REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Investor Citizenship and Residence Schemes in the European Union
Date: 2019-01-23
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: EU visa policy, European citizenship, foreign national, investment, money laundering, naturalisation, public safety, residence, residence permit, tax evasion

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.1.2019  COM(2019) 12 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Investor Citizenship and Residence Schemes in the European Union {SWD(2019) 5 final}  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE  
COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE  
COMMITTEE OF THE REGIONS 

1.  Introduction  

Recent  years  have  seen  a  growing  trend  in  investor  citizenship  (“golden  passport”)  and 
investor  residence  (“golden  visa”)  schemes,  which  aim  to  attract  investment  by  granting 
investors citizenship or residence rights of the country concerned. Such schemes have raised 
concerns about certain inherent risks, in particular as regards security, money laundering, tax 
evasion and corruption.  

Three Member States operate investor citizenship schemes, where citizenship is granted under 
less  stringent  conditions  than  under  ordinary  naturalisation  regimes,  in  particular  without 
effective prior residence in  the country  concerned1. Such schemes have implications  for the 
European Union as a whole, as every person holding the nationality of a Member State is at 
the same time  a citizen  of the Union.  Indeed, although these are national  schemes, they  are 
deliberately  marketed  and  often  explicitly  advertised  as  a  means  of  acquiring  Union 
citizenship,  together  with  all  the  rights  and  privileges  associated  with  it,  including  in 
particular the right to free movement. 

Investor  citizenship  schemes  differ  from  investor  residence  (“golden  visa”)  schemes,  which 
aim to attract investment in exchange for residence rights in the country concerned, and exist 
in twenty EU Member States. However, the risks inherent to such schemes are similar to those 
raised by investor citizenship schemes. Furthermore, these schemes impact on other Member 
States  as  a  valid  residence  permit  grants  certain  rights  to  third-country  nationals  to  travel 
freely in particular in the Schengen area. 

The  European  Parliament,  in  its  Resolution  of  16  January  20142,  expressed  concern  that 
national  schemes  involving  the  “direct  or  indirect  outright  sale”  of  Union  citizenship 
undermined the very concept of Union citizenship. It called on the Commission to assess the 
various national citizenship schemes in the light of European values and the letter and spirit of 
EU  legislation  and  practice.  The  Commission  contacted  the  Bulgarian,  Cypriot  and  Maltese 
authorities for further information on their schemes. In a debate in May 2018, the European 
Parliament  discussed  a  range  of  risks  associated  with  investor  citizenship  and  residence 
schemes. 

In  its  2017  Citizenship  Report3,  the  Commission  announced  a  report  on  national  schemes 
granting  Union  citizenship  to  investors  describing  the  Commission’s  action  in  this  area  and 
examining  current  national  law  and  practices,  and  providing  some  guidance  for  Member 
States. To prepare this report, the Commission commissioned a study on the legislation and 
practice  pertaining  to  citizenship  and  residence  schemes  in  all  relevant  Member  States4  and 

1  
2  
3  

4  

See Section 2.3. below for a definition of effective residence. 
European Parliament Resolution of 16 January 2014 on EU citizenship for sale (2013/2995(RSP)). 
Report from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions on Strengthening Citizens’ Rights in a Union of Democratic 
Change: EU Citizenship Report 2017 (COM/2017/030 final). 
Fact  finding  study.  Milieu  Law  and  Policy  Consulting,  Factual  Analysis  of  Member  States'  Investor 
Schemes granting citizenship  or residence to third-country  nationals investing in the  said Member State, 
Brussels 2018 (“the Study”). 

1 

 
 
 
 
 
 
 
 
                                                           
organised  a  consultation  with  Member  States.  This  report  also  takes  into  account  other 
relevant sources, including recent publications on the topic5.  

This  report  covers  both  investor  citizenship  and  residence  schemes  and  identifies  the  key 
areas  of  concern  and  risks  associated  with  granting  citizenship  of  the  Union  or  residence 
rights on the basis of an investment only. In particular, the report sets out the possible security 
gaps  resulting  from  granting  citizenship  without  prior  residence,  as  well  as  risks  of  money 
laundering, corruption and tax evasion associated with citizenship or residence by investment.  
It also describes challenges with respect to the governance and transparency of such schemes, 
looks at how these might be addressed and provides a framework for improvement.  

