No EU toast raised with single malta: CJEU verdict spells end for 'Golden Passport' scheme
The scheme led to 'commercialisation of the grant of nationality of a member state and, by extension, of [EU] citizenship', which breaches EU rules relating to citizenship and the principle of sincere cooperation.
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Every person holding the nationality of a member state shall be an EU citizen and enjoy the rights, and be subject to the duties, provided for in the treaty.
These rights shall be exercised under conditions and limits defined by the treaties and by measures adopted under them.
Assist each other in carrying out tasks flowing from the treaties.
Take appropriate measures to ensure fulfilment of obligations arising from the treaties or resulting from acts of EU institutions.
Refrain from any measure that would jeopardise attainment of EU objectives.
In April, Court of Justice of the European Union (CJEU) held Malta's investor-citizenship scheme (ICS) - 'golden passports' - to be a contravention of EU laws. This was the only remaining EU member state that still operated a golden passport programme.ICS was adopted under Article 10(9) of the Maltese Citizenship Act, and the Granting of Citizenship for Exceptional Services Regulations 2020, which allowed foreign investors to be naturalised as citizens of Malta upon fulfilment of certain conditions, principally of a financial nature. Such schemes are called ' citizenship by investment ' (CBI). CJEU's impugned order comes days after the EC initiated legal proceedings against Malta after revelations that Maltese passports had allegedly been sold to Russians, who were later sanctioned due to the Russia-Ukraine war.Malta defended its competence in regulating citizenship matters. While the court recognised this, it also held that:According to Article 20 of the Treaty on the Functioning of the European Union (TFEU):Article 9 of the Treaty on European Union (TEU) similarly states that every citizen of a member state shall be an EU citizen. Also, Article 4(3) of TEU puts forth the principle of sincere cooperation, under which the EU and member states shall:Notably, CJEU's order contradicts advocate general Anthony Collins' opinion from 2024, in which he remarked that 'holding the scheme to be illegitimate would upset the carefully crafted balance between national and EU citizenship, leading to a wholly unlawful erosion of member states' competence'.CBI was launched after Malta's integration into the EU and its adoption of the euro, which exposed Malta's economy to the 2008 financial crisis and the euro crisis of 2009. After this, Malta first came up with the idea of CBI in the form of the Individual Investor Programme (IIP) in 2013. Under it, an investor (citizenship buyer) was required to make a non-refundable contribution to Malta's National Development and Social Fund.A minimum non-refundable donation of ₹6 lakh was required for a 36-mth naturalisation period, while ₹7.5 lakh could fast-track naturalisation to only a year. IIP was open for applications until September 30, 2020, after which it was replaced by 2020 regulations and the Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment scheme.With its success, Malta has continued to promote the scheme. Valletta has now become home to many licensed agencies and legitimate brokers that peddle citizenship of their country (and, by extension, that of the EU). Its concurrent rise in notoriety stems from the fact that by selling its citizenship, Malta is transacting EU citizenship - opening the proverbial door to non-EU nationals to enter the union's political bloc and economic markets.CBI's implications have been deep, perverse and expansive. Countries such as Malta are arguably transacting more than just an entitlement or a bundle of rights, leading to unexpected triggers and worries. The issues around national sovereignty, market access, free trade, visa-free travel and global security are just the tip of the iceberg.Whether it's the issue of absconsion, tax avoidance, shifting wealth or even waging wars, one can witness a systematic and institutional decoupling of the state from its citizenry. This is a proven nightmare for polity and governance.The writer is a Delhi-based lawyer.
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