In a landmark ruling, the European Court of Justice (ECJ) has declared Malta’s Citizenship by Investment Scheme (CBI) incompatible with EU law. The Grand Chamber found that Malta’s program, which granted citizenship—and by extension, EU citizenship—to foreign investors in exchange for financial contributions, violated the principles of sincere cooperation and mutual trust enshrined in the EU Treaties.
Key Findings of the Judgment
- Commercialisation of EU Citizenship
The Court ruled that Malta’s scheme amounted to the “commercialisation” of EU citizenship, reducing it to a transactional commodity rather than a status rooted in genuine ties to a Member State. The program required applicants to make substantial payments (€600,000–€750,000), purchase property (minimum €700,000), and donate €10,000 to Maltese organizations, with residency requirements that could be shortened by additional payments. - No Genuine Link Requirement
The ECJ emphasized that EU citizenship must reflect a “special relationship of solidarity and good faith” between a Member State and its nationals. Malta’s scheme allowed applicants to obtain citizenship without demonstrating meaningful integration, as physical presence was only required briefly for biometric registration and oath-taking. - Breach of Mutual Trust
The Court highlighted that automatic EU citizenship rights—such as free movement, voting, and consular protection—are based on mutual trust among Member States. By selling passports without genuine connections, Malta undermined this trust and the integrity of EU citizenship. - Rejection of Malta’s Defenses
Malta argued that citizenship rules fall under national sovereignty, but the ECJ clarified that while Member States set naturalization conditions, they must respect EU law. The Court dismissed Malta’s claim that only systematic abuses of EU values could be challenged, affirming that even individual schemes could breach EU principles.
Implications of the Ruling
- End of Malta’s Investor Programme as it is today: The judgment effectively invalidates Malta’s program, requiring its termination.
- Precedent for Other EU States: The decision sets a legal precedent, discouraging similar programmes in other Member States.
- Status of EU Citizenship: The ruling reinforces the notion that EU citizenship is a fundamental status, and must not form part of a commercial transaction.
Background
The European Commission initiated infringement proceedings in 2023, arguing that Malta’s scheme breached Article 20 TFEU (EU citizenship) and Article 4(3) TEU (sincere cooperation). Despite Malta’s revisions to the program in 2020, the Court found its core transactional nature unchanged.
Reactions
- European Commission: Welcomed the ruling, stating it safeguards the “essence of EU citizenship.”
- Malta: Expressed disappointment and has stated that it will look at how it can revise the programme.
What happens from here on?
Successful applicants of the Programme must be questioning whether the citizenship granted to them before the judgment is safe. This is a mute point in the judgment, however from a face value assessment it seems that the judgment does not invalidate the granting of any citizenship before the issuance of the judgment. The revocation of citizenship still remain the exclusive remit of the Maltese state and is regulated by law. There is however a debate on whether other states may opt to not recognise citizenship granted by Malta in terms of this programme. Can a member a member state decide not to recognise a Maltese passport granted through the programme? Whilst this is considered to be remote as Maltese passport does not indicate how citizenship was granted, this is an evolving matter.
This article is simply for informational purposes and is not to be considered as legal advice.
Av. Cedric Mifsud
Founding Partner
Mifsud & Mifsud Advocates
For more information you can contact one of our Team Members at Mifsud & Mifsud Advocates.