The  report  is  accompanied  by  a  Staff  Working  Document,  which  provides  more  detailed 
background information on investor citizenship and residence schemes. 

2. Investor citizenship schemes in the EU 

2.1. Context 

As expressed in the case law of the Court of Justice, nationality is a bond between a citizen 
and  the  State,  and  it  is  “the  special  relationship  of  solidarity  and  good  faith  between  [a 
Member State] and its nationals and also the reciprocity of rights and duties, which form the 
bedrock of the bond of nationality”6. Citizenship of a country is traditionally based on birth-
right acquisition, be it by descent (ius sanguinis) or by birth in the territory (ius soli)7. States 
also  give  immigrants  the  possibility  to  naturalise  as  citizens,  provided  they  fulfil  certain 
integration  conditions  and/or  show  a  genuine  connection  to  the  country,  which  can  include 
marriage  to  one  of  its  citizens8.  All  Member  States  have  such  ordinary  naturalisation 
procedures.   

Most  Member  States  also  have  discretionary  naturalisation  procedures9.  Under  such 
procedures, Member States can, on an individual basis, award citizenship to a foreigner on the 
basis of “national interest”. This can be for outstanding achievement, for example in the area 
of  culture,  science  or  sports.  In  some  EU  Member  States,  the  legislation  provides  that 

5  

6  
7  

8  

9  

in 

of 

the 

and 

EU: 

play, 

State 

issues 

See  in  particular,  European  Parliamentary  Research  Service  “Citizenship  and  residency  by  investment 
2018, 
impacts”,  October 
schemes 
http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_STU(2018)627128; 
Transparency International/Global Witness, European Getaway – Inside the Murky World of Golden Visas, 
October 2018, https://www.transparency.org/whatwedo/publication/golden_visas  
Judgment of 2 March 2010, Rottmann, C-135/08, EU:C:2010:104, paragraph 51. 
For a full overview of types of acquisition of citizenship, including birth-right citizenship, see the Global 
Database on Modes of Acquisition of Citizenship, available at http://globalcit.eu/acquisition-citizenship/  
Further detail concerning naturalisation via marriage in EU Member States is contained in Annex III of the 
Study,  ibid,  note  4.  Member  States  generally  take  steps  to  prevent  the  abuse  of  such  possibilities,  for 
example  in  the  context  of  marriages  of  convenience.  To  better  detect  and  tackle  fraudulently  acquired 
nationality,  national  authorities  are  encouraged  to  use  interviews  or  questionnaires,  document  and 
background checks, inspections or community-based checks while respecting applicable legal constraints, 
such  as  those  related  to  burden  of  proof  or  fundamental  rights.  They  can  also  draw  on  the  similarities 
between  fraudulently  acquired  nationality  and  right  of  residence  acquired  via  marriages  of  convenience 
with Union citizens (see the Commission’s Handbook on marriages of convenience (COM/2014/604 final).  
For further detail see Annex III of the Study, ibid, note 4. 

2 

 
 
 
 
 
 
 
 
 
                                                           
“national  interest”  may  be  equated  with  economic  or  commercial  interest10.  Discretionary 
naturalisation procedures can be used in individual cases to grant citizenship in exchange for 
investment.  Such  discretionary  naturalisation  procedures  are  highly  individualised  and  used 
on a limited basis. They are therefore not the object of this report. 

Bulgaria,  Cyprus  and  Malta  introduced  in  2005,  2007  and  2013  respectively11  broader 
schemes aimed at attracting investment from third-country nationals by facilitating access to 
their citizenship. These schemes are a new form of naturalisation as they systematically grant 
citizenship  of  the  Member  State  concerned,  provided  the  required  investment  is  made  and 
certain criteria fulfilled12.  

