Brussels issues Malta with final warning over golden passport scheme before court action

Updated at 3:05pm with Maltese government reaction

The European Commission has issued its final warning over Malta’s golden passport scheme which it claims is in breach of EU law. 

The reasoned opinion was communicated to the Maltese government on Wednesday and represents the last stage before the matter is taken to the European Court of Justice.

“The Commission 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,” the commission said in a statement, insisting that European values are not for sale.

The Maltese government now has two months react and if the EU executive is not satisfied with the reply the commission may take the matter before the European Court of Justice.

Maltese government reacts

The Home Affairs Ministry, which oversees the scheme, said granting of citizenship falls within the national competence of a member state, adding that "it should remain as such".

"The government notes the reasoned opinion concerning the acquisition of Maltese citizenship on the basis of investment... 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 ministry said.

It said that the government will analyse the contents of the commission's opinion and communicate the relative reply to the European Commission in due course.

Commission says golden passports undermine EU citizenship

Malta has been selling citizenship to wealthy foreigners, whose only link to Malta is often a rental contract or house purchase where they hardly live. The scheme was amended in late 2020 making it a condition on would-be passport buyers to first obtain a residency permit.

However, the scheme has come under fire because it can serve as a gateway for shady characters to gain a foothold in the EU by becoming Maltese citizens.

The European Commission said investor citizenship schemes undermine the essence of EU citizenship and have implications for the union as a whole. 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 inherent risks of such schemes have once again been highlighted in the context of the Russian aggression against Ukraine,” the commission said.

In its recommendation on 28 March, Brussels stressed that member states still operating investor citizenship schemes need to terminate them immediately.

The recommendation also calls on 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.

Malta has suspended the scheme for Russian and Belarusian nationals following the Russian invasion of Ukraine and last week, the Maltese government said it started the process of withdrawing citizenship to two Russian nationals against whom sanctions were levied by the US in connection with the Ukraine invasion.

READ ALSO: Brussels tells Malta to withdraw Russian golden passports over any links to Ukraine war

In October 2020, the commission decided to send a letter of formal notice to Malta 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 by Malta at the end of 2020.

The commission said Malta’s suspension of the citizenship scheme for Russians and Belarussians was a positive step but noted that Malta continues to operate the scheme for all other nationals. Malta has not expressed its intention to stop the scheme altogether.

“The Commission 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). Therefore, the Commission has decided to send Malta a reasoned opinion today,” the commission said.

Similar action was taken against Cyprus and Bulgaria. Cyprus stopped processing applications and, as of 15 October 2021, revoked the citizenship of 39 investors. The commission is assessing the situation in Cyprus before deciding on the next steps.

On 24 March 2022, the Bulgarian Parliament approved an amendment to the Bulgarian Citizenship Act, which aims to end the investor citizenship scheme.

Malta’s scheme

Malta launched its first scheme in 2014, known as the individual investor programme (IIP). Since then a large number of investors and their family members were granted citizenship. 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.