62023CJ0181_RES
Case C‑181/23
European Commission
v
Republic of Malta
Judgment of the Court (Grand Chamber) of 29 April 2025
(Failure of a Member State to fulfil obligations – Article 20 TFEU – Citizenship of the Union – Article 4(3) TEU – Principle of sincere cooperation – Principle of mutual trust between the Member States – Grant of the nationality of a Member State – Special relationship of solidarity and good faith – Operation of an investor citizenship scheme – Naturalisation in exchange for predetermined payments or investments – Transactional nature of the naturalisation scheme, which amounts to the ‘commercialisation’ of Union citizenship)
Citizenship of the Union – Provisions of the Treaty – Nationality of a Member State – Respective competences of the European Union and of the Member States – Limits – Conditions for acquisition and loss of nationality – Within the powers of the Member States – Breach of EU law when the Member States exercise their powers concerning the grant of nationality
(see paragraphs 81-83)
Citizenship of the Union – Provisions of the Treaty – Nationality of a Member State – Grant of the nationality of a Member State – Principle of sincere cooperation – Principle of mutual trust between the Member States – Special relationship of solidarity and good faith between a Member State and its nationals – Operation of an investor citizenship scheme – Naturalisation in exchange for predetermined payments or investments – Transactional nature of the naturalisation scheme, which amounts to the commercialisation of Union citizenship – Failure to fulfil obligations
(Arts 2, 3(2), 4(3), 10 and 11 TEU; Arts 20 to 24 TFEU)
(see paragraphs 84-121, operative part 1)
Résumé
Hearing an action for failure to fulfil obligations, the Court of Justice, sitting as the Grand Chamber, finds that the Republic of Malta has failed to fulfil its obligations under Article 20 TFEU and Article 4(3) TEU by establishing and operating an investor citizenship scheme, which establishes a transactional naturalisation procedure in exchange for predetermined payments or investments and thus amounts to the commercialisation of the grant of the nationality of a Member State and, by extension, that of Union citizenship.
The Maltese Citizenship Act (
1
) governs the acquisition, withdrawal and renunciation of Maltese citizenship and, in Article 10, lays down the conditions for ordinary naturalisation. An amendment to that act in 2013 established, in parallel to the procedure laid down in Article 10(1) of the Maltese Citizenship Act, the possibility for an applicant to be granted a certificate of naturalisation through participation in an ‘individual investor programme’ governed by separate conditions and procedures. That investor citizenship scheme was amended in 2020 (‘the 2020 investor citizenship scheme’).
Under the Maltese rules on citizenship which the action concerns, (
2
) a certificate of naturalisation as a citizen of Malta may be granted, inter alia, to an alien or stateless person who has rendered exceptional services to the Republic of Malta. Such services comprise, inter alia, various contributions, including those of investors. The conditions which must be satisfied in order for an investor to be able to apply for Maltese nationality are, first, the payment of a contribution of EUR 600000 or EUR 750000 to the Maltese Government, second, the purchase of residential property with a minimum value of EUR 700000 or the lease of such property for an annual rent of at least EUR 16000 for a minimum period of five years, third, a donation of at least EUR 10000 to a non-governmental organisation or society, fourth, legal residence in Malta for a period of 36 months, where that period may be reduced if the applicant makes an additional contribution and, fifth, validation of the eligibility of the investor concerned and authorisation to submit an application for naturalisation.
During the pre-litigation procedure, the European Commission noted that such investor citizenship schemes could be considered to exploit the common achievement of Union citizenship in breach of the principle of sincere cooperation between the European Union and the Member States. In its reply to the letter of formal notice of October 2020, the Republic of Malta noted that it had revised the legislative framework applicable to the acquisition of Maltese nationality. The Commission stated, in an additional letter of formal notice, that the 2020 investor citizenship scheme did not change the transactional nature of the 2014 investor citizenship scheme.
On 2 March 2022, the Republic of Malta suspended its 2020 investor citizenship scheme for Russian and Belarusian nationals, while continuing to operate the scheme for citizens of other third countries.
Taking the view that the 2014 and 2020 investor citizenship schemes operated by the Republic of Malta are incompatible with EU law, the Commission initiated an infringement procedure relating solely to the 2020 scheme, based on a single plea in law, alleging infringement of Article 20 TFEU and Article 4(3) TEU.
Findings of the Court
The Court recalls, first of all, that, under Article 9 TEU and Article 20(1) TFEU, every person holding the nationality of a Member State is to be a citizen of the Union. According to those provisions, Union citizenship is to be additional to and is not to replace national citizenship.
Next, it states that, while it is for each Member State, having due regard to international law, to lay down the conditions for the grant and loss of nationality, that competence must be exercised with due respect for EU law.