Since  Bulgaria13,  Cyprus  and  Malta  are  the  only  Member  States  which  operate  investor 
citizenship schemes, this section of the report focusses on the legislation and practice of these 
countries. 

2.2. Type and amount of investment required 

Investor citizenship schemes aim to attract investment by offering citizenship in return for a 
defined amount of money. In Bulgaria, an overall investment of EUR 1 million is requested 
under  its  fast-track14  investor  citizenship  scheme.  In  Cyprus,  a  minimum  investment  of 
EUR 2 million  is  necessary,  together  with  ownership  of  property  in  Cyprus.  In  Malta,  a 
contribution of EUR 650,000 must be paid into a national investment fund, together with an 
investment of EUR 150,000 and a requirement to own or rent property in Malta15. In Cyprus 
and Malta, additional investments for family members are required. 

Various  investment  options  can  be  observed  among  the  three  Member  States  operating 
investor  citizenship  schemes:  capital  investment16;  investment  in  immovable  property17; 
investment in government bonds18; and one-off contributions to the State budget19. In addition 
to the investment requirement, applicants must also pay non-refundable administrative fees as 

10   Countries  where  the  legislation  explicitly  equates  “national  interest”  with  the  economic  or  commercial 
interest  of  the  state  are  Austria,  Bulgaria,  Slovenia  and  Slovakia.    For  details,  see  Study  Overview,  ibid, 
note 4. 

11   For details of these schemes see the Study, ibid, note 4. 
12   See J. Dzankic, The pros and cons of ius pecuniae: investor citizenship in comparative perspective, Robert 

13  

Schuman Centre for Advanced Studies, EUDO Observatory, Issue 14. 
In  Bulgaria,  on  15  February  2018  a  working  group  was  set  up  by  the  Minister  of  Justice  to  draft 
amendments to the Bulgarian Citizenship Act, including to the investor citizenship scheme which Bulgaria 
is considering abolishing in the future. 

14   Details of the differences between the fast-track and ordinary investor scheme in Bulgaria are set out in the 

Staff Working Document.  

15   Regulation  7(5)  of  LN  47/2014  requires  that  the  main  applicant  must  acquire  and  hold  a  residential 
immovable property in Malta having a minimum value of EUR 350,000; or (b) take on lease a residential 
immovable property for a minimum annual rent of EUR 16,000. 

16   Under  the  capital  model,  the  requirement  is  to  invest  a  definite  sum  either  in  (i)  a  company  (Bulgaria, 
Cyprus) or (ii) credit or financial institutions instruments such as investment funds or trust funds (Bulgaria, 
Cyprus, Malta).  

17   This  model  requires  buying  or  renting  a  real  estate  property  of  a  definite  value  (Cyprus,  Malta).  More 

details are included in the Staff Working Document. 

18   Bonds are purchased from the governments by the investors (Bulgaria, Malta).  
19   Maltese legislation requires a “contribution” be paid to the Maltese government, which is deposited in the 

National Development Funds. 

3 

 
 
 
 
 
 
 
                                                           
part  of  the  application  process.  Cyprus  and  Malta  have  significantly  higher  fees  than 
Bulgaria20. 

2.3. Residence or other required links to the Member State 

In  the  three  Member  States  concerned,  applicants  are  issued  with  a  residence  permit  at  the 
beginning of the procedure to apply for citizenship. Merely holding a residence permit for the 
required  timeframe  is  sufficient  to  qualify  for  the  scheme.  However,  effective  residence, 
meaning physical presence for a regular and extended period in the territory of the Member 
State concerned, while holding the permit, is not required. 

In  Malta,  an  “e-Residence”  card  must  have  been  held  for  at  least  12  months  preceding  the 
issuance  of  the  certificate  of  naturalisation.  In  Cyprus,  the  applicant  must  hold  a  residence 
permit for at least 6 months before the naturalisation certificate can be issued. In Bulgaria, the 
applicant  must  hold  a  permanent  residence  permit  for  five  years  (ordinary  scheme)  or  one 
year (fast-track scheme) in order to be able to apply for Bulgarian citizenship.  

