Special Report: The Fate of Investment Migration in Europe - What Happens Next
Editor’s note: In this Special Report, independent investment migration researcher Stephane Tajick provides an in-depth overview of the European Union’s legislative procedures around investment migration. What are the potential outcomes? At which junctures can the industry influence the process? And precisely what timeline are we working with?
By Stephane Tajick
TABLE OF CONTENTS
Introduction
On Mar 9, 2022, the European Parliament adopted a motion for a resolution brought forward by rapporteur Sophia in ‘t Veld. The text was approved by 61 votes vs 3 against. From that date, the European Commission has 3 months to submit a legislative proposal, indicating it will submit one or refuse to legislate. The Commission is to reply to requests for the submission of proposals within three months (June 9th) by adopting a specific communication stating the intended follow-up actions to be taken.
The Commission made its position clear to the Parliament on the day of the vote:
Madam rapporteur, Sophie in ’t Veld. Your report on citizenship and residence by investment schemes could not be more timely. […] You can count on the Commission’s support to address the risks posed by these schemes.
– Ylva Johansson, Member of the Commission
On the 22nd of March 2022, the document “Commission recommendation on immediate steps in the context of the Russian invasion of Ukraine in relation to investor citizenship schemes and investor residence schemes” was published.
The document recommended steps to be taken against Russian RCBI applicants and sanctioned individuals. It also adopted some of the proposed resolutions put forward by the Parliament on investment migration. It concluded by highlighting that:
(20) This recommendation is only one element of the Commission’s policy to take
determined action on both citizenship and residence investor schemes. It should therefore be seen in the context of this larger effort and is without prejudice to ongoing and future initiatives of the Commission in this respect.
On the 22nd of March 2022, the Commission further clarified its position on its willingness to legislate on the EU Parliament’s own-initiative report on investment migration.
The EU position is mainly based on a 2018 study and a 2019 report:
Citizenship by Investment (CBI) and Residency by Investment (RBI) schemes in the EU
The EU's Legislative Process
Step 1: intention EP-committee
A committee of the European Parliament makes its intention clear to put forward an own-initiative report on a topic that is within the competence of the European Union.
Step 2: approval Conference of Presidents
The Conference of Presidents examines any proposal for an own-initiative report made by a committee and will either grant permission to continue work on an own-initiative report or withhold authorisation. It will issue its verdict within two months.
Step 3: tabling an own-initiative report
The parliamentary committee writes an own-initiative report. The own-initiative report and accompanying resolution are submitted to plenary.
Step 4: plenary decides
When the own-initiative report has reached the plenary, amendments may be submitted by MEPs. Two outcomes are possible:
A) The European Parliament endorses an own-initiative report, which is promptly sent to the European Commission.
B) The European Parliament votes against the own-initiative report, and no steps are taken.
Step 5: follow-up by European Commission
Having received an own-initiative report, the European Commission has three months to either:
A) submit, or indicate it will submit, a proposal on the specific issue Parliament sought to address in its own-initiative report; or
B) notify Parliament it will not submit a legislative proposal. It will inform Parliament of its reason for not doing so.
Should the Commission decide to take legislative action, formal decision-making procedures will be followed. When the Commission does not take action, Parliament cannot take action to force the Commission to submit legislative proposals.
Step 6: Commission proposal
The European Commission submits a legislative proposal to the European Parliament. To prepare the proposal, it first consults with the different stakeholders.
Step 7: First reading in Parliament
During the first reading, the European Parliament examines the Commission’s proposal and may approve it without modifications, or amend it.
Step 8: First reading in Council
During its first reading, the Council may decide to accept Parliament’s position, in which case the legislative act is adopted, or it may amend Parliament’s position and return the proposal to Parliament for a second reading.
The vast majority of readings are adopted at that stage.
What the Commission has said
Didier Reyders, EU Commissioner:
Regarding Parliament’s request for legislation to phase out citizenship by investment schemes, the legal and political feasibility of such a legislative proposal would need to be carefully assessed, in particular at a time when infringement proceedings are still ongoing.
