UE declares Malta's 'golden passport' program for investors illegal.

Malta's "golden passport" program for wealthy investors is deemed illegal by the EU's highest court, citing EU rules on citizenship. The program allowed individuals to obtain nationality for a minimum €600,000 donation and was a significant source of income for the country, generating over €1.4 billion since 2015. The ruling may impact Trump's efforts to attract wealthy foreign investors to the US.

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The European Union's highest court, the European Court of Justice (ECJ), has ruled that Malta's "golden passport" scheme is illegal under EU law. This landmark decision, delivered on Tuesday, has significant implications for the bloc's investor migration policies and could influence similar programs in other member states.

The ECJ concluded that the scheme, which allowed wealthy individuals to obtain Maltese and EU citizenship for a minimum donation of €600,000, constituted an unlawful "commercialisation of the grant of nationality of a member state." This ruling underscores the fundamental principles of EU law, including the mutual trust between member states essential for maintaining a borderless Schengen area [1].

Malta's 2020 investor citizenship program, which required applicants to contribute up to €750,000 to the Maltese economy and reside in the country for at least 12 months, has been found to be in breach of EU law. Investigations revealed that many applicants spent minimal time in Malta and still acquired citizenship, highlighting the scheme's potential for misuse [1].

The ruling follows legal proceedings launched by the European Commission in 2020 against both Malta and Cyprus. While Cyprus shuttered its scheme shortly after the challenge began, Malta chose to defend its position, arguing that nationality laws fall under national jurisdiction [1].

In response to the verdict, Malta's government stated it was "studying the legal implications so that the regulatory framework on citizenship can then be brought in line with the principles outlined in the judgment." However, the government also defended the program's benefits, noting that it had generated more than €1.4 billion in government revenue since 2015 [1].

The ruling is expected to have a ripple effect across the continent, as several EU countries had launched similar schemes post-global financial crisis to attract foreign capital. However, these practices have increasingly come under scrutiny due to concerns related to corruption, national security, and organized crime [1].

The UK, for instance, scrapped its "tier 1 investor visa" in February 2022, citing risks of illicit finance and deteriorating relations with Russia. Meanwhile, U.S. President Donald Trump announced plans earlier this year to launch a "gold card" visa—a $5 million residency offer for the ultra-wealthy [1].

The EU's Court of Justice emphasized that each member state has the right to decide on nationality but must exercise this freedom in compliance with EU law. "A member state cannot grant its nationality –- and indeed European citizenship -– in exchange for predetermined payments or investments, as this essentially amounts to rendering the acquisition of nationality a mere commercial transaction," the court stated [2].

This decision may impact Trump's efforts to attract wealthy foreign investors to the U.S., as it sets a precedent against commercial transactions for citizenship. The ruling also underscores the EU's commitment to maintaining the integrity and fairness of its citizenship policies.

References:
[1] https://www.newsx.com/world/eu-court-declares-maltas-golden-passport-scheme-illegal-what-it-means-for-cash-for-citizenship-in-the-bloc/
[2] https://www.hazard-herald.com/news/national/eu-top-court-rules-golden-passport-schemes-are-illegal/article_aa98cb8e-8985-5bbe-bcfc-8d437b28f995.html

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