In that context, there is nothing in the wording or the scheme of the Treaties to support the inference that their authors intended to lay down, as regards the grant of the nationality of a Member State, an exception to the obligation to comply with EU law whereby only significant breaches of the values and objectives of the European Union are liable to entail a breach of EU law when the Member States exercise their powers in the matter. Such an exception cannot be accepted since it would amount to a limitation of the effects attaching to the primacy of EU law, which falls within the essential characteristics of EU law and, therefore, within the constitutional framework of the European Union.
Moreover, according to the wording of Article 3(2) TEU the European Union is to offer its citizens an area of freedom, security and justice without internal frontiers. In addition to the right to move and reside freely within the territory of the Member States, conferred on every Union citizen, the latter also has political rights (
3
) which ensure his or her participation in the democratic life of the European Union, including the right to vote and to stand as a candidate in elections to the European Parliament and in municipal elections in the Member State in which he or she resides, under the same conditions as nationals of that State.
It is in the light of those various rights that the Court has already held, first, that the provisions relating to Union citizenship are among the fundamental provisions of the Treaties which are part of the framework of a system that is specific to the European Union and which are structured in such a way as to contribute to the implementation of the process of integration that is the raison d’être of the European Union itself and thus form an integral part of its constitutional framework.
Union citizenship is thus one of the principal concrete expressions of the solidarity which forms the very basis of that process of integration It is therefore an integral part of the identity of the European Union as a specific legal system, accepted by the Member States on a basis of reciprocity.
Moreover, in accordance with the principle of sincere cooperation enshrined in Article 4(3) TEU, it is for each Member State to refrain from any measure which could jeopardise the attainment of the European Union’s objectives.
Accordingly, the exercise of the Member States’ power to lay down the conditions for granting the nationality of a Member State is not unlimited. Union citizenship is based on the common values contained in Article 2 TEU and on the mutual trust between the Member States as regards the fact that none of them is to exercise that power in a way that is manifestly incompatible with the very nature of Union citizenship.
In that regard, the Court recalls its case-law to the effect that the bedrock of the bond of nationality of a Member State is formed by the special relationship of solidarity and good faith between that State and its nationals and the reciprocity of rights and duties.
As regards the establishment of such a particular relationship of solidarity and good faith, it is true that the definition of the conditions for granting the nationality of a Member State does not fall within the competence of the European Union, but within that of each Member State, which has a broad discretion in the choice of the criteria to be applied. Those criteria must nevertheless be applied in compliance with EU law.
A Member State manifestly disregards the requirement for such a special relationship when it establishes and implements a naturalisation scheme based on a transactional procedure between that Member State and persons submitting an application for the grant of nationality, which amounts to commercialisation of the grant of the status of national of a Member State and, by extension that of the status of Union citizen.
In addition, the Member States are required to recognise the effects of the granting to a person, by another Member State, of the latter’s nationality with a view to the exercise of the rights and freedoms arising from EU law. Transactional naturalisation, which is granted in exchange for predetermined payments or investments, is not only contrary to the principle of sincere cooperation, but is also liable, by its nature, to call into question the mutual trust which underlies that requirement of recognition. That trust relates to the premiss that the grant of the nationality of a Member State is based on a special relationship of solidarity and good faith justifying the grant of rights resulting, in particular, from the status of Union citizen.
In the present case, the first three conditions laid down by the 2020 investor citizenship scheme tend to indicate that payments or investments for predetermined minimum amounts occupy a key position in that scheme, suggesting that the latter amounts to the commercialisation of the granting of the nationality of a Member State following a transactional procedure. Such a classification is not capable of being called into question by the other conditions to which the grant of Maltese nationality under that scheme is subject, in particular the condition relating to the check of the applicant’s eligibility. That check is intended, in essence, to ensure that the implementation of the 2020 investor citizenship scheme does not undermine certain public interest objectives of the Republic of Malta, in particular the public security and national security of that Member State and its internal and external image, and not to assess whether the applicant’s situation justifies the grant of Maltese nationality. Moreover, the 2020 investor citizenship scheme was publicly presented by the Republic of Malta as offering primarily the benefits arising from Union citizenship, in particular the right to move and reside freely in the other Member States. That presentation helps to establish that, by means of that scheme, that Member State established a transactional procedure which amounts to the commercialisation of the grant of the nationality of a Member State, by making use of the rights attaching to Union citizenship for the purpose of promoting that procedure.
(
1
)	Maltese Citizenship Act (Chapter 188 of the Laws of Malta).
(
2
)	Article 10(9) of the Maltese Citizenship Act, as amended by the Maltese Citizenship (Amendment No. 2) Act (Act XXXVIII of 2020) (The Malta Government Gazette No 20,452 of 31 July 2020), and the Granting of citizenship for Exceptional Services Regulations, 2020 (Subsidiary Legislation 188.06 of the Laws of Malta) (The Malta Government Gazette No 2020, No 20,524 of 20 November 2020).
(
3
)	Referred to in Articles 10 and 11 TEU and given concrete expression in Articles 20, 22 and 24 TFEU.