Ylva Johansson, Member of the Commission
[ON MARCH 9TH 2022:] I will continue to work together with you following up on this report. As a first and important step, very soon, the Commission will present a recommendation to all Member States addressing residence permits and citizenship under investor schemes, in particular in the current context.
Comments
The long legislative process can take years from start to finish. But we are already assumed to be at Step 6 and the vast majority of legislation is passed at stage 8. Once in the hand of the EU Commission, most legislation takes between 24 and 31 months to pass.
If the legislation is not adopted at Stage 8, it can go to a second reading at the Parliament, then a second reading at the Council, then the Conciliation Committee, before a third reading at the Parliament.
At stage 6, the proposed legislation can take 1-2 years to prepare. Before the Commission proposes a new policy or law, it
– describes the initiative in a roadmap or inception impact assessment;
– examines the potential economic, social, and environmental consequences in an impact assessment;
– requests input from the public and stakeholders, for example via public consultations.
So far, none of the three have taken place.
The EU's Stance on CBI
Information at hand
The following is taken from the EU Parliament’s MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION with proposals to the Commission on Citizenship and residence by investment schemes
Proposal 1: a Union-wide gradual phasing out of CBI schemes by 2025
– A Union-wide notification system, with measurable targets, strictly applicable to the existing programmes only and thus not allowing for new programmes to be legitimised by this system, for the maximum number of citizenships to be acquired under CBI schemes across the Member States should be established with the number to be gradually lowered each year, reaching zero in 2025, thereby leading to the complete phasing out of CBI schemes. Such a gradual phasing out will allow the Member States that maintains CBI schemes to find alternative means to attract investment and sustain their public finances. Such a phasing out is in line with the previous position of Parliament expressed in several resolutions and is necessary in light of the profound challenge that CBI schemes pose to the principle of sincere cooperation under the Treaties (Article 4(3) TEU).
– This proposal could be based on Article 21(2), Article 79(2) and, because CBI schemes affect the single market, Article 114 TFEU.
Proposal 6: ensuring that third countries do not administer harmful RBI/CBI schemes
– Third-country CBI schemes should be included in Regulation (EU) 2018/1806 as a specific element to take into account when deciding on whether to include a particular third country in the annexes to that Regulation, i.e. as a factor when deciding on the third countries whose nationals are exempt from visa requirements. That element should also be embedded in the visa suspension mechanism set out in Article 8 of that Regulation and in the planned monitoring.
– A new article should be added to Regulation (EC) No 810/2009 of the European Parliament and of the Council of 13 July 2009 establishing a Community Code on Visas (Visa Code)[26] on cooperation with third countries on phasing out their CBI schemes and bringing their RBI schemes in line with the new Regulation proposed under proposal 2 above.
– For candidate countries and potential candidate countries, the complete phase-out of CBI schemes and the strict regulation of RBI schemes should be a prominent and integral part of the accession criteria.
The following is taken from the Commission’s recommendation on immediate steps in the context of the Russian invasion of Ukraine in relation to investor citizenship schemes and investor residence schemes
– The Commission considers that investor citizenship schemes by a Member State are not compatible with the principle of sincere cooperation enshrined in Article 4(3) of the Treaty on European Union and with the concept of EU citizenship as provided for in Article 20 of the Treaty on the Functioning of the European Union and need to be repealed. As a result, it opened, on 20 October 2020, infringement procedures against two Member States, and has been urging another Member State to proceed with ending its scheme. Two of those Member States have in the meantime abolished their citizenship schemes or are in the process of doing so.
– Limiting the risks associated to investor citizenship and residence schemes operated by third countries is essential. In the context of the monitoring of visa-free regimes and the enlargement process, and having in mind EU interests, the Commission is closely scrutinising investor citizenship schemes of third countries that could be used to circumvent the EU short-stay visa procedure. In case of an increased risk for the internal security of Member States, the exemption from the visa requirement is temporarily suspended.
What the Commission has said
Didier Reyders, EU Commissioner, on the Commisssion stand on CBI in the Union
These schemes must be completely abolished and should not be legitimized in any way. […] In the joint G7 statement of February 26 on the economic measures taken in the context of the Ukrainian crisis, signed by the Commission, France, Germany, Italy, the United Kingdom, Canada and the United States, we have made a commitment, in particular, to take certain measures aimed at limiting the sale of citizenship.