This means that applicants can acquire citizenship of Bulgaria, Cyprus or Malta – and hence 
Union citizenship – without ever having resided in practice in the Member State. In Malta, the 
applicant must be physically present to provide biometric data for the e-Residence Card and 
to take the oath of allegiance21. A personal interview with the applicant may also be required 
in  Malta.  In  Bulgaria,  the  applicant’s  presence  is  required  for  the  submission  of  the 
application for citizenship and in Cyprus for the collection of the residence permit. 

The study looked for other factors, besides physical residence, which might arguably create a 
link  between  the  applicant  for  citizenship  and  the  country  concerned.  In  Bulgaria,  the 
applicant must undergo an application interview, but is exempt from the conditions of being 
proficient  in  the  Bulgarian  language  or  from  showing  knowledge  of  Bulgarian  public  life.  
The  Cypriot  authorities  consider  that  the  investment  in  Cyprus  is  itself  a  sufficient  bond 
between the applicant and Cyprus. It is to be noted that, under the relevant Cypriot Council of 
Ministers decision, the residence criterion required under its ordinary naturalisation procedure 
is replaced by an investment criterion22. Applicants for Maltese citizenship in the final stage 
of the naturalisation process  are asked about  their links with Malta. Applicants  are asked to 
have boarding passes showing travel to Malta, and if they have other evidence, for instance, 
donations to charitable organisations in Malta, membership of a local sports, cultural or social 
club  or  pay  income  tax  to  the  Maltese  Inland  Revenue  Department23.  Applicants  are  also 
encouraged to set up a business in Malta. 

21  

20   Bulgaria charges a total of EUR 650 per application; Cyprus charges EUR 7,000 for the main applicant and 
EUR 7,000 for the spouse; Malta charges a total of EUR 8,200 for the main applicant and EUR 5,500 for 
the spouse. 
Information confirmed through consultation with national stakeholder (Identity Malta, competent authority, 
8 March 2018), obtained for the purposes of the Study, ibid, note 4. 

22   Article 111A paragraph (2) of the Civil Registry Laws, published on 30 April 2013. 
23  

See Deliverable B.I of the Study, ibid, note 4; also Office of the Regulator Individual Investor Programme 
(ORiip), Fourth Annual Report on the Individual Investor Programme of the Government of Malta (1st July 
2016 – 30th June 2017), November 2017, p. 32: 
https://oriip.gov.mt/en/Documents/Reports/Annual%20Report%202017.pdf  

4 

 
 
 
 
 
 
 
 
 
                                                           
2.4. Investor citizenship schemes and EU law 

In line with the Treaties, every person who becomes a national of a Member State shall be a 
citizen  of  the  Union24.  Citizenship  of  the  Union  is  destined  to  be  the  fundamental  status  of 
nationals  of  the  Member  States25.  A  decision  by  one  Member  State  to  grant  citizenship  for 
investment  automatically  confers  rights26  in  relation  to  other  Member  States,  in  particular 
free movement rights, the right to vote and stand as a candidate in local and EU elections, the 
right to consular protection if unrepresented outside the EU and rights of access to the internal 
market  to  exercise  economic  activities.  It  is  precisely  the  benefits  of  Union  citizenship, 
notably free movement rights, that are often advertised as the main attractive features of such 
schemes. 

The Court of Justice of the EU has held, in what is now settled case-law, that, while it is for 
each Member State to lay down the conditions for the acquisition and loss of nationality, they 
must do so having due regard to Union law27. Having due regard to EU law means taking into 
account  all  rules  forming  part  of  the  Union  legal  order  and  includes  having  due  regard  to 
norms and customs under international law as such norms and customs form part of EU law28.    

