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Wednesday 2nd December 2020
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EC opens infringement for “selling” citizenship

Today, the European Commission is launching infringement procedures against Cyprus and Malta by issuing letters of formal notice regarding their investor citizenship schemes also referred to as “golden passport” schemes.

The Commission considers that the granting by these Member States of their nationality – and thereby EU citizenship – in exchange for a pre-determined payment or investment and without a genuine link with the Member States concerned, is not compatible with the principle of sincere cooperation enshrined in Article 4(3) of the Treaty on European Union. This also undermines the integrity of the status of EU citizenship provided for in Article 20 of the Treaty on the Functioning of the European Union.

Due to the nature of EU citizenship, such schemes have implications for the Union 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.

The Commission considers that the granting of EU citizenship for pre-determined payments or investments without any genuine link with the Member States concerned, undermines the essence of EU citizenship.

Next steps

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.

Background

Investor citizenship schemes allow a person to acquire a new nationality based on payment or investment alone. These schemes are different to investor residence schemes (or “golden visas”), which allow third-country nationals, subject to certain conditions, to obtain a residence permit to live in an EU country.

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. As nationality of a Member State is the only precondition for EU citizenship and access to rights conferred by the Treaties, the Commission has been closely monitoring investor schemes granting the nationality of Member States.

The Commission has frequently raised its serious concerns about investor citizenship schemes and certain risks that are inherent in such schemes. As mentioned in the Commission’s report of January 2019, those risks relate in particular to security, money laundering, tax evasion and corruption and the Commission has been monitoring wider issues of compliance with EU law raised by investor citizenship and residence schemes. In April 2020, the Commission wrote to the Member States concerned setting out its concerns and asking for further information about the schemes.

In a resolution adopted on 10 July 2020, the European Parliament reiterated its earlier calls on Member States to phase out all existing citizenship by investment (CBI) or residency by investment (RBI) schemes as soon as possible. As stated by President von der Leyen in the State of the Union Address of 16 September 2020, European values are not for sale.

The Commission is also writing again to Bulgaria to highlight its concerns regarding an investor citizenship scheme operated by that Member State and requesting further details. The Bulgarian government has one month to reply to the letter requesting further information, following which the Commission will decide on the next steps.

European Commission – Press release

Investor citizenship schemes: European Commission opens infringements against Cyprus and Malta for “selling” EU citizenship

6 COMMENTS

  1. Thanks for that Nigel, but why isn’t there much shorter time limits when rules have been broken so blatantly?

    Why doesn’t Brussels say: no more golden passports from today!! The UK are or were contributing to this useless body, just another good reason to leave

  2. The queue at the sphincter clinic is growing day by day as the realisation dawns that the gravy train has stopped running and the golden goose is dying.

  3. “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.”

    Anyone know what a ‘reasoned opinion’ means here? It doesn’t sound particularly action-orientated in terms of heavily punishing the Republic for what is a hideous breach of being an E.U member state.

    They’ve offered hardened international criminals a new identity and passport to an entire continent in exchange for millions of Euros to build tacky (and as we are increasingly now seeing – also illegal from a planning perspective) ‘developments’.

    With a charge that severe, you’d expect something a bit more concrete than a ‘reasoned opinion’?!

    Any other perpetrator(s) in most other European countries would most probably looking forward to a long spell in prison.

    • A ‘Reasoned Opinion’ is a formal request to comply with EU law. It explains why the Commission considers that the country is breaching EU law. It also requests that the country inform the Commission of the measures taken, within a specified period, usually 2 months.

      If the country still doesn’t comply, the Commission may decide to refer the matter to the Court of Justice. Most cases are settled before being referred to the court.

      If an EU country fails to communicate measures that implement the provisions of a directive in time, the Commission may ask the court to impose penalties.

      If the court finds that a country has breached EU law, the national authorities must take action to comply with the Court judgement.

      Non-compliance with a court decision

      If, despite the court’s judgement, the country still doesn’t rectify the situation, the Commission may refer the country back to the court.

      Financial penalties

      When referring an EU country to the court for the second time, the Commission proposes that the court impose financial penalties, which can be either a lump sum and/or a daily payment.

      These penalties are calculated taking into account:

      the importance of the rules breached and the impact of the infringement on general and particular interests
      the period the EU law has not been applied
      the country’s ability to pay, ensuring that the fines have a deterrent effect

      The amount proposed by the Commission can be changed by the court in its ruling.

      • OK – thanks for the clarification Nigel. Let’s see if it actually results in anything concrete in terms of driving compliance – and punishing those ‘outed’ in the video.

        My own personal cynicism at the extreme corruption on the island makes me think ‘tap on wrist’ followed by wave after wave of obfuscation and non-punishment of the truly guilty will be the outcome – followed by the E.U letting the whole thing roll into the tall grass – but let’s see…

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