Citizenship for investments. CJEU: Malta violated the EU law

Malt She amended her law on citizenship in July 2020, introducing registration about the citizenship program for investors. They gave foreign entrepreneurs the opportunity to apply for Malta's citizenship – and thus EU citizenship – for “exceptional merits in connection with direct investments”.

In other words, foreigners could receive Maltese citizenship if they invested the right amount of money in this country.

She filed a complaint about Malta in this matter European Commissionwhich decided that the system adopted by Malta was contrary to the treaty provisions regarding the citizenship of Union and the principles of loyal cooperation.

As the EC noted, citizenship is granted in this case to people who have no real relationship with Malta, but only in exchange for payments and investments they earlier.

The Tribunal agreed with the EC and ruled that Malta violated the law of the community because it established and implemented a citizenship program for investors, reminiscent of a transaction of the sale of a Member State, and thus – the status of a Union citizen.

CJUE He admitted that the granting and receiving citizenship belongs to the competences of the Member States, but they must follow the law of European Union law, which was missing in this situation.

The Tribunal noted that the acquisition of EU citizenship cannot take place as a result of a commercial procedure.

“The bond of citizenship with the Member State is based on a special relationship between solidarity, loyalty and reciprocity of rights and obligations between the state and its citizens. When the Member State grants its citizenship – and therefore also the citizenship of Union – directly in exchange for previously specific investments or payments by way of transaction procedure, these principles are clearly infringed,” said CJEE.

The Tribunal also reminded that European citizenship guarantees the freedom to move through the territory of the community, and this freedom is based on two basic treaty principles: mutual trust between Member States and mutual recognition of decisions taken by a given Member State. Meanwhile, “commercialization” of the status of a citizen harms both in the principle of loyal cooperation and threatens mutual trust between EU countries.

Therefore, the CJEU ruled that the Member State cannot give its citizenship – and in fact European citizenship – in exchange for money and investments, because in this way it brings the acquisition of citizenship to a regular commercial transaction.

The decision of the CJEU was commented by the EC spokesman Markus Lammert, who announced that Malta must now exercise the judgment of the Tribunal. He also emphasized that – from the commission's point of view – citizenship systems for investors violate EU law and as such should be abolished by all Member States. “EU citizenship is not for sale,” said the spokesman.

Lammert added that Malta was the last member state with this type of citizenship scheme. Earlier, similar programs were in force on Cyprus and in Bulgaria. In view of the first of these countries, the EC also initiated proceedings regarding the violation of the obligations of a Member State, but in the meantime Cyprus suspended the program, and from November 2020 he stopped accepting applications and currently conducts an assessment of cases of citizenship. Bulgaria withdrew from the program in April 2022.

Lammert reminded that shortly after the full -size invasion Russia on Ukrainestarted in February 2022, the EC also issued recommendations for the Member States, calling them to immediately suspend all investor systems operating in them – so as to eliminate the risk of granting citizenship or the right to stay in exchange for investments.

– These types of systems create a risk for the security of the community, are corruptionogenic, can be associated with money laundering and facilitating tax evasion – noted the spokesman.