Malta:End of Commercialized EU Citizenship?
Commission v. Malta: CJEU Declares Investor Citizenship Schemes Incompatible with EU Law By Shemi Esquire
European Commission v. Malta: CJEU DInvestor Citizenship Schemes Incompatible with EU Law
Case C-181/23: End of Commercialized EU Citizenship
By Shemi Esquire
On April 29, 2025, the Court of Justice of the European Union delivered a landmark ruling in European Commission v. Malta (Case C-181/23)¹, declaring Malta's longstanding citizenship-by-investment program illegal under EU law.
The Grand Chamber's judgment unequivocally stated that "the acquisition of Union citizenship cannot result from a commercial transaction"², establishing a definitive legal precedent. The judgment signals the formal end of so-called "golden passport" schemes within the European Union and reshapes how member states may grant citizenship moving forward.
This article examines the legal ruling, its historic context, and its implications for EU migration policy, particularly in comparison to approaches taken by other European Union member states.
Background: Malta's "Golden Passport" Origins
Malta launched its first investor citizenship program, the Individual Investor Programme, in 2014. Designed to attract high-net-worth individuals, the MIIP allowed applicants to acquire Maltese citizenship and, by extension, EU citizenship in exchange for a comprehensive investment package. The program required a non-refundable contribution of €650,000 to Malta's National Development and Social Fund, an investment of €150,000 in government bonds, and a property purchase worth at least €350,000 or rental commitment. Additionally, the program included a residency requirement of 12 months, although this was often interpreted with considerable flexibility.
Though the program generated hundreds of millions of euros for Malta's economy, it attracted controversy from its inception. Critics characterized it as a commodification of EU citizenship, raising concerns about money laundering, security risks, and the absence of genuine ties between applicants and Malta. Civil society organizations, European Parliament members, and eventually the European Commission expressed mounting concern about the program's integrity and its broader implications for EU citizenship principles.
2020: MIIP to CES Reforms
In response to escalating EU pressure, Malta terminated the MIIP in 2020 and introduced a revised framework called the Citizenship by Naturalisation for Exceptional Services by Direct Investment. The new program attempted to address some criticisms while maintaining the fundamental structure of citizenship-for-investment. Key changes included implementing a residency period of either 12 or 36 months before application, depending on the investment level, increasing the contribution to up to €750,000 based on residency duration, and introducing tighter due diligence checks.
While Malta marketed the CES as a more robust and EU-compliant system, critics viewed it as rebranding rather than genuine reform. The essential mechanism of granting citizenship in exchange for financial investment remained unchanged, perpetuating the fundamental concerns that had plagued the original program.
EU Legal Action Initiated
In October 2020, the European Commission, acting under Article 258 TFEU, launched formal infringement proceedings against Malta, having previously taken similar action against Cyprus. The Commission argued that such schemes violated the principle of sincere cooperation under Article 4(3) of the Treaty on European Union and undermined the nature of EU citizenship as established under Article 20 of the Treaty on the Functioning of the European Union.
Despite Malta's persistent argument that citizenship remained a national competence under EU law, a principle traditionally respected by the EU given its sensitive nature, the Commission maintained that the effects of Maltese naturalization extended far beyond Malta's borders. By granting individuals full EU rights, including freedom of movement and establishment throughout the union, Malta's decisions had union-wide implications that required scrutiny under EU law.
This legal confrontation led to a formal referral to the CJEU in 2023, culminating in the definitive 2025 ruling that would reshape European approaches to investment-based citizenship.
2025 CJEU Ruling: Citizenship Not for Sale
In its April 29, 2025 decision, the CJEU delivered a comprehensive judgment siding with the European Commission and establishing clear principles regarding the commercialization of EU citizenship. The Grand Chamber's ruling centered on two fundamental breaches of EU law that would have far-reaching implications for similar programs across Europe.
The court found that by treating the acquisition of nationality and, by extension, Union citizenship as a commercial transaction, Malta had fundamentally devalued the essence of EU citizenship, which requires a genuine connection to a Member State, thereby violating Article 20 of the Treaty on the Functioning of the European Union. Specifically, the judgment determined that "the scheme was found to devalue the essence of EU citizenship, which must be linked to a true national bond"³. Notably, while the Advocate General's opinion had previously suggested EU law did not impose a 'genuine link' requirement for nationality itself, the Grand Chamber's judgment effectively established this principle in the context of the acquisition of Union citizenship, emphasizing a 'special relationship of solidarity and good faith justifying the grant of rights' which cannot arise from a purely commercial transaction. The court established that Malta's program failed to create any meaningful connection between applicants and the country beyond a purely financial transaction, violating the fundamental requirement of a genuine link between citizen and state.
The court also ruled that Malta had breached Article 4(3) of the Treaty on European Union, which enshrines the principle of sincere cooperation. The judgment stated that "Malta was deemed to have failed in its duty of sincere cooperation by risking the mutual trust between Member States"⁴. This commodification was further deemed a breach of Article 4(3) TEU, as it eroded the mutual trust between Member States essential for the effective functioning of Union law, particularly regarding the rights conferred by EU citizenship. This principle requires that member states assist each other in full mutual respect and refrain from actions that could undermine the union's objectives or the mutual trust essential to EU functioning.
European Commission spokesperson Markus Lammert welcomed the judgment, declaring that "European citizenship is not for sale"⁵, emphasizing the Commission's consistent position on investor citizenship schemes. The court explicitly rejected Malta's defense that its sovereignty over nationality matters was unlimited, establishing clearly that EU law imposes constraints on how citizenship can be granted when such decisions affect EU-level rights and freedoms.