Ylva Johansson, Member of the Commission
We consistently assess risks raised by investor citizenship schemes in third countries. I recently proposed to suspend the visa exemption with Vanuatu on grounds of public policy and security because other third-country nationals can too easily get access to the European Union. This suspension will enter into force on 3 May.
We exercise constant pressure on all visa-free countries running citizenship by investment schemes and with results. Several visa-free countries have decided to terminate their schemes or have put on hold plans to set up new schemes. And we will do more. You can count on the Commission to follow up on your report.
Didier Reynders
Comments
The Parliament, in its proposal, requested a phasing out of CBI in the Union by 2025, including in third-countries with a visa-free waiver to the Schengen area.
Both the Commission’s president and commissioner hold a very negative opinion on these programs and their stance may be even more aggressive than that of the Parliament.
We are speaking of Malta of course, but also the five Caribbean CBI countries. The Commission has already brought legal proceedings against Malta to force them to shut down the MEIN. With the added pressure of the US and their ability to exclude the country from their ESTA regime, the closure of the MEIN may simply be a question of time.
Perhaps surprisingly, the Caribbean five can be affected sooner than Malta. The Commission indicated in the March 22nd report that “in case of an increased risk for the internal security of Member States, the exemption from the visa requirement is temporarily suspended”.
In addition, with ETIAS being soon implemented, some experts believe this may be used as a tool to perhaps discriminate against “foreign-born” nationals of certain countries, similar to what the US is now doing with Hungarian citizens who obtain ancestry-based citizenship.
It’s fair to say that the Commission has many mechanisms at its disposal to affect the Caribbean CBI jurisdictions. This leaves the market with a lot of uncertainty, not only about the future of these programs but also about the travel privileges enjoyed by current passport holders. Thousands of past CBI clients are potentially at risk, and this will be an important weight in the balance in future inter-governmental discussions.
The EU's Stance on RBI
Information at hand
The following is taken from the European Parliament’s MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION with proposals to the Commission on Citizenship and residence by investment schemes
Proposal 2: a comprehensive regulation covering all RBI schemes in the Union
– To address the specificities and widespread occurrence of RBI schemes across the Member States, a dedicated Union legal framework in the form of a regulation is necessary. Such a regulation will ensure Union harmonisation, limit the risks posed by RBI schemes and make RBI schemes subject to Union monitoring, thereby enhancing transparency and governance. It is also a means to discourage Member States from establishing harmful RBI schemes.
– The regulation should contain Union-level standards and procedures for increased due diligence and rigorous background checks for applicants and for the source of their wealth. In particular, all applicants should be structurally crosschecked against all relevant national, Union and international databases by the Member State authorities while respecting fundamental rights standards. There should be an independent verification of documents submitted, a full background check of all police records and involvement in previous and current civil and criminal litigation, in-person interviews with the applicants and a thorough verification of how the applicant’s wealth was accumulated and is related to the reported income. The procedure should allow sufficient time for the proper due diligence process and should foresee the possibility to annul positive decisions retroactively in cases of substantiated misrepresentation or fraud.
– The practice of joint applications, where a main applicant and family members can be part of the same application, should be prohibited: only individual applications subject to individual and rigorous checks should be allowed, while taking into account the links between applicants. Rigorous checks should also apply when residency rights can be pursued by family members of successful applicants under family reunification rules or other similar provisions.
– An important element of the regulation, possibly complemented by other legislative measures, where needed, should be the regulation of intermediaries. The following should be included:
(a) a Union-level licensing procedure for intermediaries containing a thorough procedure with due diligence and auditing of the intermediary company, its owners and its related companies. The license should be subject to renewal every second year and be featured in a public Union register for intermediaries. Where intermediaries are involved in applications, Member States should be allowed to process such applications only where prepared by Union-licensed intermediaries. Applications for licensing should be made to the Commission, to be supported by the relevant Union bodies, offices and agencies in carrying out the checks and procedure;
(b) specific rules for the activities of intermediaries. Those rules should include detailed rules concerning the background checks, due diligence and security checks that the intermediaries are to carry out on applicants.
