On 20 October, the European Commission (EC) has issued letters of formal notice regarding the investor citizenship programmes in Cyprus and Malta, thus opening an infringement procedure against the two countries. The EC maintains that the programmes, which grant the high-net worth individuals the possibility to access passports of these Member States, and by automatism, the rights of EU citizenship, are contrary to the principle of “sincere cooperation” enshrined in article 4(3) of the Treaty on European Union (TEU) and that they damage the integrity of the EU citizenship status as defined in article 20 of the Treaty on the Functioning of the European Union.
The background to the infringement procedure reveals the complex relationship between the regulation of national citizenship, which is still an exclusive domain of the Member States, and the automatic attribution of additional EU citizenship rights, enforceable across the Union. The Commission maintains that “the effects of investor citizenship schemes are neither limited to the Member States operating them, nor are they neutral with regard to other Member States and the EU as a whole”, and that the grant “of EU citizenship for pre-determined payments or investments without any genuine link with the Member States concerned, undermines the essence of EU citizenship”.
The investor citizenship programmes of Cyprus and Malta have recently come under public scrutiny as a result of corruption and the rule of law issues that they raised. During the months of September and October, Al Jazeera uncovered a list of politically exposed or otherwise controversial individuals who had been granted Cypriot citizenship, and evidenced that the programme was highly susceptible to corruption. Shortly thereafter, the Speaker of the Parliament of Cyprus resigned, and the country announced suspension of the programme from November 2020. In September, the authorities arrested the former chief of staff to Joseph Muscat, the ex-prime minister, during an investigation into alleged money laundering through the country’s Individual Investor Programme (IIP). Earlier that month, Malta’s IIP has reached its upper threshold of 1,800 applicants. The country’s citizenship legislation has been adapted to pave the way to a future investor citizenship programme. However, the Legal Notice laying the details of such a scheme has not yet been issued.
The European Commission had previously pointed to the many problematic aspects of investor citizenship programmes in its 2019 Report, and President von der Leyen’s State of the Union speech emphasized the significance of upholding the rule of law across the union, referring inter alia to the sale of passports.
Apart from Cyprus and Malta, Bulgaria also allows the purchase of the country’s citizenship, but a draft bill has been under consideration by the country’s parliament since October 2019, in view of changing this practice. As a result, prior to taking action, the Commission has requested clarification from this country about its investor programme, granting the Bulgarian authorities the possibility to respond within one month.
For further information, check out country profiles for Bulgaria, Malta and Cyprus, and Jelena Dzankic’s Working Paper and book on the topic of investor citizenship.
The cover picture portrays the Berlaymont Palace in Brussels: the original can be found here.