Malta's Reaction and Program Status
Following the ruling, Malta's government issued a measured statement acknowledging its respect for the judgment while indicating it would evaluate available legal options. The government maintained that the program had implemented strict due diligence procedures and argued that citizenship granted under previous schemes should remain valid.
While the CJEU's judgment did not directly invalidate citizenship granted under previous schemes, it establishes that the basis upon which such citizenship was granted (i.e., purely commercial transaction lacking genuine connection) is incompatible with EU law. This compels Malta to terminate the CES program for future applicants to comply with EU law or face potential financial penalties. It also implies that national courts might, in certain circumstances, review the legal validity of individual naturalizations in light of this new binding interpretation of EU law, though the CJEU itself did not make such a direct declaration of invalidity of existing citizenships. The decision effectively closes the last remaining direct citizenship-for-investment program within the European Union.
Malta vs. Other EU Countries Key Differences
Malta's approach to investment-based citizenship stood apart from other European Union member states in several crucial ways, making it uniquely vulnerable to the CJEU's scrutiny.
Understanding these differences illuminates why Malta faced legal challenge while other countries with investment programs have largely avoided similar consequences.
Cyprus operated the only other direct citizenship-by-investment program in the EU, but terminated its scheme in 2020 following scandals and EU pressure. The Cyprus Investment Program had required investments of €2.2 million and granted full EU citizenship without residency requirements, making it even more controversial than Malta's scheme.
Following the Al Jazeera investigation that revealed corruption and abuse within the program, Cyprus suspended it entirely before facing formal legal action from the European Commission.
Most other EU countries that offer investment-based immigration programs focus on residency rather than direct citizenship. Portugal's Golden Visa program, for example, provides a pathway to residency through property investment or other qualifying investments, but citizenship requires maintaining legal residence for five years and demonstrating integration through language skills and community ties. Similarly, Greece offers residency through property investment but requires seven years of legal residence before citizenship eligibility.
Spain's investment visa program grants residency to investors who purchase property worth at least €500,000 or make other qualifying investments, but citizenship requires ten years of legal residence and demonstration of integration. Italy offers various investor visa programs leading to residency, with citizenship available after ten years of continuous legal residence and meeting integration requirements.
These programs differ fundamentally from Malta's approach because they establish genuine connections between investors and their chosen countries over extended periods. Residents must maintain their status, contribute to local communities, learn local languages, and demonstrate integration before accessing citizenship rights. This creates the "genuine link" that the CJEU found lacking in Malta's program.
France and Germany, while not operating formal golden visa programs, do offer various investment-based residency pathways through business creation and employment generation. However, these programs emphasize economic contribution and job creation rather than passive investment, and citizenship requires extensive integration over many years.
The Netherlands previously offered an investor visa program but terminated it due to concerns about effectiveness and abuse. The country now focuses on attracting innovative entrepreneurs and skilled workers rather than passive investors, reflecting a broader European trend toward programs that generate economic activity and employment.
New EU Citizenship Standard
The CJEU's ruling creates a binding legal precedent that will influence how all EU member states approach investment-based immigration programs. The decision establishes that no member state may operate a citizenship-by-investment program that lacks substantive connections between applicants and the granting country.
While the ruling does not ban golden visa programs that provide residency-by-investment, it increases scrutiny on all investment-based immigration schemes.
The CJEU's ruling, while not directly banning residency-by-investment programs, creates a stricter framework for all investment-based immigration schemes. The emphasis on a 'genuine link' implies that even RBI programs may face increased scrutiny, particularly if they are perceived as de facto pathways to citizenship with minimal integration, or if they facilitate circumvention of EU anti-money laundering or security protocols.
Member States operating such schemes will likely need to demonstrate robust mechanisms for verifying genuine residence, integration, and comprehensive due diligence to ensure compliance with the spirit of the CJEU's judgment and broader EU objectives.
The European Commission has already warned member states that even residency programs must align with EU anti-money laundering rules and security protocols, suggesting further regulatory tightening may follow.
The case also clarifies the relationship between national sovereignty and EU obligations in citizenship matters. While nationality decisions remain a national competence, they must respect EU law obligations, particularly where EU citizenship and its associated rights are conferred. This principle may influence future challenges to other investment-based programs that fail to establish genuine connections.
The ruling reflects broader European concerns about the integrity of citizenship and the potential security risks posed by programs that prioritize financial investment over genuine integration. As EU institutions continue tightening control over migration and citizenship frameworks, the decision sets a powerful precedent that citizenship cannot be treated as a commercial product, especially when it grants access to the EU's shared legal space and rights framework.
Conclusion: End of an Era
The April 2025 CJEU decision formally ends Malta's golden passport program, marking the collapse of direct citizenship-for-sale schemes within the European Union. While Malta derived significant economic benefits from its program, the ruling underscores that citizenship cannot be reduced to a commercial transaction, particularly when it grants access to the rights and freedoms of the European Union.
The decision distinguishes Malta's approach from other EU investment programs by emphasizing the importance of genuine connections, extended residency requirements, and integration measures that create meaningful ties between investors and their chosen countries. As European institutions continue strengthening oversight of migration and citizenship frameworks, the ruling establishes a fundamental principle that EU rights are not commodities for sale, and member states must uphold principles of genuine connection, transparency, and mutual trust in their citizenship policies.
The end of Malta's program represents not just the closure of a controversial scheme, but the affirmation of European values regarding citizenship, belonging, and the rights that come with membership in the European Union.
Footnotes:
¹ European Commission v. Malta, Case C-181/23, ECLI:EU:C:2025:XXX (CJEU Apr. 29, 2025)
² Ibid., para. 47
³ Ibid., para. 52
⁴ Ibid., para. 63
⁵ European Commission Press Release, "Court of Justice confirms that EU citizenship is not for sale," (Apr. 29, 2025)