The Curious Case of Malta vs. the EU

The Curious Case of Malta vs. the EU
St. Julians Bay, Malta. |©iStock/Kerrick

The Mediterranean island nation of Malta is one of the most fascinating in the region. Its blend of Arabic and European culture and its fascinating history set it apart from its neighbors.

Malta is unusual in another way: it’s the only country in the European Union that still sells citizenship in exchange for investment.

In 2013, the Maltese government created the Individual Investor Program, through which foreign citizens could make a capital investment in return for citizenship for themselves and their dependents. It wasn’t cheap—a €650,000 donation, with an added €25,000 for spouses and minor children.

After domestic criticism, the government amended the program to require a further €150,000 investment in approved financial assets for at least 5 years, along with a real estate purchase of €350,000 or a five-year lease at €16,000 a year.

Despite this exceptionally high price tag, at least as citizenship by investment (CBI) programs go, the European Commission was deeply unhappy with Malta’s program. The Commission told Malta it was a security risk and ran counter to EU constitutional values. In response, the Maltese government added a 12-month residence requirement before an applicant could be naturalized.

This did nothing to appease the EU, which launched a formal complaint against the country in the European Court of Justice. Malta responded by tightening conditions again, adding a 36-month residency requirement for those donating €600,000, and a 12-month stay for those donating €750,000. The fee for dependents rose to €50,000. Finally, the minimum property purchase doubled to €700,000, along with a €10,000 donation to a charitable program.

This makes Malta's CBI program by far the most expensive on the planet. A couple buying citizenship this way is out of pocket €700,000 euros, and on the hook for at least €350,000 of real estate—in other words, over €1,000,000.

Now, plenty of people sing the praises of Malta’s unique environment and culture. But That’s clearly not what prospective citizens are investing in. They want an EU passport… and the EU doesn’t like that one bit.

The EU objections to citizenship by investment reflect concerns about the potential for corruption, money laundering, and security risks to the Union as a whole. But The EU is also concerned about people with little or no long-term connection to the bloc gaining citizenship there. The EU is perfectly happy for people to become citizens through ancestry or naturalization. But doing so in exchange for money “jeopardizes the integrity of EU citizenship.”

On June 17, the European Court of Justice heard the case between the European Commission in Malta at its chambers in Luxembourg. The outcome has a great deal of significance for anyone looking to become a citizen of the European Union.

The debate is ultimately about the limits of national sovereignty within the EU. Malta argues that each country should have the right to decide its own conditions of citizenship. The EU argues that because citizenship of a member country automatically comes with EU citizenship, the bloc has a sovereign interest in these matters as well.

I think Malta has painted itself into a corner on this issue. The country’s price of citizenship is so high that it guarantees that only the wealthiest non-EU citizens would be interested in it.

Given the many other pathways to residency and naturalization on the continent, Malta’s program comes across as an invitation to citizens of countries in the EU’s bad books. Indeed, before the outbreak of war in 2022, most applicants were Russian. Since then, Chinese and Middle Easterners have dominated.

The good news is that Malta also offers a permanent residence by investment program—AKA a golden visa—which requires a minimum of €300,000 investment in property, a €28,000 donation, and a nonprofit donation of €2,000. This still isn’t cheap, but it’s but it’s about half of the investment required in Portugal nowadays. And it comes with the added benefits of no fixed residency requirement, as well as a five-year pathway to citizenship.

So, if Malta is on your radar screen, my advice is to focus on the residency option!