In Commission v. Malta in C‑181/23, the CJEU ruled that Malta’s 2020 citizenship-by-investment (CBI) program violated EU law, specifically Articles 20 TFEU (Union citizenship) and 4(3) TEU (loyal cooperation). The program allowed foreign nationals to acquire Maltese (and thus EU) citizenship in exchange for financial contributions such as real estate investments or charitable donations, with minimal residence requirements.

The Court found that such a program commodifies Union citizenship and does not ensure a “genuine link” between the applicant and the State, which EU citizenship inherently demands.

The judgment has sparked significant controversy, with critics labeling it “judicial activism,” “free of legal reasoning” (van den Brink), and even “lawlessness” (Kochenov). A central criticism is that the Court has elevated EU citizenship from a derivative status to a quasi-autonomous legal construct, reversing the established doctrinal hierarchy. Additionally, the introduction of a “genuine link” test raises concerns due to its lack of clarity. Notably, the Court diverged from the Advocate General’s opinion, which happens in only about 20% of cases, often in politically sensitive rulings.

Potential Effects on CBI programs

The practical implications for interested investors are that they may find their access to EU citizenship delayed or denied, unless they can demonstrate a “genuine link” with the respective Member State. The legal uncertainty could also lead to a chilling effect, where member states over-correct by imposing unnecessarily strict criteria out of caution, potentially restricting even still compliant pathways to citizenship.

It remains ambiguous whether and how CBI programs can still be made compliant EU law at all – for instance through clearly defined criteria such as minimum physical or tax residence, or cultural and social integration. Only future clarification by legislators or courts could bring certainty.

Residency-by-investment as an alternative?

Against this backdrop, alternative models can gain importance, in particular residency-by-investment (RBI) schemes, which are available in several EU Member States, including Austria.

These programs often grant citizenship-like rights and can eventually lead to citizenship – for this, Austria generally requires ten years of legal and uninterrupted residence (§ 10 para. 1 no. 1 Austrian Citizenship Act – StbG); Greece seven years; Portugal and Ireland allow naturalization after five years and only require a minimum physical presence (14 to 21 days in Portugal, no minimum residence period in Ireland). However, Austria’s program only demands proof of liquid assets of EUR 50,000, compared to minimum investments of EUR 200,000 or EUR 1,000,000 in Portugal and Ireland, respectively.

However, RBI programs could also be affected by the legal uncertainty triggered by the ECJ ruling. Though not granting citizenship, they may resemble CBI schemes in structure. If Member States accelerated naturalization via “fast-track”-paths to citizenship and reduced presence requirements, such programs could become functionally equivalent to “golden passports”, blurring the legal line between permissible and prohibited models.

Outlook

In response to the judgment in C 181/23, both Member States and investors must recalibrate their approach to investment migration. CBI models will only remain compliant with EU law if they not only reward financial commitment but also create a connection to the host country that goes beyond this. Whether RBI programs will establish themselves as a real alternative for CBI investors remains to be seen.