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ECJ Rules Against Malta On Citizenship Investment Program

The ECJ has ruled in favor of the EU, invalidating Malta’s citizenship by investment program. 

The ECJ has ruled in favor of the EU, spelling the end to Malta’s citizenship by investment program. 

The European Court of Justice (ECJ) ruled today in favor of the European Commission in the case challenging Malta’s citizenship by investment program. The Grand Chamber declared that Malta “has failed to fulfill its obligations under Article 20 TFEU and Article 4.3 TEU” and ordered the country to pay all legal costs.

The court condemned Malta’s program for establishing what it called “a transactional naturalization procedure in exchange for predetermined payments or investments.” This approach, according to the ruling, “amounts to the commercialization of the grant of the nationality of a member state, and by extension that of Union citizenship.”

The court upheld the Commission’s action against Malta’s Exceptional Investor Naturalisation (MEIN) Policy. The ruling affirms the Commission’s position that EU citizenship requires more than just financial grounds and must establish a genuine connection between the applicant and the member state.

The Commission successfully argued that by “establishing and operating an institutionalized citizenship investment scheme,” Malta violated EU law by undermining the principle of sincere cooperation and the concept of Union citizenship.

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Malta defended its program on national sovereignty grounds, arguing that “granting citizenship is a matter of national competence, supported by international law and the Treaty on European Union.” The court rejected this defense, finding that while member states retain authority over nationality decisions, they must exercise this power in accordance with EU law.

The ECJ determined that Malta has “failed to fulfil its obligations under Article 20 TFEU and Article 43 TEU.” This contradicts Advocate General Anthony Michael Collins’ October 2024 opinion, in which he recommended dismissing the Commission’s action. The court has ordered Malta to pay legal costs.

The ruling compels Malta to terminate its citizenship by investment program entirely, fulfilling the Commission’s original demand when it first sent a formal notice to Malta in October 2020. Malta now remains the only EU member state with such a program after Cyprus suspended its program in November 2020 and Bulgaria abolished its program in April 2022.

The decision limits member states’ discretion in nationality matters when they affect the collective value of EU citizenship.

This decision carries considerable implications for investment migration across Europe. EU citizenship automatically confers rights to free movement, access to the internal market, and voting rights in European elections—privileges that, according to the court, require more than just financial means.

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The victory for the Commission comes nearly three years after it first referred the case to the ECJ in September 2022. The Commission maintained that “granting EU citizenship in return for pre-determined payments or investments without any genuine link to the Member State concerned is not compatible with the principle of sincere cooperation.”

The ruling sets a legal precedent that investment-based citizenship programs cannot operate within the EU legal framework without establishing meaningful connections between applicants and the naturalizing state. It clarifies the balance between EU oversight and national sovereignty in citizenship matters.

Update: 1417 GMT:

Laszlo Kiss, Managing Director of Discus Holdings, believes the ECJ’s decision to go against the Advocate General’s opinion stems from “socialism” within EU institutions.

Regarding potential appeals, Kiss notes that “Under Article 256 of the Treaty on the Functioning of the European Union, the Court of Justice may hear appeals of decisions given by the General Court – but I do not know if it was the General Court which made the ruling.”

For Malta’s program, Kiss sees only one outcome: “closure.” The implications extend beyond Malta, as Kiss believes “I see no chance to have a new EU CIP, only by surrounding and nearby countries. For them, the visa cancellation in certain circumstances could be a problem.”

When asked if this ruling might lead to increased EU pressure on citizenship programs outside the bloc, Kiss disagrees: “No, this whole topic was a matter within the EU.”

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