The Death of European Citizenship by Investment

Big news arrived recently from the European Court of Justice (ECJ)… and it has profound implications for anyone looking for European residency via investment.

Only a few years ago, half a dozen countries in or aspiring to become part of the European Union had citizenship-by-investment programs. “CBI” is when a country gives you citizenship and a passport for plunking some money down there, through private or public investment. They included Cyprus, Bulgaria, Montenegro, and Malta.

Of these, Malta is the only one left. And it’s about to shut down its CBI program, thanks to the recent ECJ ruling. The European Court of justice ruled against the Mediterranean island nation, saying that its refusal to close its CBI program was incompatible with its treaty commitments to sincere cooperation with other EU countries. Malta faces the choice between keeping the program open and potentially being kicked out of the EU.

CBI programs haven’t flourished in Europe for two related reasons.

First, they are tainted by associations with corruption and criminality. Cyprus, for example, closed its program in 2020 after reports of passports sold to wanted criminals. Malta reportedly granted at least seven passports to Russians who were subsequently sanctioned by the EU or the United States following Russia’s invasion of Ukraine.

Second, the European Commission—the EU’s ruling executive body—really, really hates CBI. This goes beyond worries about spies, criminals, and sanctioned people getting EU citizenship. They just don’t like the idea that somebody with no European background can become a fully-fledged citizen of the bloc without meaningful roots there.

This is why Montenegro and Bulgaria dropped their programs, for example. Bulgaria was on the verge of joining the Schengen Zone, and Montenegro is a candidate for EU membership. Neither would happen had they not closed their CBI programs.

The big question is what happens to a Europe that rejects the idea that people can become citizens simply by splashing out some money. What does that do for residency-by-investment (RBI) programs… a.k.a. Golden Visas?

Although the mainstream press constantly lumps the two together, CBI and Golden Visas are very different. Whereas the former gives successful applicants full citizenship, Golden Visas are residency permits. Citizenship is exceedingly difficult to take away, but residency can be canceled easily. Many people who get Golden Visas don’t spend much time in Europe, and don’t plan to.

The problem, as the European Commission sees it—they don’t like Golden Visas either—is that time on a Golden Visa counts towards naturalization. For example, holders of the Portuguese Golden Visa only need to spend seven days a year in the country for five years, after which they can apply for citizenship. In Greece, it’s seven years. Although this gives plenty of time for governments to do due diligence on potential citizens, it still rankles many in Europe.

Ever since the ruling against Malta, I’ve received a flurry of emails from EU immigration consultants decrying the decision. They correctly see it as an existential threat to their business. Although retirement and digital nomad visas aren’t threatened, the big money is in Golden Visa applications, which can involve investments of a half million euros or more.

I’m not sure that Golden Visas face an immediate threat. I understand why people in that business think so, because their livelihoods are at stake.

But I do think we’re seeing a sea change in Europe, And more changes will come. The Portuguese ruling coalition, for example, is already proposing to extend the time required for naturalization, and to require more time in country. And Italy has gutted its citizenship-by-ancestry program, once one of the easiest ways to get an EU passport (if you have Italian ancestors).

The bottom line is that if you are thinking about residency by investment in Europe, the time to act is now. You never know how long that window is going to be open.