The European Commission has opened infringement procedures against Malta and Cyprus over the countries’ citizenship by investment schemes.
The Commission sent letters of formal notice to the two countries.
The Commission said that it considers that the granting by these Member States of their nationality – and thereby EU citizenship – in exchange for a pre-determined payment or investment and without a genuine link with the Member States concerned, is not compatible with the principle of sincere cooperation enshrined in Article 4(3) of the Treaty on European Union.
This also undermines the integrity of the status of EU citizenship provided for in Article 20 of the Treaty on the Functioning of the European Union, the Commission said.
“Due to the nature of EU citizenship, such schemes have implications for the Union as a whole. When a Member State awards nationality, the person concerned automatically becomes an EU citizen and enjoys all rights linked to this status, such as the right to move, reside and work freely within the EU, or the right to vote in municipal elections as well as elections to the European Parliament.”
“As a consequence, the effects of investor citizenship schemes are neither limited to the Member States operating them, nor are they neutral with regard to other Member States and the EU as a whole.”
The Commission said that it considers that the granting of EU citizenship for pre-determined payments or investments without any genuine link with the Member States concerned, undermines the essence of EU citizenship.
Based on the reply, the Commission will decide on possible next steps, which could include the initiation of infringement proceedings.
The Cypriot and Maltese governments now have two months to reply to the letters of formal notice. If the replies are not satisfactory, the Commission may issue a Reasoned Opinion in this matter.
The action comes after Commission President Ursula von der Leyen said in her first State of the Union speech that these citizenship schemes go against European values.
It also comes after Cyprus suspended its scheme after an Al Jazeera investigation exposed how people with a criminal record can skirt around regulations to obtain citizenship regardless.
Investor citizenship schemes allow a person to acquire a new nationality based on payment or investment alone.
Malta’s own Individual Investor Programme (IIP) has run for the past few years, with some 1,800 people obtaining Maltese citizenship through this means.
It is currently inactive after its first phase finished, with a second phase with some proposed changes to residency periods in the offing and awaiting Commission approval – which may now prove to be a harder nut to crack than was previously thought.