The European Commission has decided that it will proceed with infringement proceedings against Malta on its golden passport scheme, with the Commission issuing a “reasoned opinion” on the scheme.
The reasoned opinion was sent to Malta on Wednesday, and the government now has two months to reply.
If the reply is not satisfactory, the Commission may the bring this matter before the Court of Justice of the European Union.
In its reasoned opinion, the Commission said that it considers that the granting of EU citizenship in return for pre-determined payments or investments, without any genuine link to the Member State concerned, is in breach of EU law.
“Investor citizenship schemes undermine the essence of EU citizenship and have implications for the Union as a whole. Every person that holds the nationality of an EU Member State is at the same time an EU citizen. EU citizenship automatically gives the right to free movement, access to the EU internal market, and the right to vote and be elected in European and local elections,” the Commission pointed out.
The Commission noted that the inherent risks of such schemes have once again been highlighted in the context of the Russian aggression against Ukraine.
In a short statement in reply, the Government said that it had noted the reasoned opinion from the European Commission concerning the acquisition of Maltese citizenship on the basis of investment.
“The grant of citizenship falls within the national competence of a Member State and it should remain as such. That being said, the Government reiterates that only worthy individuals benefit from an important right as citizenship on such basis, and that it will be keeping an open dialogue with the Commission,” the government said.
The government said that it will analyse the contents of the said Opinion of the Commission and will communicate the relative reply to the European Commission in due course.
In its recommendation of 28 March, the Commission stressed that Member States still operating investor citizenship schemes need to terminate them immediately. The recommendation also calls Member States to ensure strong checks of investor residence schemes.
Residence permits granted under such schemes to Russian or Belarusian nationals, who are subject to EU sanctions in connection to the war in Ukraine, should be withdrawn immediately, the Commission had recommended.
Malta has been facing infringement proceedings since 20 October 2020, when the Commission decided to send a letter of formal notice to the country asking to end its investor citizenship scheme and subsequently sent an additional letter of formal notice to Malta on 9 June 2021, following the introduction of a new scheme at the end of 2020.
Malta recently suspended this new scheme for Russian and Belarusian nationals following the Russian invasion of Ukraine, but continues to operate the scheme for all other nationals and has continued to staunchly defend it.
Prime Minister Robert Abela in fact has continually said that citizenship is a matter of national competency as he defended the scheme.
The Commission however considers that such a scheme is “in breach of the principle of sincere cooperation (Article 4(3) TEU) and infringes the very status of citizenship of the Union as laid down in the Treaties (Article 20 TFEU),” which is why the Commission had decided to send Malta a reasoned opinion.
Background
Investor citizenship schemes, or ‘golden passport' schemes, allow a person to acquire a new nationality based on payment or investment and in the absence of a genuine link with the naturalising country. These schemes are different to investor residence schemes (or ‘golden visas'), which allow third-country nationals, subject to certain conditions, to obtain a residence permit to live in an EU country.
The conditions for obtaining and forfeiting national citizenship are regulated by the national law of each Member State, subject to due respect for EU law. As nationality of a Member State is the only precondition for EU citizenship, and subsequent access to rights conferred by the Treaties, the Commission said that it has been closely monitoring investor schemes granting the nationality of Member States.
In October 2020, the Commission also started an infringement procedure against Cyprus for its investor citizenship scheme. Cyprus repealed its scheme and stopped receiving new applications on 1 November 2020 after a media investigation highlighted severe due diligence shortcomings. However, it continued to process pending applications. As a result, the Commission decided to send a reasoned opinion to Cyprus on 9 June 2021. Since then, Cyprus stopped processing applications and, as of 15 October 2021, revoked the citizenship of 39 investors. The Commission said that it is carefully assessing the situation in Cyprus before deciding on the next steps.
The Commission was also in contact with Bulgaria, highlighting its concerns regarding an investor citizenship scheme operated by that Member State. On 24 March 2022, the Bulgarian Parliament approved an amendment to the Bulgarian Citizenship Act, which aims to end the investor citizenship scheme.
Since the launch of its first scheme in 2014 (the ‘individual investor programme'), Malta has naturalised a large number of investors and their family members. At the end of 2020, Malta established a new scheme, after the original one came close to reaching its limit of 1.800 successful main applicants. The new scheme maintains the principle that nationality can be awarded systematically, in return for pre-determined payments, without having to establish any genuine link between the applicant and Malta. On 2 March 2022, Malta announced that it had suspended, until further notice, the processing of applications from nationals of the Russian Federation and Belarus.