The  Nottebohm  case  of  the  International  Court  of  Justice  establishes  that,  for  nationality 
acquired  through  naturalisation  to  be  recognised  in  the  international  arena,  it  should  be 
granted  on  the  basis  of  a  genuine  connection  between  the  individual  and  the  State  in 
question29.  The  “bond  of  nationality”  is  traditionally  based  either  on  a  genuine  connection 
with  the  people  of  the  country  (by  descent,  origin  or  marriage)  or  on  a  genuine  connection 
with the country, established either by birth in the country or by effective  prior residence in 
the  country  for  a  meaningful  duration.  Other  elements  may  be  required  to  attest  to  the 
existence  of  a  genuine  bond  with  the  country,  such  as  knowledge  of  a  national  language 
and/or  of  the  culture  of  the  country,  links  with  the  community.  The  existence  of  these 
requirements  in  Member  State  nationality  regimes  confirms  that  Member  States  generally 
regard the establishment of a genuine link as a necessary condition for accepting third-country 
nationals into their societies as citizens.   

Such  a  common  understanding  of  the  bond  of  nationality  also  lies  at  the  basis  of  Member 
States' acceptance that Union citizenship and the rights entailed by it under the Treaty on the 
Functioning  of  the  European  Union  (TFEU)  would  accrue  automatically  to  any  person 
becoming one of their citizens. 

24   Article 9 TEU and Article 20(1) TFEU. 
25 
26   See Article 20(2) TFEU. 
27  

Judgment of 20 September 2001, Grzelczyk, C-184/99, EU:C:2001:458, paragraph 31. 

Judgment  of  7  July  1992,  Micheletti  and  Others  v  Delegación  del  Gobierno  en  Cantabria,  C-369/90, 
EU:C:1992:295,  paragraph  10;  Judgment  of  11  November  1999,  Belgian  State  v  Mesbah,  C-179/98, 
EU:C:1999:549, paragraph 29; Judgment of 20 February 2001, Kaur, C-192/99, EU:C:2001:106, paragraph 
19; Judgment of 19 October 2004, Zhu and Chen, C-200/02, EU:C:2004:639, paragraph 37; Judgment of 2 
March  2010,  Rottmann,  C-135/08,  EU:C:2010:104,  paragraph  39;  see  also  Case  C-221/17  Tjebbes, 
pending. 
See  Opinion  of  Advocate-General  Maduro  in  Case  C-135/08  Rottmann,  paragraphs  28-29;  as  regards 
impact of international law on EU law, see: Judgment of 14 May 1974, 3, Nold KG v Commission, Case 4-
73, EU:C:1974:51; Judgment of 24 November 1992, Anklagemindigheden v Poulsen and Diva Navigation, 
C-286/90,  EU:C:1992:453,  paragraphs 9  and  10,  and  Judgment  of  16  June  1998,  Racke  v  Hauptzollamt 
Mainz, C-162/96, EU:C:1998:293, paragraphs 45 and 46. 
Judgment  of  the  International  Court  of  Justice  of  6  April  1955,  Nottebohm,  I.C.J.  Reports  1955,  p.  4, 
available at https://www.icj-cij.org/files/case-related/18/018-19550406-JUD-01-00-EN.pdf    

28  

29  

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Granting  naturalisation  based  on  a  monetary  payment  alone,  without  any  further  condition 
attesting to the existence of a genuine link with the awarding Member State and/or its citizens 
departs  from  the  traditional  ways  of  granting  nationality  in  the  Member  States  and  affects 
citizenship of the Union.  

Since  under  Article  20  TFEU,  citizenship  of  the  Union  is  an  automatic  consequence  of 
holding  nationality  of  a  Member  State  and  a  host  Member  State  cannot  limit  the  rights  of 
naturalised Union citizens on  grounds that they  acquired the nationality  of another Member 
State without any link with that awarding Member State30, each Member State needs to ensure 
that nationality is not awarded absent any genuine link to the country or its citizens31.  

The Commission has discussed with the Maltese and Cypriot authorities the inclusion of an 
effective  residence  criterion  in  their  investor  citizenship  scheme  legislation32.  As  a  result, 
Malta  in  2014  introduced  a  requirement  for  “proof  of  residence”  for  twelve  months  into  its 
legislation33.  In  practice,  this  requirement  is  considered  fulfilled  if  the  applicant  obtains  a 
residence  permit  to  reside  in  Malta,  even  without  physical  residence,  provides  boarding 
passes, and possibly evidence of, for example, donations to charitable organisations in Malta, 
membership of local sports clubs or payment of income tax to Malta.  Cyprus also changed its 
legislation in 2016 to require applicants under its investor citizenship scheme and their family 
members to hold residence permits34. The Commission will continue monitoring compliance 
with Union law. 

