EU Court Declares Malta's Golden Passport Scheme Illegal, Calls for Immediate Abandonment
The European Court of Justice has issued a landmark ruling declaring Malta's controversial golden passport scheme illegal, necessitating its discontinuation. This judgment, delivered on Tuesday, marked a significant challenge to the EU's investor citizenship programs, which have sparked criticism for their commercialization of nationality and consequent risks related to money laundering and corruption.
The court found Malta's scheme to be in violation of EU law, jeopardizing the mutual trust essential among member states to maintain an area without internal borders. The ruling specifically examined Malta's investor citizenship initiative, established in 2020, which required individuals to contribute as much as €750,000 to the Maltese government and, in theory, commit to living in Malta for a year to obtain citizenship.
Acquisition of a Maltese passport grants individuals EU citizenship, allowing freedom to live and work anywhere across the European Union. However, the program faced scrutiny from transparency advocates, who argued that it provided a loophole for wealthy individuals with few genuine ties to Malta and raised concerns over security risks. A 2021 investigation by The Guardian revealed that some multimillionaires were obtaining citizenship after spending as little as three weeks in the country, with numerous rental properties left unoccupied.
Legal actions against Malta and Cyprus were initiated by the European Commission in October 2020 for their citizenship-for-sale schemes. While Cyprus opted to terminate its program ahead of the legal proceedings, Malta remained steadfast in its position, asserting its exclusive competency in matters of nationality.
In response to the ruling, Malta's government announced it would review the implications of the court's findings to align its citizenship framework with EU principles but touted the scheme's financial contributions—over €1.4 billion since 2015—to the national revenue. Former Prime Minister Joseph Muscat, who spearheaded the establishment of the scheme, criticized the court's judgment as politically motivated. He stepped down in 2020 amidst widespread backlash linked to the murder investigation of journalist Daphne Caruana Galizia.
Throughout Europe, golden passport initiatives have emerged as governments seek revenue following the financial crisis. However, concerns over integrity and security prompted the UK to scrap its investor visa program in 2022, amidst growing issues related to corruption and relations with Russia. In contrast, Donald Trump proposed a $5 million residency permit for affluent foreigners during the same period.
Matthew Caruana Galizia, director of the foundation honoring his mother's legacy, hailed the court's ruling as a victory for Malta and all EU residents who have faced the dangers posed by money laundering and corruption through citizenship purchases. He urged the Maltese government to eliminate its citizenship-by-investment program without delay.
A spokesperson for the European Commission praised the decision, reinforcing that citizenship within the EU should not be for sale and called for all EU member states to abolish similar investor citizenship schemes.
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