Malta’s citizenship-by-investment regime, often referred to as the “golden passport” scheme, has long been the subject of legal and political controversy within the European Union. Promoted as a means to attract high-net-worth individuals and boost national revenue, the program has now been dealt a decisive blow by the European Court of Justice (CJEU), which ruled it incompatible with EU law. This article explores the key legal, political, and practical implications of the scheme’s termination.
What was Malta’s golden passport scheme and how did it operate?
Malta introduced its Individual Investor Programme (IIP) in 2013, later rebranded under the Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment. The scheme offered foreign nationals the opportunity to acquire Maltese – and therefore EU – citizenship in exchange for a combination of financial contributions and property commitments. Applicants could obtain citizenship after either 12 or 36 months of residence, depending on the level of investment.
The financial requirements were substantial: a minimum direct investment of €600,000 after 36 months, or €750,000 after 12 months, in addition to a €10,000 donation to a Maltese-registered philanthropic organisation and the purchase or lease of real estate for at least five years. The program promised full citizenship rights, including the ability to live and work in all EU Member States, despite applicants often having no meaningful link to Malta beyond the transaction.
Why did the European Court of Justice rule the scheme illegal?
On 29 April 2025, the European Court of Justice ruled that Malta’s investor citizenship program was contrary to the principles and obligations of EU law. In its judgment, the Court found that granting citizenship purely on the basis of financial contributions undermines the concept of sincere cooperation between Member States and the foundational notion of EU citizenship as a shared legal status.
The ruling drew a clear distinction between residence-by-investment programs – where individuals physically reside in the host country – and citizenship-by-investment schemes, which in Malta’s case involved little or no actual integration into society. The Court held that citizenship should reflect a genuine link between the individual and the Member State, which was not established merely through capital transfers.
How has Malta responded to the CJEU judgment, and what are the political implications?
The Maltese government has publicly acknowledged the ruling and confirmed that it will examine its implications. While it has stopped short of admitting fault, the government has committed to reviewing its citizenship framework to ensure it complies with EU law. Officials continue to defend the scheme’s past role in contributing to the country’s economic development, with reported revenues exceeding €1.4 billion since inception.
Politically, the ruling places Malta under pressure not only from the European Commission, which had already launched infringement proceedings, but also from other Member States who have long viewed the scheme as a breach of trust. The decision reinforces the EU’s stance against the commodification of citizenship and is likely to have a chilling effect on similar programs in other jurisdictions, particularly those still operating or considering comparable schemes.
What happens to individuals who have already obtained citizenship through the scheme, and what are the implications for other jurisdictions in Europe, such as Cyprus’ passport regime?
Individuals who have already acquired Maltese citizenship through the investment scheme retain their nationality for the time being. The European Court of Justice’s ruling does not retroactively invalidate granted passports, as nationality remains a matter of national competence unless obtained through fraud or misrepresentation. However, these individuals may face greater scrutiny, both from Maltese authorities, who may review individual files for compliance, and from EU institutions concerned with security, money laundering, and sanctions enforcement. Enhanced due diligence may be applied, especially for nationals from jurisdictions of concern or those with politically exposed person (PEP) status.
Beyond Malta, the ruling carries clear implications for other EU Member States that have operated similar schemes, most notably Cyprus, which ran its own investor citizenship program until it was formally discontinued in 2020 following EU infringement proceedings and scandals involving politically connected applicants. While Cyprus has already wound down its scheme, the CJEU’s decision solidifies the legal reasoning underpinning the EU’s opposition to such programs, making any revival highly unlikely. Other countries considering such models will now be on notice that granting EU citizenship on purely economic grounds—without requiring genuine links to the country—is not legally defensible within the Union’s constitutional framework.
What alternative pathways remain available for high-net-worth individuals interested in Malta and Europe in general?
While citizenship-by-investment is now effectively off the table, Malta continues to offer alternative residence-by-investment routes. Chief among these is the Malta Permanent Residence Programme (MPRP), which allows non-EU nationals to acquire permanent residency through a combination of property investment and non-refundable contributions to government funds.
Unlike the golden passport scheme, the MPRP does not confer citizenship, but it grants the right to reside in Malta and enjoy visa-free access to the Schengen Area. Applicants must pass a stringent four-tier due diligence process and maintain their investments for a minimum period. This route is more closely aligned with EU norms, as it requires genuine engagement with the local economy and a physical presence in the jurisdiction.
Beyond Malta, several other European countries offer residency-by-investment programs tailored to high-net-worth individuals. These include Italy, Portugal, and Spain, each of which provides residence permits in exchange for investment in real estate, job creation, or government bonds. Andorra and Monaco also offer attractive residency options with favourable tax regimes, albeit subject to more stringent wealth and presence requirements. Meanwhile, Switzerland offers residency through lump-sum taxation agreements with cantonal authorities, though not through a formal golden visa route. These pathways may not offer immediate citizenship, but they provide strategic access to the EU or Schengen Zone, often with long-term naturalisation options.
Conclusion
The termination of Malta’s golden passport scheme marks a significant turning point in the European Union’s policy on investment migration. The CJEU’s decision sends a strong signal that EU citizenship cannot be reduced to a commodity, and that national decisions on naturalisation must respect broader European legal principles. Going forward, Malta will need to reconcile its economic ambitions with its obligations under EU law and investors seeking European access will need to consider alternative, residency-based solutions that reflect a genuine connection to the jurisdiction, such as Italy, Portugal, Spain, Andorra, Monaco, and Switzerland.
If you are assessing the legal implications of Malta’s citizenship-by-investment framework, or considering alternative residency or investment migration options within the EU, contact LINDEMANNLAW for strategic legal advice and cross-border regulatory insight. Our team of experienced EU and international lawyers is well positioned to guide private clients, advisors, and institutions through the evolving landscape of citizenship, residency, and mobility rights in Europe.
