Malta hauled to EU Court over refusal to stop golden passports

Malta will have to defend its golden passport scheme for the global elite at the European Court of Justice in Luxembourg

The European Commission will refer Malta to the Court of Justice of the European Union over its golden passport scheme, accusing the island of breaching the EU Treaty’s principle of sincere cooperation for selling EU citizenship without any genuine link to Malta.

The EC followed up on its long-held warning to the Maltese to scrap its €1.1 million citizenship-by-investment scheme, saying it was incompatible with the concept of Union citizenship as laid down in the EU Treaty.

Malta was first warned on 20 October 2020, to end its investor citizenship scheme. The Commission sent an additional letter of formal notice to Malta on 9 June 2021.

Passport Papers

Passport Papers | Secrecy and bid to avoid scrutiny was always the mark of IIP

Following Russia’s war against Ukraine, Malta suspended the scheme for Russian and Belarusian nationals. “While this was a positive step, Malta continues to operate the scheme for all other nationalities and has not expressed any intention to end it,” the Commission said.

On 6 April 2022, the Commission sent a reasoned opinion to Malta, but decided to refer the country to the ECJ when it determined that Malta had not satisfactorily addressed the concerns raised. “Malta is the only remaining Member State that operates such a scheme,” the Commission said.

EU citizenship automatically gives the right to free movement, access to the EU internal market, and the right to vote and to be elected in European and local elections. Investor citizenship schemes allow a person to acquire a new nationality in absence of a genuine link with the naturalising country, such as long-term residence.

Brussels said Malta’s scheme is different from investor residence schemes, or ‘golden visas’, which allow third-country nationals to obtain a residence permit to live in an EU country.

But it said both types of schemes pose serious risks, in particular as regards security, money laundering, tax evasion and corruption.

In a statement, the home affairs ministry in charge of citizenship, said that it does not believe that it is in breach of any European treaty. “Our legislative framework of citizenship by investment fully respects the provisions as laid down in the Treaty of the Functioning of the European Union by the operation of the said avenue of naturalisation.

“The government, following consultations with experts in this field, strongly rejects the interpretation given by the Commission regarding such articles.”

The ministry added that government had been exchanging views with the Commission on its citizenship-by-investment scheme. While government insisted that such a scheme is a matter of national competence, the Commission insisted that such competence was not unlimited.

Other EU states

The Commission has been following up on the investor citizenship schemes in other Member States as well. In October 2020, the Commission also started an infringement procedure against Cyprus for its investor citizenship scheme. Cyprus suspended its scheme and stopped receiving new applications on 1 November 2020.

However, as it continued to process pending applications, the Commission decided to send a reasoned opinion to Cyprus on 9 June 2021. Cyprus finished processing all pending applications in July 2021. The Commission is closely analysing the situation before deciding on any next steps.

The Commission has also been in contact with Bulgaria on its investor citizenship scheme. Effective  5 April 2022, Bulgaria abolished the scheme.