Malta’s Citizenship-by-Investment Scheme: A Legal Test Case for the Nation-State in the 21st Century
In this paper, Lucrezia Signori argues that Malta’s Citizenship-by-Investment scheme has sparked a significant legal and political debate within the EU. While this argument is not new, the paper introduces an overlooked dimension: the extent to which this scheme, directly or indirectly, has contributed to redefining the concept of the nation-state. Due to its small size and EU membership, Malta has served as a test case for legal provisions with implications extending beyond financial gain, influencing evolving definitions of citizenship, sovereignity and national identity in the 21st century.
The Malta Citizenship-by-Investment scheme has sparked a significant EU legal and political debate. Following Advocate General Collins’s recent opinion, the case development of the case could lead to greater EU regulation of citizenship policies, with implications for tax fairness, security, and market integrity as well as reshape the international norms on nationality and scrutiny of similar CBI programs, influencing global mobility and economic policies.
Following the Advocate General Collins’ opinion issued in October 2024 on the case, the European Union is currently facing a setback in the heated debate over Malta’s Citizenship-by-Investment (CBI) scheme, which allows investors to acquire citizenship without demonstrating a “genuine link” to the country. This scheme came under scrutiny when the European Commission initiated proceedings against Malta, arguing that such practices undermine the integrity of EU citizenship and the cohesion of the internal market. Recent developments, including Advocate General Collins’s legal Opinion, have provided greater clarity on the issue but also reignited discussions about the extent of the EU’s authority in regulating national citizenship matters.
Historically, international law has recognized the absolute sovereignty of states over their nationality policies, emphasizing that no external entity can dictate how or to whom citizenship is granted. This principle, rooted in the concept of nationality developed during the French Revolution, reflects the deeply cultural and sovereign nature of state citizenship. The European Union has generally respected this tradition. While it has intervened in cases involving the loss of nationality to protect individual rights[MOU1] , it has not questioned a state’s authority to grant citizenship.
However, Malta’s CBI scheme signals a shift in this dynamic. The Maltese government introduced the Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment (commonly referred to as the Maltese Exceptional Investor Naturalisation or MEIN) procedures. These regulations, governed by the Maltese Citizenship Act and Legal Notice 437 of 2020, allow individuals and their dependents to acquire Maltese citizenship by making significant investments in the country. The MEIN procedures outline specific financial commitments [MOU2] for applicants. Applicants must first pay a government payment to the national development and social fund, which can range from €650,000 to €750,000, depending on how long they lived there before applying. Dependents must also pay additional fees. Second, they have to make an investment in Maltese real estate, either by buying a property for at least €700,000 or renting one for at least €16,000 a year, both of which have to be maintained for at least five years. Lastly, candidates must make a €10,000 donation to a society or non-governmental group that is registered. The program relies on low residence terms and financial limits rather than requiring applicants to have strong ties to Malta.
The European Commission views this scheme as a potential threat to the cohesion of the EU’s citizenship framework and internal market, leading it to challenge Malta’s policy. On 21 March 2023, the European Commission brought “infringement proceedings against Malta in the Court of Justice of the European Union for its continued refusal to end a perceived ‘golden passport’ investor citizenship scheme[MOU3] ”. Advocate General Collins’s Opinion, however, dismisses the argument that EU law requires a “genuine link” between a state and individuals granted citizenship[MOU4] . Drawing on the Micheletti v. Spain case[MOU5] , Collins reiterated that EU law does not impose such a requirement, affirming that nationality remains a sovereign prerogative of Member States.
Despite this, the principle of sincere cooperation under Article 4(3) [MOU6] of the Treaty on European Union (TEU) requires Member States to avoid actions that could undermine the objectives of the Union, including the integrity of the internal market. If Malta’s CBI scheme disrupts market coherence or mutual trust among Member States, EU institutions may have grounds for intervention.
Therefore it is possible to identify two risks associated with CBI schemes. First, these programs can facilitate tax evasion and harmful tax competition by allowing wealthy individuals to exploit low-tax jurisdictions. Such practices could lead to an uneven playing field within the internal market, undermining fairness. Second, the lack of robust security checks in some CBI schemes poses a risk to mutual trust among Member States. If a Member State’s naturalization process allows individuals with criminal backgrounds to acquire EU citizenship, it could jeopardize the free movement of persons and erode the trust necessary for the EU’s functioning. Following this reasoning, while there is no legal basis for imposing a “genuine link” requirement in EU law, the principle of sincere cooperation could provide a framework for regulating CBI schemes. If credible evidence demonstrates that Malta’s policy harms the internal market, the EU may have grounds to act.
In analysing the possible outcomes of the case, there are two main possible outcomes that could have a significant impact on the EU, its single market and international law itself, depending on how the legal and political arguments play out. On one side, if the court agrees with Advocate General Collins’s Opinion and reaffirms that EU law does not require a “genuine link” for citizenship acquisition, Malta could continue its Citizenship-by-Investment (CBI) scheme without substantial changes. This outcome would uphold the principle that nationality is a sovereign prerogative of Member States. Alternatively, if the EU demonstrates that Malta’s CBI scheme undermines [MOU7] the internal market or mutual trust among Member States, it might invoke the principle of sincere cooperation under Article 4(3) TEU. In this scenario, the EU could demand modifications to the scheme or establish broader regulatory measures for such programs. This outcome would mark a significant shift in EU influence over national citizenship policies. Ultimately, the case’s resolution will likely depend on how the Court of Justice of the European Union balances state sovereignty with the broader interests of the EU.
Furthermore the implications of the Malta Citizenship-by-Investment case at the international level could be significant, potentially influencing the way states and international bodies approach nationality, citizenship policies, and their intersection with global markets and security concerns. The case could signal a shift away from the traditional view that nationality is an exclusive sovereign prerogative. If the EU establishes a precedent for regulating how Member States grant citizenship, it might encourage international organizations or regional bodies to impose constraints or guidelines on nationality policies elsewhere. This could lead to increased scrutiny of similar CBI programs globally, such as those in the Caribbean or the Middle East.
Because of the strong cultural value that impregnates one state’s nationality, selling citizenship has already been understood as undermining the intrinsic meaning of nationality and citizenship. This might start a larger international discussion about the moral and legal ramifications of market-driven citizenship initiatives, especially in a world where economic disparities and migration issues are becoming more and more prevalent. There would be significant economic repercussions from this. If international standards change against CBI programs, nations who depend on them as a major source of income may be under pressure to change or do away with them. States that entice investors with cheap taxes and minimum residence restrictions, for instance, may see a decline in demand for their programs, which could influence their economy. At the same time, foreign players may reconsider their border security and visa-free arrangements if the case raises questions about insufficient security inspections in CBI schemes. Stricter regulations might be applied by nations to citizens who have earned their citizenship by investment, which might have an impact on international mobility. The case might be used as a political and legal template to challenge CBI initiatives elsewhere in the world. The case’s arguments and conclusions may be used by activists, legislators, and international organizations to launch comparable actions against nations that provide investor citizenship programs.
In all its facets, the Malta CBI is to be considered a fundamental case for the most recent development of European and international law. The case could catalyze international debates on sovereignty, fairness, security, and the commodification of citizenship. It may prompt shifts in how states design and implement nationality laws, while also affecting global norms around economic justice and security collaboration.