The Court of Justice of the European Union found “disloyal behaviour” on the part of the Republic of Malta (judgment C-181/23) and prohibited the application of naturalisation rules in Maltese law (so-called “citizenship by investment”).
In a long-awaited judgment (Case C-181/23 of 29 April 2025), issued on the basis of a 2023 action brought by the European Commission against Malta, the Court of Justice of the European Union ruled that the rules of Maltese law on nationality, which provide for the granting of nationality in exchange for investment, are contrary to EU law, namely the principle of loyalty of EU Member States towards each other and towards the EU institutions, as well as the principles of Union citizenship, because Malta was effectively selling its citizenship. Malta must now terminate this programme immediately.
Other EU countries (e.g. Portugal, Hungary, Bulgaria and Cyprus) also had programmes at certain times that made it possible to obtain citizenship of those countries in exchange for investment or the purchase of real estate; these countries received more than EUR 20 billion for these passports between 2011 and 2019. The reason, of course, was not that wealthy foreigners, such as corrupt businessmen from Angola or other African kleptocracies, magnates from China, oligarchs from the Russian Federation, sheikhs from Arab countries and post-Soviet businessmen from Central Asia, wanted to live permanently in Lisbon, Budapest, Sofia, Nicosia or La Valletta, but rather that the new citizens of these EU countries wanted to move to Madrid, Paris, Berlin or Rome – which is possible with EU citizenship, and even the EEA countries (Norway, Iceland and Liechtenstein) and Switzerland were legally accessible to new citizens and their family members.
The surprising background to the European Court of Justice’s ruling against Malta is the fact that nationality rules fall within the exclusive competence of the Member States, i.e. there are no EU standards in this area, let alone directives, regulations, minimum requirements, etc. This area does not fall within the competence of the EU, even though Article 9(1) of the EU Treaty and Article 20(1) of the Treaty on the Functioning of the EU introduced ‘citizenship of the Union’; However, the second sentence of these articles states that ‘every person holding the nationality of a Member State shall be a citizen of the Union’ (citizenship and nationality are used here as synonyms), and the third sentence emphasises that ‘Union citizenship shall complement and not replace national citizenship’. This means that Union citizenship can only be acquired through the nationality of an EU Member State. This is subject to national law, i.e. all EU countries have introduced citizenship based on origin (‘ius sanguinis’), but some also have the so-called right of birthplace (‘ius soli’) and most have a mixed system, i.e. a combination of both elements. In addition, there are rules for naturalisation that take into account, for example, length of residence, language acquisition, integration, special merits, etc. The fees cover the administrative procedure and amount to EUR 255 in Germany, but not hundreds of thousands of euros as in Malta (and Cyprus).
All naturalisations presuppose a substantial link between the citizen and their new country, in the sense of the famous “genuine link” from the ICJ’s “Nottebohm” decision (International Court of Justice, Liechtenstein v. Guatemala) of 6 April 1955, which concerned (by today’s standards, surprisingly topical) the naturalisation of a German businessman from Hamburg, a German emigrant who had lived in Guatemala since 1905 and, at the beginning of the Second World War, had become a naturalised citizen of Liechtenstein, where his brother lived, in order to avoid being subject to expropriation measures in Guatemala as an “enemy alien”. Although naturalisation rules fall within the jurisdiction of each state, the ICJ did not accept Mr Nottebohm’s naturalisation in Liechtenstein because Mr Nottebohm lacked a “genuine connection” to Liechtenstein and Liechtenstein citizenship was not his “effective” citizenship. Under international law, this naturalisation was invalid. In the case of this emigrant, it was not convincing even at the time, but it was a fundamental decision concerning the acquisition of citizenship.
Other EU countries have even introduced restitution citizenship, for example Portugal and Spain in favour of the descendants of Jews who were expelled at the end of the 15th century, Germany and Austria in favour of mainly Jewish but also political emigrants who had to emigrate in the first half of the 20th century, mostly between 1933/1934 and 1945/1955; these rules favour not only former (German and Austrian) citizens who were deprived of their citizenship, but also stateless persons and refugees of other nationalities who were never German or Austrian citizens but also had to flee. They have a ‘genuine connection’ within the meaning of the Nottebohm decision to Germany and Austria because they lived there and were then expelled from there.
However, Malta introduced a system that made the detailed rules for acquiring Maltese citizenship conditional only on the payment of money: “Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment” – this was the name of the “Citizenship by Investment Programme 2020”; The “investment” started at EUR 100,000; there was no requirement to reside in Malta or learn Maltese or English. Of course, like a similar system in Cyprus, this was a gateway to corruption. An unhealthy closeness developed between the administration, the government and dubious legal service providers, such as lawyers close to the government. It is no wonder that Malta earned several billion euros a year thanks to this programme.
In its judgment of 29 April 2025, the Court of Justice of the European Union ruled that this system violates the principle of loyal cooperation between Member States and EU institutions (Article 4(3) of the Treaty on European Union) and the rules on Union citizenship. Thanks to their EU citizenship, new Maltese citizens could reside and work anywhere in the EU, vote in Malta and in European elections, invest, bring their families and enjoy all fundamental freedoms throughout the EU, even though Maltese citizenship had simply been sold to them.
https://www.goldenvisas.com/ and ‘golden passports’ (e.g. from Vanuatu: https://planb.stanfordknight.com/; https://goldpassports.eu/; and https://www.goldenpassportagency.com/ – from Munich) are still being offered, even the Maltese programme, which violates EU law, continues to be sold by almost all providers, mostly law firms based in London, but also in Munich. bnt attorneys-at-law does not sell golden passports, but provides advice on legitimate issues of residence and citizenship law.
Source:
https://www.europarl.europa.eu/news/en/press-room/20220211IPR23114/meps-call-for-a-ban-on-golden-passports-and-eu-rules-for-golden-visas
ECJ judgment of 29 April 2025 (C-181/23)