(c) a Union-wide prohibition on marketing practices for RBI schemes that use the Union flag or any other Union-related symbols on any materials, website or documents or that associate the RBI schemes to any benefits linked to the Treaties and the acquis;
(d) clear rules on transparency of intermediaries and their ownership;
(e) anti-corruption measures and best due diligence practices to be adopted within the intermediary, including on appropriate staff remuneration, the two-person rule (that every step is checked by at least two persons) and provisions for a second opinion when preparing applications and carrying out checks on applications, and a rotation of staff members across the countries of origin of applicants under RBI schemes;
(f) a prohibition on combining the consultation of governments on the establishment and maintenance of RBI schemes with involvement in the preparation of applications. Such a combination creates a conflict of interest and provides the wrong incentives. Furthermore, intermediaries should not be allowed themselves to implement RBI schemes for Member State authorities but should only be allowed to act as intermediaries in individual applications and only when being approached by individual applicants. General public affairs activities of intermediaries should be organisationally separated from their other activities and should comply with all legal requirements and codes of conduct at Union and national level regarding transparency;
(g) a monitoring, investigations and sanctions framework to ensure that intermediaries comply with the regulation. The relevant law enforcement authorities should be able to conduct undercover investigations, including by posing as potential applicants. Sanctions should include dissuasive fines and should, where infringements are established twice, lead to the revocation of the Union license to operate.
– A duty for Member States to report to the Commission regarding their RBI schemes should be introduced. The Member States should submit detailed annual reports to the Commission on the overall institutional and governance elements of their schemes, as well as on the monitoring mechanisms in place. They should also report on individual applications, including on rejections and approvals of applications, and the reasons for approvals or for rejections, such as non-compliance with anti-money laundering provisions. Statistics should include a breakdown of the applicants by the country of origin and data on family members and dependents who have gained rights via an applicant under a RBI scheme. The Commission should publish those annual reports, where needed redacted in line with data protection regulations and the Charter of Fundamental Rights of the European Union, and should publish alongside those annual reports its assessment of them.
– A system, managed at Union level, for prior notification to and consultation with all other Member States and the Commission, prior to granting residence under an RBI scheme, should be set up. If Member States do not object within 20 days, that should mean that they have no objection to the granting of residence[24]. That would allow all Member States to detect double or subsequent applications and to conduct checks in national databases. Within these 20 days, the Commission should also carry out, in cooperation with the relevant Union bodies, offices and agencies (including through their liaison officers in third countries), Union-level final checks of applications against the relevant Union and international databases and further security and background checks. On that basis, the Commission should issue an opinion to the Member State. The competence to grant residence or not under RBI schemes should remain with the Member States. The Commission should provide any relevant information to help highlight where the same individuals have made several unsuccessful applications.
– Member States should be required to effectively check physical residence, including by using the option of establishing minimum physical presence requirements, on their territory and to keep a record of it, which the Commission and Union agencies can consult. That should include at least biannual in-person reporting appointments and on-site visits to the domicile of the individuals concerned.
– To combat tax avoidance, specific Union measures to prevent and tackle the circumvention of the Common Reporting Standard through RBI schemes, in particular the enhanced exchange of information between tax authorities and Financial Intelligence Units (FIUs), should be introduced[25].
– Rules on the types of investments required under RBI schemes should be introduced. A significant majority of the required investment should consist of productive investments in the real economy, in line with the priority areas of the green and digital economic activity. Investment in real estate, in investment funds or trust funds or in government bonds or payments directly into the Member State budget should be limited to a minor part of the invested amount. Furthermore, any payments directly into the Member State budget should be limited so as not to create budgetary dependence on this source, and the Commission should request Member States to assess such payments in the context of the European Semester.
– This Regulation could be based on Article 79(2) and Articles 80, 82, 87 and, because RBI schemes affect the single market, 114 TFEU.
– In case a regulation or any other legislative act concerning RBI schemes comes into force before the complete phase-out of CBI schemes, all rules applicable to RBI schemes should apply to CBI schemes as well in order to avoid less strict controls for CBI schemes than for RBI schemes.
