A “golden passport” scheme operated by Malta offering citizenship to wealthy overseas investors has been struck down by the European Court of Justice (ECJ), which found it amounted to the government selling citizenship.
In a significant ruling, the EU court said the controversial scheme had commercialised citizenship by in effect allowing rich foreign individuals to buy a passport.
Under the scheme, applicants could secure Maltese citizenship by donating at least €600,000 to the government and buying or renting property on the small Mediterranean island.
The European Commission challenged the legality of the scheme.
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The commission criticised the “transactional” nature of the programme, which gave successful applicants a passport that allowed them to work and travel across the EU. The practice of in effect selling EU citizenship undermined trust between the 27 member states, the commission said in an April 1st, 2020 letter.
Agents pushing the scheme promoted it as an avenue to secure the “right to reside, study and work in any of the 27 countries of the European Union”, according to excerpts from promotional materials submitted to the court.
Malta stopped taking applications from Russian and Belarusian individuals following Russia’s full-scale invasion of Ukraine in early 2022, over fears the scheme would be exploited by wealthy individuals seeking to avoid western economic sanctions.
By that point the commission had already opened a legal case against the citizenship investor programme, seeking an ECJ ruling that it broke EU law.
Malta argued that the portrayal of its process as an “automatic and unconditional access route to Maltese nationality” was an “oversimplification”.
In a decision published on Tuesday, the ECJ said the selling of national citizenship through the “transactional” Maltese scheme was “incompatible” with EU law. The ruling means Malta will be forced to discontinue its overseas investor programme.
Anti-corruption organisation Transparency International welcomed the ruling. Maíra Martini, its chief executive, said “countless cases have shown how these schemes have granted safe haven to corrupt actors from around the world and other suspicious individuals in the EU”.
The ECJ decision “stops not only Malta from selling EU citizenship, but will also prevent other member states from doing the same”, she said.
Another EU state, Bulgaria, scrapped a similar golden passport scheme in 2022, following pressure from the commission.
Ireland discontinued, in February 2023, a cash-for-visa scheme it had run for more than a decade. It had allowed wealthy individuals secure residency in Ireland in return for investing €1 million in an Irish business, or philanthropic donations of at least €400,000, commonly made to sports clubs and charities.
The government closed the scheme to new applicants in early 2023 in response to internal concerns about a surge in applications from China and difficulties carrying out due diligence on those applying.
