Should citizenship be for sale? Is it acceptable to buy a citizenship? These were the questions that arose after a discussion related to the acquisition of the EU. As a humorous solution, I suggested buying a citizenship based on the well-known concept of 'money can solve all problems'. Even though this idea may have seemed amusing at first, it started a thought process about the risks such a transaction can entail.

The trend of citizenship by investment has grown in recent years as presented in the European Commission report from 2019. The Member States are trying to attract investors by providing them with citizenship in exchange for their contribution. In the EU we can find three states which introduced the investment schemes and operate within them: Bulgaria, Cyprus, and Malta (Vella, 2020). Their broad schemes of granting citizenship based on monetary payment have raised concerns about certain risks which might be related to citizenship by investment. One of these risks is that the acquisition of citizenship of one EU Member State leads simultaneously to the Union citizenship which in fact has an impact on the EU as a whole.

Freedom of movement, freedom of residence, right to vote and to stand as a candidate at local elections and elections into the European Parliament, diplomatic and consular protection – those and many more are recognised under the Charter of Fundamental Rights of the European Union, and also in Treaty on the Functioning of the European Union and the Treaty on European Union. These rights and benefits closely connected to them are primarily used in citizenship by investment schemes to attract the potential investors in exchange for EU citizenship. Also, in accordance with the mentioned treaties, every person who is granted citizenship of a member state is automatically a citizen of the Union in accordance with Article 9 of the Treaty on European Union and Article 20 of the Treaty on the Functioning of the European Union. However, the case-law of the Court of Justice of the European Union states that while each Member State has a right to set the rules for acquisition and loss of citizenship, they must do so ‘having due regard to EU law’, its norms and customs (CJEU, Janko Rottmann v Freistaat Bayern, 2010).

Nationality is a legal bond having as its basis a social fact of attachment, a genuine connection of existence, interests, and sentiments, together with the existence of reciprocal rights and duties. It may be said to constitute the juridical expression of the fact that the individual [...] is in fact more closely connected with the population of the State conferring nationality than with that of any other State’. (ICJ, Nottebohm Case, 1955)

On the one hand, even though some legal scholars believe that it is time to retire Nottebohm (Macklin, 2017), on the other hand, is it correct to naturalise a person only on the grounds of monetary payment without other requirements proving the existence of a genuine link?

The problem of the ‘golden passport schemes’ was addressed by the European Parliament for the first time in 2014. The parliament acknowledged that matters related to citizenship are in the competence of the Member States. However, it highlighted the importance of taking the side-effects into consideration while exercising such rights. Also, the parliament emphasized that EU citizenship depends on both – the ties of a person to Europe and a Member State, and also on personal ties with other EU citizens. Moreover, it is of the essence that EU citizenship ‘should never become a tradable commodity’. This resolution also called on the Commission to address the various citizenship schemes of the Member States in accordance with the values of the EU (European Parliament, 2014). The Commission’s consultations with the Member States were reflected in the 2017 EU Citizenship Report and are still ongoing.

Based on further discussions between the European Commission and Maltese Authorities, amendments to the Individual Investment Program of the Republic of Malta were made. In order to gain Maltese citizenship, one has to reside in Malta for at least 12 months prior to obtaining the certificate of naturalisation. The requirement of residence status was added to the regulations in order to strengthen the genuine link requirement (European Commission, 2019). However, the situation, in reality, is slightly different. This requirement is fulfilled even if the applicant is not physically residing in Malta. Boarding passes, donations, gifts, and other contributions to charitable organisations or sports clubs are considered sufficient enough to meet this requirement (European Commission, 2019).

According to the 2019 European Commission report (p. 4), Cyprus made similar changes to its legislation and requires the successful investors and their family members to hold residence permits. Yet, in practice, the applicants just have to sign the necessary documents and appear in person at the Cyprus Civil Registry and Migration Department in order for their biometric data to be collected. There is no requirement to reside or be physically present in Cyprus (Ministry of Interior of Cyprus, 2016; Transparency International, 2018). The situation in Bulgaria is identical to the one in Cyprus. It is obvious that the Bulgarian Immigrant Investor Program was designed as a fast-track path to citizenship without the requirement of investors being physically present in the country itself while waiting for citizenship to be issued (CBI Index, 2019).