Proposal 3: a new category of the Union’s own resources, consisting of a ‘CBI and RBI adjustment mechanism’
– As all Member States and the Union institutions are confronted with the risks and costs of the CBI and RBI schemes operated by some Member States, a common mechanism, based on appropriate data and information, to offset the negative consequences of CBI and RBI schemes to the Union as a whole is justified. Moreover, the value of selling Member State citizenship or visas is inherently linked to the Union rights and freedoms that come with it. By establishing a CBI and RBI adjustment mechanism, the negative consequences borne by all Member States are compensated through a fair contribution to the Union budget. It is a matter of solidarity between the Member States operating CBI and RBI schemes, the other Member States and Union institutions. In order for that mechanism to be effective, the levy payable to the Union should be set at a meaningful percentage of the investments made in Member States as part of CBI/RBI schemes, reasonably estimated on the basis of all negative externalities identified in the schemes;
– The mechanism could be established under Article 311 TFEU, which stipulates that “the Union shall provide itself with the means necessary to attain its objectives and carry through its policies”, including the possibility to “establish new categories of own resources or abolish an existing category”. Further implementing measures could be adopted in the form of a regulation. Something similar was done for the Plastics Own Resource that has been in place since 1 January 2021. That option does involve a rather lengthy process of formal adoption of an own resources decision, linked to the respective national constitutional requirements for approving it. It could be combined with the legal basis of Article 80 TFEU which stipulates “the principle of solidarity and fair sharing of responsibility, including its financial implications, between the Member States”, including in the area of immigration.
Proposal 4: a targeted revision of legal acts in the area of anti-money laundering and countering the financing of terrorism
– The Commission has made a welcome step by including RBI schemes prominently in its package of legislative proposals of 20 July 2021 to revise legal acts in the area of anti-money laundering and countering the financing of terrorism, especially where it concerns intermediaries. Three further elements should be included:
(a) public authorities engaged in processing applications under RBI schemes to be included on the list of obliged entities under legal acts in the area of anti-money laundering and countering the financing of terrorism, specifically in Article 3, point (3), of the proposal for a regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (2021/0239(COD));
(b) a greater exchange of information on applicants under RBI schemes between the Member State authorities under legal acts in the area of anti-money laundering and countering the financing of terrorism, specifically between the Financial Intelligence Units;
(c) enhanced due diligence measures as recommended by the OECD to mitigate the risks posed by RBI schemes to be foreseen for all obliged entities involved in the RBI process.
Proposal 5: a targeted revision of the Long-Term Residence Directive
– The Commission should, when it comes forward with its expected proposals for the revisions of the Long-Term Residence Directive, limit the possibility of third-country nationals who have obtained residence under an RBI scheme from benefitting from more favourable treatment under that Directive. That could be achieved by amending Article 13 of the current Long-Term Residence Directive to narrow its scope of application by expressly excluding beneficiaries of RBI schemes.
– The Commission should take the steps necessary to ensure that the legal and continuous residence of five years, required by Article 4(1) of the Long-Term Residence Directive, is not circumvented through RBI schemes, including by ensuring that the Member States enforce stronger controls and reporting obligations on applicants under RBI schemes.
The following is taken from the Commission’s recommendation on immediate steps in the context of the Russian invasion of Ukraine in relation to investor citizenship schemes and investor residence schemes
– The Commission considers that Member States should also take measures to prevent investor residence schemes from operating in a way that could create risks, in particular linked to security, money laundering, tax evasion and corruption. To this end, Member States should ensure that all necessary measures and safeguards are taken to address these risks, including by establishing and carrying out checks related to the conditions of residence and security prior to the issuance of such residence permits, and verifying whether residence is continuous.
What the Commission has said
Ylva Johansson, Member of the Commission
Investment residence schemes may never be a shortcut to citizenship. That’s why I am considering strengthening checks on continuous residence as part of our current revision of the long—term residence directive. We must prevent people from using these schemes to falsify their tax residence by ensuring implementation of the directive on administrative cooperation with infringement procedures if necessary.
