Citizenship by Investment - Latest Development in the European Union

Abstract

This paper covers citizenship by investment (CBI) schemes in the European Union (EU) context which allow to acquire nationality of the EU member state through targeted investments. We were verifying whether the negative attitude of the EU towards the CBI schemes of member states and the ongoing war in Ukraine threaten their very existence. In order to achieve the objective, we analysed the rules on the acquisition of citizenship by naturalization as well as the relationship between nationality of the EU member states, which is still their exclusive competence and the EU citizenship status. Subsequently, we compared CBI schemes of three EU member states (Bulgaria, Cyprus, Malta). The results show that the EU has put pressure on member states to cancel their CBI programs because of the complex relationship between the national citizenship on the one hand and the EU citizenship and related rights enforceable across the whole EU on the other hand. This EU pressure has been further intensified following the war in Ukraine. The reason is that Russian nationals made up a significant number of CBI applicants and also because some Russian or Belarusian nationals who are supporting the war in Ukraine might have acquired EU citizenship under CBI schemes. Of the three countries we analysed, only Malta currently has a valid CBI program. Bulgaria and Cyprus abolished their CBI programs. This development indicates that the EU has gradually succeeded in eliminating the existence of CBI in the EU member states. However, it is not yet clear whether this practice of member states is contrary to the EU law. We assume that the Court of Justice of the EU will resolve this question in the ongoing infringement procedure initiated by the European Commission against Malta.