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The European Court of Justice has ruled Malta’s “golden passport” scheme violates EU law, in a landmark decision set to force the island to scrap the commercialisation of EU citizenship.
“A member state cannot grant its nationality — and indeed European citizenship — in exchange for pre-determined payments or investments, as this essentially amounts to rendering the acquisition of nationality a mere commercial transaction,” the court said.
“By establishing and operating an institutionalised citizenship investment scheme,” Malta had “failed to fulfil its obligations” under the bloc’s treaties that enshrine EU citizenship, the court ruled.
Malta will now be forced to scrap the citizenship-for-investment scheme in its current form, or risk a fine.
Malta’s government said “the legal implications of this judgment are being studied in detail, so that the regulatory framework on citizenship can then be brought in line with the principles outlined in the judgment”.
The European Commission welcomed the court’s judgment. The commission had referred Malta to the bloc’s top court in 2023 over its scheme, arguing the sale of EU passports undermined “the essence of EU citizenship”, which relies on mutual trust between the member states.
The Maltese scheme has implications for the entire bloc, as people who acquire Maltese citizenship enjoy the right to live and work anywhere in the bloc, and to vote in EU elections.
Cyprus and Bulgaria have abolished their paid-for citizenship schemes under pressure from Brussels, which has argued that such schemes pose risks of corruption, money laundering and tax evasion.
In its ruling, the court said citizenship was “one of the principal concrete expressions of the solidarity which forms the very basis of the process of integration . . . which is an integral part of the identity of the European Union”.
“A member state manifestly disregards the requirement for such a special relationship of solidarity and good faith . . . when it establishes and implements a naturalisation scheme based on a transactional procedure,” it said.
Malta overhauled its scheme in 2020, and the Maltese government says it has tightened due diligence requirements for applicants. It also barred Russian and Belarusian nationals from the scheme in 2022.
People purchasing a Maltese passport have to make a one-off investment of at least €600,000, either purchase or rent a property, donate €10,000 to charity and live in the country for three years. The residency requirement can be reduced to a single year for people investing €750,000.
But the court stated that, even with improved due diligence checks, the scheme “amounts to the commercialisation of the grant of Maltese nationality, following a transactional procedure”.
A Financial Times analysis revealed 16 people who received Maltese passports were politically exposed individuals, or were later subject to sanctions or convicted of crimes.
Among the people identified by the FT were some who spent only several days in Malta during the year in which they were required to legally reside there preceding their naturalisation.
“It cannot be considered that actual residence on that territory was regarded by the Republic of Malta as constituting an essential criterion for the grant of the nationality of that member state under that scheme,” the court said.
The ruling could increase pressure on Malta to revoke passports issued under the scheme, which would be a lengthy and complicated process.
“What’s really interesting is whether other states inside or outside the EU could call into question the citizenship of people holding Maltese or Cypriot passports, on the basis that the citizenship was never valid,” said Simon Cox, a lawyer specialised in EU immigration law, referring to both the Maltese and now-abolished Cypriot programmes.
Cox said that while it was “unlikely Malta would adopt a general policy of revoking all these citizenships”, it could “increase the chance that they revoke [individual passports] to avoid political conflict with other states”.
According to the latest government report, Malta had approved more than 5,300 applications for citizenship as of the end of 2023.
In at least one case a passport, which had been granted to Russian millionaire Pavel Melnikov, was later revoked. Melnikov received Maltese nationality in 2015 and was convicted for tax and accounting fraud in Finland in February this year. He is appealing against the conviction and said he would challenge the revocation of his Maltese passport.
“Today’s judgment confirms that member states cannot commodify EU citizenship and operate reckless golden passport programmes,” said Transparency International’s chief executive Maíra Martini. “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.”
Daniel Freund, a Green member of the European parliament, also welcomed the ruling. “European passports are not for sale. Criminals, autocrats and terrorists should not be able to buy a ticket into the EU,” Freund said. “It’s time to end golden passports across Europe. It’s a disgrace that some Russians were able to use them to bypass EU sanctions.”
https://www.ft.com/content/a0284206-4fa0-4795-80cf-f2c296236eab
