Analysis of the European Court of Justice Ruling on Malta’s Golden Passport Scheme

Private Clients

The European Court of Justice (ECJ) has issued a judgment declaring Malta’s Golden Passport programme violates European Union law. This April 29, 2025 decision in Case C-181/23 (European Commission v Republic of Malta) represents a development in EU citizenship law, establishing limits on how Member States can exercise their power to grant nationality.

The Nature of the Dispute

The European Commission brought action against Malta, challenging its “Maltese Citizenship by Naturalisation for Exceptional Services by Direct Investment” programme, commonly known as the “golden passport”. Introduced in 2014 and revised in 2020, the programme allowed individuals to acquire Maltese citizenship and consequently EU citizenship through substantial financial investments.

Under the 2020 version of the scheme, applicants could obtain Maltese citizenship by:

• Contributing €600,000 to €750,000 to the Maltese government
• Purchasing property worth at least €700,000 or leasing property for at least €16,000 annually
• Donating at least €10,000 to a registered Maltese organization
• Maintaining legal residence in Malta for 36 months (reducible to 12 months with an additional €150,000 payment)

The Commission argued this scheme violated Article 20 TFEU (establishing EU citizenship) and Article 4(3) TEU (sincere cooperation), claiming it commercialised EU citizenship without requiring ‘genuine links’ between applicants and Malta.

The Court’s Key Legal Findings

Member State Competence and EU Law Constraints

The Court found that Malta had failed in its duties of sincere cooperation. The relevant provision of article 4(3) cited by paragraph 5 of the Judgment was: 

“3.      Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.”

The Court arrogated itself the role of being an arbiter of what ‘tasks’ flowed from the Treaties and it further found that Malta had not striven hard enough to carry these out. The Court did not analyse what reciprocal duties were held by the Union in relation to the exercise of a sovereign right which flowed from the Treaty, giving the mutual respect in the provision a slightly less mutual air.

The Court reaffirmed that while nationality matters fall primarily within Member State competence, this power must be exercised “having due regard to EU law“. The ECJ explicitly rejected Malta’s argument that only “significant breaches” of EU values should be reviewable, finding “nothing in the wording or the scheme of the Treaties” supports such an interpretation. That is, ordinary (rather than significant) levels of breach would be sufficient to trigger the reviewability of whether sovereignty has been exercised in accordance with EU law.

The Nature of EU Citizenship

The Court characterised EU citizenship as “one of the principal concrete expressions of the solidarity which forms the very basis of the process of integration [between EU member states]“. The Court emphasized that EU citizenship provides substantial privileges (in addition to national ones), including:

• Freedom of movement within the EU (Article 20(2)(a) and Article 21(1) TFEU)
• Political participation rights that ensure involvement in the EU’s democratic life (Articles 10-11 TEU)
• Diplomatic protection in third countries (Article 20(2)(c) and Article 23 TFEU)

The “Transactional” Nature of Malta’s Golden Passport Scheme

The Court also found that Malta’s programme established a “transactional procedure” whereby nationality was “essentially granted in exchange for predetermined payments or investments“. This approach, the Court ruled, was fundamentally incompatible with the concept of citizenship as representing a “special relationship of solidarity and good faith between a Member State and its nationals“.

The Court specifically noted that:

1. Financial requirements occupied a “key position” in Malta’s scheme
2. The residence requirement was minimal, requiring physical presence only for collecting biometric data and oath-taking
3. The ability to reduce the residence period from three years to one year by paying an additional €150,000 further demonstrated the scheme’s transactional nature
4. The programme’s verification procedures were designed merely to screen out risky applicants rather than establish genuine connections

Implications for Member State Sovereignty

This judgment clarifies the limits of Member State discretion in nationality matters. While maintaining that Member States have “broad discretion” in choosing criteria for granting nationality, the Court asserted that commercialising citizenship through predetermined payment schemes crosses a clear legal boundary. 

The judgment of the CJEU in this matter is unfortunately not well reasoned and leaves the impression of being highly political. Also unfortunately at least in the characterisation of the arguments made by Malta given by Court, the Maltese position in the litigation does not appear (with the benefit of hindsight especially) to have been especially robust, creative or inspired.

Broader Significance of the Judgment

Mutual Trust Between Member States

A central concern for the Court was how transactional citizenship schemes undermine mutual trust between Member States. Since all EU countries must recognize each other’s nationality decisions, the Court found that transactional naturalisation is “liable, by its nature, to call into question the mutual trust which underlies that requirement of recognition“.

A Rebuke to “Selling” EU Rights

The ECJ noted that Malta’s scheme was “publicly presented” as offering “primarily the benefits arising from Union citizenship,” particularly free movement rights in other Member States. This approach, the Court concluded, effectively used EU citizenship rights “for the purpose of promoting” a commercial transaction.

Conclusion

The ECJ’s ruling against Malta’s golden passport scheme marks a development in the understanding of EU citizenship. By declaring that the commercialisation of citizenship through predetermined payment schemes violates EU law, the Court has established boundaries around Member State discretion in nationality matters.