The European Court of Justice (ECJ) recently ruled that Malta’s “golden passport” initiative, which permitted affluent non-EU citizens to essentially purchase citizenship, is in violation of European Union law. This landmark decision effectively ends citizenship-by-investment programs across the EU.

Malta’s now-illegal scheme allowed international investors to gain Maltese citizenship, and consequently full EU rights, by investing approximately €1 million. This verdict underscores the principle that EU citizenship cannot be commodified.

The European Commission initiated legal action against Malta in 2022, contending that granting citizenship without any real connection to the nation through residency, cultural assimilation, or language contradicted the core tenets of EU law. By allowing investors to buy passports, Malta facilitated their free movement to live and work within the EU.

While EU member states have the autonomy to determine their nationality criteria, the ECJ noted that Malta’s program undermined the mutual trust fundamental to the EU’s community of regions. The court stressed that granting nationality and thus European citizenship in exchange for financial transactions degrades the process into a mere commercial activity. Such practices fail to cultivate the essential bonds of solidarity and good faith between a member state and its own citizens and further erode confidence between member states.

The judgment signifies the termination of the EU’s last operating investor citizenship scheme. Legal analysts previously cautioned that a favorable ruling for Malta could have paved the way for the resurgence of similar “golden passport” schemes across Europe, akin to Cyprus’ program, which was dismantled in 2020 amid a backlash over significant abuses and corruption concerns.

Security and ethical issues were prominent in discussions about these schemes. According to reports, some individuals who obtained Maltese passports later appeared on sanctions lists in the EU, US, or Ukraine. At least 16 of these new citizens were either politically exposed persons or under criminal investigation when they acquired citizenship. Among these beneficiaries were members of the Saudi royal family, although there have been no claims of corruption against them.

This ruling emerges while Cyprus is grappling with ongoing legal scrutiny regarding its own ceased golden passport initiative, which was discontinued in November 2020 after probes spotlighted grievous misconduct and tarnished its global standing.