The European Commission has decided to launch infringement procedures against two member states regarding their investor citizenship schemes also referred to as “golden passport” schemes.
By issuing letters of formal notice to Cyprus and Malta, the Commission considers that the granting by these member states of their nationality in exchange for a pre-determined payment or investment and without a genuine link with them is not compatible with the principles of the EU treaty.
The Commission is also writing to Bulgaria to highlight its concerns regarding an investor citizenship scheme operated by that member State and requesting further details (20 October).
Due to the nature of EU citizenship, such schemes have implications for the EU as a whole. When a member state awards nationality, the person concerned automatically becomes an EU citizen and enjoys all rights linked to this status, such as the right to move, reside and work freely within the EU, or the right to vote in municipal elections as well as elections to the European Parliament.
As a consequence, 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 undermines the essence of EU citizenship.
The Cypriot and Maltese governments have two months to reply to the letters of formal notice. If the replies are not satisfactory, the Commission may issue a Reasoned Opinion in this matter.
The conditions for obtaining and forfeiting national citizenship are regulated by the national law of each member state, subject to due respect for EU law. Until now, the Commission has been reluctant to interfere in the sales of passports by certain member states.
A study in 2018 showed that, in one or another form, Austria, Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Latvia, Lithuania, Malta, Portugal, United Kingdom and candidate country Montenegro have all offered Golden Visa schemes with investments ranging from €250,000 to €10 million.
“This is an important and overdue step in the fight against money laundering and corruption in Europe,” commented MEP Sven Giegold (Greens/EFA). “Malta and Cyprus have been a security blackspot in Europe by allowing the sale of passports to criminals, corrupt and money launderers from all over the world.”
Rachel Owens, Head of EU Office at Global Witness, said that, ”Countless news stories and NGO investigations have sounded the alarm over the use of schemes by the criminal and corrupt to buy access to Europe”.
“Whilst appearing to agree with those warnings, the European Commission was slow to properly crackdown on golden visas. It is therefore music to our ears to see the EU finally taking concrete action against two countries whose schemes pose the highest risk.”
This Thursday, the European Parliament will debate and vote on “Serious security threats through the sale of EU passports and visas to criminals”. The Parliament has called for a ban on commercial citizenship sales across Europe. Giegold added that the Commission should also look into the residency by investment schemes in Bulgaria, Portugal and other member states.