Court annuls Malta's "golden passports" - "Citizenship cannot be acquired through a simple commercial transaction"
The European Court of Justice has ruled that Malta's scheme to award "golden passports" violates EU law, in a landmark ruling aimed at forcing the island to abandon the commercialisation of EU citizenship.
"A Member State cannot grant its citizenship - and indeed European citizenship - in exchange for predetermined payments or investments, as this essentially amounts to transforming the acquisition of citizenship into a simple commercial transaction," the court said.
“By creating and operating an institutionalised citizenship by investment scheme”, Malta “has failed to fulfil its obligations” under the EU treaties that sanction EU citizenship, the court ruled.
Malta will now be forced to scrap the citizenship-by-investment scheme in its current form, or risk a fine. The Maltese government said in a statement that “the legal implications of this decision are being studied in detail, so that the regulatory framework on citizenship can be adapted to the principles set out in the decision.”
The European Commission welcomed the court's ruling. The commission had referred Malta to the bloc's highest court in 2023 over its scheme, arguing that selling EU passports undermined the "essence of EU citizenship," which is based on mutual trust between 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, as well as to vote in EU elections.
Cyprus and Bulgaria have scrapped their citizenship-for-payment schemes, under pressure from Brussels, which has argued that such schemes pose risks for corruption, money laundering and tax evasion.
In its ruling, the court said that citizenship was “one of the main concrete expressions of solidarity that forms the very basis of the integration process, which is an integral part of the identity of the European Union.”
“A Member State blatantly disregards the requirement for such a special relationship of solidarity and trust when it creates and implements a naturalisation scheme based on a transactional procedure,” the court said.
Malta reviewed its scheme in 2020, and the Maltese government says it has tightened requirements while showing due diligence to applicants. Malta also excluded Russian and Belarusian nationals from the scheme in 2022, when the invasion of Ukraine began.
People buying a Maltese passport must make a single investment of at least €600,000, by buying or renting a property, donating €10,000 to charity and living 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 “constitutes the commercialisation of the granting of Maltese citizenship, following a transactional procedure”.
A Financial Times analysis found that 16 people who received Maltese passports were politically exposed individuals, or later subjected to sanctions or convicted of crimes. Among the people identified by the FT were some who spent only a few days in Malta during the year they were required to reside legally there before their naturalization.
“It cannot be taken for granted that current residence in the territory of the Republic of Malta is an essential criterion for the grant of citizenship 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 is really interesting is whether other states inside or outside the EU can question the citizenship of people holding Maltese or Cypriot passports, on the basis that the citizenship was never valid,” said Simon Cox, a lawyer specializing in EU immigration law, referring to both the Maltese and Cypriot programs, which have now been abolished.
Cox added that while it was “impossible for Malta to adopt a blanket policy of revoking all citizenships granted to date”, this could “increase the possibility that they will revoke passports for certain individuals, to avoid political conflict with other states”. According to the latest government report, Malta had approved more than 5,300 citizenship applications by the end of 2023.
In at least one case, a passport issued to Russian millionaire Pavel Melnikov was later revoked. Melnikov obtained Maltese citizenship in 2015 and was convicted of tax fraud in Finland in February this year. He is appealing the conviction and said he will contest the revocation of his Maltese passport.
“The decision confirms that member states cannot commodify EU citizenship and operate reckless golden passport programs,” said Transparency International’s executive director, Maira Martini. “Countless cases have shown how these schemes have provided a safe haven for corrupt actors from around the world and other dubious individuals in the EU.”
Daniel Freund, a member of the European Parliament from the Green Party, also welcomed the decision. “European passports are not for sale. Criminals, autocrats and terrorists should not be able to buy a ticket to the EU,” Freund said. “It is time to put an end to golden passports across Europe. It is a shame that some Russians managed to use them to circumvent EU sanctions,” he added.
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