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Citizenship for sale: One year on

Acquiring the nationality of one (or more) Member State(s) of the EU automatically means that EU citizenship is acquired under Article 20 TFEU. Viviane Reding, former vice-president of the European Commission, saidin a speech delivered on 15th January 2014:

“Citizenship must not be up for sale!”

European Parliament Resolution

On 16th January 2014, the European Parliament passed a resolution on EU citizenship for sale. The resolution stated that every Member State “is expected to act responsibly in preserving the Union’s common values and achievements” and “those values and achievements are invaluable and cannot have a price tag attached to them”. The European Parliament recognised that some Member States have introduced schemes which directly/indirectly result in the sale of EU citizenship to third-country nationals (TCNs), and that TCN investors are being issued with temporary or permanent residence permits in an increasing number of Member States.

The European Parliament did not disguise how it viewed the Maltese scheme for the sale of Maltese citizenship with no residency requirement. It made clear that such outright sale “undermines the mutual trust upon which the Union is built”.

The European Parliament expressed concerns about:

  • the effect of investment programmes on local housing markets;
    • criminal abuse of investment programmes – including issues such as money laundering, and the subsequent access to all other EU Member States following the principles of free movement within the EU;
    • possible discrimination because practices only allow the richest TCNs to obtain EU citizenship, without reference to other criteria;
    • the mutual rights and responsibilities which citizenship entails: whether Maltese citizens would truly benefit under the scheme as the investors concerned would not be required to pay taxes.

The European Parliament viewed the sale of Member State citizenship as undermining the very concept of European citizenship, and called on Member States to “recognise and live up to the responsibilities they hold in safeguarding the values and objectives of the Union”. It called upon the European Commission – the ‘guardian of the Treaties’ to assess whether investor schemes for the acquisition of Member State citizenship respect the letter and spirit of the Treaties and EU rules on non-discrimination. The Parliament also invited the Commission to issue recommendations in order to prevent such schemes from undermining core EU values, and guidelines for access to EU citizenship via national schemes.

Reiterating that the principle of ‘sincere cooperation’ is enshrined in Article 4(3) TEUand that Member States are to assist each other, the European Parliament recognised that Member States hold exclusive competency to grant residency and citizenship rights, despite calling upon Member States to be ‘careful’ when exercising competencies in this area.

The European Parliament wanted to avoid Union citizenship becoming a commodity, and emphasised that “the rights conferred by EU citizenship are based on human dignity and should not be bought or sold at any price”. The Parliament emphasised that access to funds should not be the main criterion in conferring EU citizenship on TCNs.

Reform of Maltese rules

On 29th January 2014, the European Commission and Maltese Authorities issued a Joint Press Statement in which amendments to the Individual Investor Programme (IIP) were announced.

Applicants must now:

  • make a non-refundable contribution of €650,000;
  • purchase a property with a value of at least €350,000 and retain this property for at least 5 years, or rent a property for at least 5 years with an annual rent of at least €16,000;
  • make an ‘approved investment’ of €150,000;
  • have a clean criminal record;
  • have appropriate health insurance;
  • reside in Malta for one year before the date of application for citizenship.

The introduction of residency requirements to the Maltese investment programme means that there now has to be a stronger link to the country, and hence to the EU than when the scheme required investment alone. The property requirements go some way to help demonstrate an intention to live within Malta for five years, as the property cannot be rented out or sub-let. Additionally, there are now thorough due diligence checks which will have reduced the European Parliament’s fears over criminal use of investment routes to citizenship.

UK approach to citizenship following investment

The UK has an accelerated route to settlement open to investors: investors may qualify for accelerated permanent residence if they maintain an investment of £10 million over two years or £5 million over three years, and can show:

  • An investment of not less than £2 million of capital in the UK by way of UK Government bonds, share capital or loan capital in active and trading UK registered companies;
  • Maintenance of at least £2 million of funds in the UK;
  • Sufficient knowledge of the English language and life in the UK;
  • A maximum of 180 days (6 months) outside the UK in any year of residence.

Applications by accelerated-route investors to naturalise as British citizens can be made following 5 years’ residence within the UK.

The UK approach is clearly in line with the EU’s core values, requiring both residency and long term investment within the UK, while offering the incentive of an accelerated route to settlement for high level investors to make the UK more attractive.

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