The issues with residence permits are closely linked to the acquisition of citizenship. Malta, Cyprus, and Bulgaria offer not only citizenship by investment schemes, but also residence by investment schemes. Once you invest in your residence permit, this investment may modify the requirements for citizenship and may qualify the applicant for the citizenship scheme as well (Kyprianou, 2018). Cyprus and Malta both operate under these rules (European Commission, 2019,). However, these three EU states are not the only ones that offer residency in exchange for monetary investment. With the exception of the following ten states – Austria, Belgium, Denmark, Finland, Germany, Hungary, Poland, Slovakia, Slovenia, and Sweden (European Parliamentary Research Service, 2018), every other EU Member State has some system of residency by investment scheme (European Parliamentary Research Service, 2018).

Based on the presented case law and described situations in Malta, Cyprus, and Bulgaria respectively, are these measures effective enough to ensure that citizenship is not awarded absent of any genuine link to the country or its citizens? And what about the principle of sincere cooperation stated in Article 4(3) of the Treaty on the European Union? Aren’t states obliged to respect the treaties and guard the interests of the EU (Lang, 2013)? According to the Court of Justice of the EU, each Member State shall refrain from implementing measures jeopardising the EU goals. The court further emphasised that ‘duty of genuine cooperation is of general application and does not depend on whether the Community competence concerned is exclusive …’ (ECJ, Commission v Luxembourg, 2005). Based on the abovementioned, it’s the member states’ responsibility to focus on the fact that, when granting or removing national citizenship, they also simultaneously grant or remove EU citizenship and should therefore at all times respect the principle of sincere cooperation (European Commission, 2017).

In addition to the above-mentioned issues, what are the real reasons for the third-country nationals to invest in other states? Are these motivations lawful or not? What if the applicants are by these means trying to escape legal proceedings in their countries of origin or protect their assets from confiscation procedures (European Commission, 2019)? ‘Golden passport’ schemes also raise many other issues of concern to the Member States and the European institutions. The Commission’s report identified many grey zones in the application of anti-money laundering legislation and also in connection to the security checks used for applicants, corruption, and tax evasion (European Commission, 2019). Moreover, the lack of communication between the states in regard to application procedures, origin of applicants, or the number of rejected applicants may create problems, too (De Nederlandse Grondwet, 2019). The risks associated with investor citizenship schemes are quite serious. A higher level of transparency, better interaction between the states, and more detailed governance of these schemes on the national level is sorely needed.

Fast-track citizenship is beneficial for governments and an easy way to secure a better life for the elite. These transactions’ – its profits, ethical, and social consequences, and related risks – affect not only EU citizens, but also EU residents and citizens-to-be who must comply with stricter requirements of states to obtain their residency or citizenship because they cannot offer this luxury of passport shopping (Transparency International, 2018). However, does putting a price tag on citizenship change our idea of what it means to belong to a certain community within a certain state or EU in general? Ignoring this issue and not caring enough about how the ‘golden passport’ schemes work and how the states might (not) be trying to minimise certain risks may have severe negative results. After all, people’s mobility and access to the EU is at stake. In regard to this issue, the EU states shall support and help each other while carrying out their obligations which arise from the EU treaties and a mere principle of sincere cooperation. They should do so with respect to the case law and the genuine link requirement. It is essential to harmonise this market across the EU, unify the Member States’ approach, and implement the higher standards of transparency and due diligence. However, this cannot be done easily, and it will require a lot of effort to set the bar high enough to keep the EU a safer place for all of us.

 

By Zuzana Petrová

 

This material was published in Lawyr.it Vol. 6, September 2020, available only online.

 

Bibliography:


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Janko Rottmann v Freistaat Bayern [2010] Case no. C-135/08. European Court Reports, I, 01449, pp. 1467 – 1492.

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