European court: ‘Golden passport’ investor citizenship scheme is against EU law
The Court of Justice of the European Union said on April 29 that it has found Malta’s investor citizenship scheme – commonly referred to as “golden passports” – contravenes EU law.
Following an amendment to the Maltese Citizenship Act in July 2020, Malta adopted regulations which established detailed rules for the acquisition of “Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment”.
Under what is known as the 2020 investor citizenship scheme, foreign investors could apply to be naturalised where they fulfilled a certain number of conditions, principally of a financial nature.
The court said that the European Commission (EC) had asserted that that scheme, which granted naturalisation in return for predetermined payments or investments to persons without a genuine link with Malta, constitutes an infringement of the rules relating to EU citizenship and of the principle of sincere cooperation. The EC took the matter to the European Court of Justice in November 2020.
The court found that by establishing and operating the 2020 investor citizenship scheme, “which amounts to the commercialisation of the grant of the nationality of a Member State and, by extension, of Union citizenship”, Malta has infringed EU law.
The court said that each EU member state is free to lay down the conditions under which it grants or withdraws its nationality.
“That freedom must, however, be exercised in compliance with EU law,” the court said.
Neither the wording of the Treaties nor their scheme can support the inference that their authors intended to lay down, as regards the grant of the nationality of a Member State, an exception to the obligation to comply with EU law, it said.
The court said that European citizenship guarantees free movement within a common area of freedom, security and justice.
“That common area is based on two essential principles: mutual trust between Member States and mutual recognition of national decisions.”
European citizenship embodies fundamental solidarity between Member States, based on a set of reciprocal commitments, it said.
“Each Member State must therefore refrain from any measure that could undermine the EU common objectives, in accordance with the principle of sincere cooperation,” the court said.
“As a result, a Member State cannot grant its nationality – and indeed European citizenship – in exchange for predetermined payments or investments, as this essentially amounts to rendering the acquisition of nationality a mere commercial transaction.”
The court said that such a practice does not make it possible to establish the necessary bond of solidarity and good faith between a Member State and its citizens, or to ensure mutual trust between the Member States and thus constitutes a breach of the principle of sincere cooperation.
(Photo: EPPO)
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