The European Court of Justice has ruled that Malta’s controversial citizenship-by-investment scheme, introduced under a Labour government, breaches EU law.

In its judgment, the Court stated that granting nationality — and by extension EU citizenship — in exchange for payments or pre-set investments amounts to reducing citizenship to a commercial transaction.

It ruled that such schemes undermine the mutual trust between EU member states and violate the principle of sincere cooperation.

Reacting to the decision, the Nationalist Party (PN) welcomed the ruling, stating that it confirmed long-standing concerns over the programme. “The Court stated that the scheme goes against European laws,” the PN said, adding that the practice of selling citizenship eroded EU values and legal standards.

The Opposition recommends that the Labour Government: (a) suspend the IIP programme in its current form; (b) launch a clear plan with a schedule of amendments to implement the EU Court’s decision; (c) publicly declare it fully accepts the ruling.

Former Prime Minister Joseph Muscat, who spearheaded the scheme, hit back, calling the ruling a political one. He noted that the Court overturned the opinion of its own Advocate General, who had previously sided with Malta.

Muscat argued that Malta’s scheme was fully transparent — unlike similar programmes in other countries — and insisted it had brought significant investment to the country.

Muscat also accused PN figures and European Parliament President Roberta Metsola of working against Malta’s interests, claiming the programme supported families, NGOs, and the economy during the pandemic.

Despite the ruling, he maintained that the programme could continue with adjustments.

Response By Government 

The Government of Malta responded, saying that while respecting the court’s decision, the government is reviewing the legal implications to align the citizenship framework with the ruling’s principles.

Since the European Commission initiated proceedings in 2020, Malta has consistently defended the programme, arguing that citizenship is a matter of national competence—a view supported by Advocate General Collins, who found no case against Malta, the government said.

Despite the court acknowledging national competence, it rejected the Advocate General’s recommendation and explored other issues. The government stressed that decisions made under the existing and previous frameworks remain valid.

The programme, the government responded, has generated over €1.4 billion since 2015, supporting key investments through the National Development and Social Fund (NDSF) and the Consolidated Fund. Projects funded include social housing, healthcare (e.g., St Michael Hospice, Mater Dei Hospital), sports infrastructure, and environmental restoration. It also facilitated €339 million in property sales, €158 million in rentals, and €236 million in bond investments, with over €10 million donated to NGOs.

The government urged national unity in addressing the ruling’s aftermath, criticising the opposition for allegedly undermining Malta’s position during the legal process.

#MaltaDaily