Comments
The Parliament’s main focus is on Golden Visa programs in the Union. The set of proposals brought forward is extraordinary. A few target intermediaries with rigorous rules and oversight, while some of those related to the applicant are quite intrusive, to say the least. These are extraordinary measures, meant to heavily discriminate against RBI applicants specifically.
Here are the most discriminatory proposals:
– Exclude RBI applicants from the current Long-Term Residence Directive
– RBI applicants are put under a microscope in the area of anti-money laundering and countering the financing of terrorism, especially where it concerns intermediaries.
– For CRS purposes, enhanced exchange of information between the tax authorities of the country of origin and Financial Intelligence Units (FIUs)
– Notification of and consultation with all other Member States and the Commission, prior to granting residence under an RBI scheme
– Effectively check physical residence, including by using the option of establishing minimum physical presence requirements, on each country’s territory and to keep a record of the same, which the Commission and Union agencies can consult. That should include at least biannual in-person reporting appointments and on-site visits to the domicile of the individuals concerned.
– Report on individual applications, including on rejections and approvals of applications, and the reasons for approvals or for rejections, such as non-compliance with anti-money laundering provisions.
– There should be an independent verification of documents submitted, a full background check of all police records and involvement in previous and current civil and criminal litigation, in-person interviews with the applicants, and a thorough verification of how the applicant’s wealth was accumulated and is related to the reported income.
– The practice of joint applications, where a main applicant and family members can be part of the same application, should be prohibited: only individual applications subject to individual and rigorous checks should be allowed while taking into account the links between applicants. Rigorous checks should also apply when residency rights can be pursued by family members of successful applicants under family reunification rules or other similar provisions.
– A significant majority of the required investment should consist of productive investments in the real economy, in line with the priority areas of the green and digital economic activity. Investment in real estate, in investment funds or trust funds or in government bonds or payments directly into the Member State budget should be limited to a minor part of the invested amount.
Overall, the impetus is to increase and harmonize regulations of Golden Visas offered by member states. Some of them will take the form of increased due diligence on applicants and sharing information with member states.
But if all these sets of proposals were to be implemented, they would go far beyond the due diligence process in place by more experienced RBIs such as the Quebec IIP or the Australia IV. The difference between the due diligence and monitoring done on an Investor Visa versus a Work Visa in the Union would be staggering.
Other Parliament proposals could affect the demand more severely than increased background checks. The increased minimum stay requirement can seriously damage the attractiveness of “investor visas” that traditionally understand the international mobility of global investors. It’s unclear what those minimum stay requirements would be. The Parliament also proposed “at least biannual in-person reporting appointments and on-site visits to the domicile of the individuals concerned.”
Furthermore, investments in popular routes such as real estate and funds could be capped to leave more seats to applicants investing in more active and riskier investments such as startups.
What Happens Next?
Information at hand
1. During the preparation of the legislative proposal by the Commission, it will:
– examine the potential economic, social, and environmental consequences in an impact assessment; and
– request input from the public and stakeholders, for example via public consultations.
2. The Commission will table a legislative proposal on which the Parliament will vote. This can be adopted at the first reading, at a second reading at the Council, at the Conciliation Committee, at a third reading at the Parliament, or end up rejected.
3. Once the legislation is approved, regulations and decisions become binding automatically throughout the EU on the date they enter into force. Directives must be incorporated by EU countries into their national legislation. Each directive contains a deadline by which EU countries must incorporate its provisions into their national legislation and inform the Commission to that effect. If national authorities fail to properly implement EU laws, the Commission may launch a formal infringement procedure against the country in question. If the issue is still not settled, the Commission may eventually refer the case to the European Court of Justice.
Sophie in ‘t Veld
Comments
Stage 6 and Stage 7 of the EU legislative process are now the only remaining junctures at which the industry can hope to influence proceedings.
Stage 6: EU Commission preparing the legislation
During the preparation of the legislative proposal by the Commission, both the investment migration industry and countries with an RCBI program can participate in the discussion.
