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Lessons from the EU and Malta’s ‘citizenship by investment’ dispute

by Christina Georgaki, Founder and Managing Partner of Georgaki and Partners Law Firm. @c_georgaki

The EU and Malta’s ‘Cash for Citizenship’ dispute is a cautionary tale – both for poorly thought-through investment migration schemes and those who’d try to stop them. 


Last week, the European Commission’s dispute with Malta over their citizenship by investment scheme came to a head in a court case in the EU’s Grand Chamber in Luxembourg. 

In taking the step of hauling Malta to court, the EU are trying to end a decade-long policy whereby the Maltese Government have granted citizenship to foreign nationals who invest in the country above a certain threshold. The programme’s current iteration – the Malta Exceptional Investor Naturalisation Policy (MEIN) – has this threshold at €600,000, through which you gain citizenship after 36 months, and faster timeframes of up to 12 months available via a larger investment. 

The EU’s opposition to this setup is to argue that from a legal standpoint, ‘selling’ EU citizenship violates the principles of cooperation between EU member states, by making citizens of people who have no substantive connection to Malta or the EU. 

More widely however, it stems from the EU’s increasing aversion to investment migration programmes – a stance that unfortunately lacks understanding of the benefits that these schemes can bring. 

In my home country of Greece for instance, while we do not offer citizenship by investment, our Golden Visa programme gives investors a residency permit with many of the same benefits. This system has recently been revised to a four-tiered structure with a minimum threshold of €250,000 for commercial to residential conversions and restorations, then either €400,000 or €800,000 depending on location. Between 2021 and 2024, this scheme has earned €4.3bn for the Greek economy. Critically, this is €4.3bn that hasn’t had to come through borrowing, taxation or EU grants. 

Last week’s hearing sits in another context too – that of badly designed investment migration schemes falling by the wayside. In recent months, Spain, the Netherlands and Ireland have scrapped their Golden Visa programmes and Portugal have scaled theirs back, predominantly due to their ineffectiveness. On the other hand, Malta’s problem is that their offer is too generous to be palatable to the rest of the EU. 

The EU’s court challenge seems doomed to fail. The Maltese defence – that it is the prerogative of nations to decide who they give citizenship to – is strong, and has been reinforced by numerous historical precedents and increased vetting processes. This does not necessarily mean that the EU will give up here though, so expect their opposition to take new forms in the coming months and years, all the while causing uncertainty for prospective investors.

There are lessons to be learned for all parties from last week, regardless of the case’s outcome. For the EU, that investment migration schemes won’t be easily discarded under pressure. For its constituent nations, that there are boundaries to how far you can push the tolerance of the Commission in this sector. And for investors, that you’re better off choosing an investment migration scheme that avoids this mess in the first place.

Photo by Mike Nahlii on Unsplash

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