme would stimulate economic growth, the European Commission raised alarms about its potential security risks and its undermining of EU unity.

The European Commission argued that Malta’s golden passport scheme violated EU regulations, specifically the obligation of EU member states to cooperate sincerely. Essentially, the Commission contended that offering EU citizenship to individuals without meaningful connections to Malta was inconsistent with the principles enshrined in EU treaties.

The Court’s Ruling: Commercialization of EU Citizenship

On Tuesday, the Court of Justice of the European Union (CJEU) sided with the European Commission, ruling that Malta’s golden passport scheme constituted the commercialization of EU citizenship. The Court’s decision emphasized that the acquisition of EU citizenship should not be treated as a business transaction. It also underlined that the scheme was incompatible with the fundamental status of EU citizenship, which includes a genuine connection to the member state granting citizenship.

The CJEU declared that “the granting of nationality by a member state must be based on more than financial transactions or investments” and that Malta’s approach failed to meet these standards. Furthermore, the court emphasized that the program did not prioritize actual residence, which is typically a key criterion for acquiring citizenship under EU law.

Malta’s Reaction and Potential Next Steps

Following the ruling, Malta’s government expressed its respect for the court’s decision but stated that the legal implications of the judgment were still under review. In a statement, the government highlighted that the decisions made under the existing framework of the golden passport scheme would remain valid. The Maltese authorities also stressed that the program had contributed significantly to the nation’s economy, enabling investments that supported national development.

The statement read: “The Government of Malta respects the decisions of the courts, while at this moment the legal implications of this judgment are being studied in detail, so that the regulatory framework on citizenship can then be brought in line with the principles outlined in the judgment.”

Despite this, the Commission’s stance remains firm. European Commission spokesperson Markus Lammert reiterated that “European citizenship is not for sale,” signaling that the ruling would prompt Malta to reevaluate its investor citizenship policies.

A Step Back for Other Golden Passport Programs

Malta’s golden passport scheme was the last remaining such program in the European Union after Cyprus ended its scheme in 2020 and Bulgaria followed suit in 2022. However, the golden passport issue is not confined to Malta. Many countries have adopted “golden visa” schemes, offering residence permits to foreign investors in exchange for significant financial contributions. These visas are often seen as a way to attract foreign capital and stimulate the economy.

While golden visas do not offer full citizenship, they can still open doors for wealthy individuals to move freely within the EU. This has prompted concerns over money laundering and national security, particularly as wealthy individuals from countries under international sanctions, like Russia, could use these visas to circumvent restrictions.

Portugal, for example, made significant changes to its golden visa program in 2023, eliminating a real estate investment requirement to curb property speculation. Similarly, the Netherlands ended its golden visa program in January 2024, and Spain has pledged to abolish golden visas tied to real estate investments as well.

Security Concerns and Ethical Considerations

The primary concerns with golden passport and visa schemes revolve around national security and money laundering risks. These programs have been criticized for allowing individuals with questionable backgrounds or unclear financial histories to acquire EU citizenship or residency. The situation escalated with the outbreak of the Ukraine conflict in 2022, as wealthy Russian individuals sought alternative routes into the EU to evade sanctions. This further intensified calls from European lawmakers for stricter regulations on such schemes.

In response to the growing concerns, Members of the European Parliament (MEPs) have advocated for tighter rules surrounding golden visas and citizenship by investment. In 2022, a group of MEPs urged the EU to impose a blanket ban on investor citizenship programs, arguing that they were “objectionable from an ethical, legal, and economic point of view.”

The End of the Road for Malta’s Golden Passport Program?

Malta’s golden passport scheme may now be facing its final chapter, but the broader debate over investor citizenship and golden visa programs is far from over. Malta has long defended its program as an important driver of economic growth, generating substantial revenue for national development. The government, however, will now have to navigate a complex legal landscape as it works to align its citizenship laws with the EU’s legal framework.

The European Commission’s stance remains unequivocal: EU citizenship is a fundamental right, not a commodity to be bought and sold. As Malta faces pressure to adjust its policies, other EU member states will likely be watching closely, as the future of golden visa and citizenship-by-investment programs hangs in the balance.

Conclusion: What Lies Ahead for Golden Passport Schemes?

The European Union’s ruling on Malta’s golden passport scheme is a landmark decision that challenges the notion of citizenship as a tradable asset. With Malta’s program now deemed unlawful, the remaining golden passport schemes across Europe are under increased scrutiny. Security concerns, ethical questions, and the risk of money laundering have cast a long shadow over these programs, leading to calls for reform across the continent.

It is clear that the EU is committed to maintaining the integrity of its citizenship laws, and the implications of this ruling will likely influence how other EU member states approach similar schemes in the future. For Malta, the road ahead involves reconciling its economic interests with the EU’s legal framework—an undoubtedly complex task, but one that could reshape the future of investment-based citizenship.

Related Links

• EU Citizenship Laws: An Overview
• Malta’s Economic Growth through Investment
• Golden Visa Programs: A Global Perspective
• The Ethical Implications of Investor Citizenship

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Source: euronews, by Jeremy Fleming-Jones & Gregoire Lory