Certain countries may be asked for input and information in the impact assessment prepared by the Commission. That could be the case of EU member states running an RCBI, but also Caribbean countries operating a CBI. This will likely take place at the Commission’s request.
The public consultation stage is an important one, where industry professionals and governments can have their opinion heard on the matter. During the public consultation in 2019, a number of investment migration firms participated.
Stage 7: EU Parliament vote
Following the completion of Stage 6, the Commission will present a legislative proposal to the Parliament for a vote. Even if the Commission presents a relatively balanced proposal, this may be viewed as off-the-mark by the Parliament, which could request modifications for stricter rules in line with their original set of proposals.
Directly involved in the Parliamentary process is rapporteur Sophia in ‘t Veld, but also all the key people behind the March 9th resolution:
Jeroen Lenaers, PPE
Tomáš Zdechovský (PPE)
David Casa (PPE)
Sirpa Pietikäinen (PPE)
Juan Fernando López Aguilar, S&D
Ramona Strugariu, Renew Group
Maite Pagazaurtundúa (Renew)
Saskia Bricmont, erts/ALE
Ernest Urtasun (Verts/ALE)
Gwendoline Delbos-Corfield (Verts/ALE)
Daniel Freund (Verts/ALE)
Nicolaus Fest,ID-Fraktion
Patryk Jaki, ECR
Jadwiga Wiśniewska (ECR)
Assita Kanko (ECR)
Joachim Stanisław Brudziński (ECR)
Κωνσταντίνος Αρβανίτης (The Left)
Γιώργος Γεωργίου (The Left)
José Gusmão (The Left)
Malin Björk (The Left)
Sabrina Pignedoli (NI)
Paul Tang (S&D)
Margarida Marques (S&D)
The vote may take place before the 2024 EU Parliament elections, which generally take place in May.
Stage 8: EU Council vote
The EU Council is composed of all the heads of state of member countries. Since the 2014 Treaty of Lisbon, the council vote has often been passed by a qualified majority. This is the case if one of the two occurs:
Majority of countries: 55% (15+ countries)
Majority of population: 65% (roughly 290m hab)
If the legislation does not find a qualified majority, it can also be stopped by a blocking minority. This requires at least 4 countries representing more than 35% of the population of the EU. If blocked, it will be sent back to the EU Commission for amendments and a second reading at the Parliament, then a second reading at the council. If it’s still blocked then the Conciliation Committee, before a third reading at the Parliament.
For a blocking majority to happen, at least four important EU countries (in terms of population) must oppose the proposal. For that, the countries with an RBI in Europe need to be able to oppose the legislation and push for more reasonable amendments. Nevertheless, it’s unlikely that the 35% of the EU population required to form a blocking minority can be achieved only with the RBI countries below. They will need additional countries to join them.
EU countries with RBI programs (of the passive-investment variety) have a combined population of about 144 million, or about 32% of the total EU population.
Conclusion
The position of the EU Parliament and Commission is clear: CBI must disappear and RBI in the union must be strictly regulated.
Observations that should concern the investment migration industry include (but are far from limited to):
– CBI in the Caribbean risks the same fate as Vanuatu and will be pressured to close down;
– EU RBI applicants could experience a very intrusive due diligence process;
– Processing time will increase for EU RBI applicants;
– Popular investment routes such as real estate and funds will be capped to a lower proportion of available places; and
– Annual physical presence will be increased and require in-person checks.
The industry can influence proceedings are three different governing levels:
1. European Commission: by participating in the public consultations
2. European Parliament: by soliciting the key parliamentarians behind the proposal
European Council: by soliciting the heads of the immigration departments to send their recommendation up the governing chain.
When it comes to the Caribbean CIPs and Schengen access, there isn’t a legislative process involved; the European Commission can decide to suspend the visa agreement if they deem it necessary for security reasons. Regarding the EU RBIs, it will take a lot of coordination from the industry to be able to mount a tangible defense. The clock is ticking, the odds are against us, and it will take a unified industry effort to be able to salvage those programs.
About the Author
Stephane Tajick is a researcher in the field of investment migration, the developer of the STC database on more than 200 residence and citizenship by investment programs worldwide. He is a regular columnist at Investment Migration Insider.