3.  Investor Residence Schemes in the EU 

3.1. Context 

While some investor residence schemes were initiated in the early 2000s, the financial crisis 
starting  in  2007  led  more  Member  States  to  adopt  these  schemes,  or  revive  previous  ones. 

30   See, in relation to freedom of establishment, the clear statement of the Court in Case C-369/90, Micheletti, 
paragraph 10: “Under international law, it is for each Member State, having due regard to Community law, 
to lay down the conditions for the acquisition and loss of nationality. However, it is not permissible for the 
legislation of a Member State to restrict the effects of the grant of the nationality of another Member State 
by imposing an additional condition  for recognition of that nationality  with a view  to the exercise of the 
fundamental  freedoms  provided  for  in  the  Treaty.”;  see  also  Case  C-165/16,  Lounes,  paragraph  55:  “A 
Member State cannot restrict the effects that follow from holding the nationality of another Member State, 
in  particular  the  rights  which  are  attendant  thereon  under  EU  law  and  which  are  triggered  by  a  citizen 
exercising his freedom of movement.”. 

31   The  principle  of  sincere  cooperation  with  other  Member  States  and  the  Union  laid  down  by  Article  4(3) 
TEU, obliges Member States to refrain from measures that could jeopardise the attainment of the Union’s 
objectives. 

32   See  the  Joint  Press  Statement  of  29  January  2014  issued  by  the  European  Commission  and  the  Maltese 
Authorities,  http://europa.eu/rapid/press-release_MEMO-14-70_en.htm.  Several  exchanges  took  place 
between the Maltese and Cypriot authorities, respectively. 

33   Regulation 7(12) of LN 47/2014 (the Individual Investor Programme of the Republic of Malta Regulations) 
requires proof that the main applicant has been a resident of Malta for at least 12 months preceding the day 
of  the  issuing  of  the  certificate  of  naturalisation.  The  term  “proof  of  residence”  has  not  however  been 
further defined.  See the Study, ibid, note 4. 
34   Council of Ministers Decision No 834 of 13.9.2016 

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This trend has continued over the past 10 years and these schemes exist to date in 20 Member 
States35.  

Their features vary greatly in particular as regards the investment to be made, both in nature 
and  in  amount.    Five  types  of  investment  options  can  be  observed:  capital  investment36, 
investment  in  immovable  property37,  investment  in  Government  bonds38,  donation  or 
endowment of an activity contributing to the public good39, and one-time contributions to the 
State budget40. These options are not  mutually  exclusive, some Member States allowing  for 
different types of investment and their combination.  

In terms of amount, the scale ranges from a very low investment (below EUR 100,00041) to a 
very high investment (over EUR 5 million42).  

In addition to these, a non-financial investment such as the creation of jobs or the contribution 
to the economy may be required43. 

Procedures differ greatly as well as the conditions linked to physical presence in the Member 
State granting residence rights44.  

35   Bulgaria,  Czechia,  Estonia,  Ireland,  Greece,  Spain,  France,  Croatia,  Italy,  Cyprus,  Latvia,  Lithuania, 
Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia and the United Kingdom. Hungary 
suspended  their  scheme  in  April  2017.  For  more  details  on  the  identification  of  these  schemes,  see  the 
accompanying Staff Working Document. 

36   Under the capital model, the requirement is to invest a definite sum either (i) in a company irrespective of 
the role that the investor has in the company or title under which the investor participates in the company – 
owner, shareholder, manager  (Bulgaria, Estonia, Ireland, Spain, France, Croatia, Italy, Latvia, Lithuania, 
Netherlands,  Portugal,  Romania,  Slovakia,  United  Kingdom)  or  (ii)  in  credit  or  financial  institutions 
instruments  such  as  investment  funds  or  trust  funds  (Bulgaria,  Estonia,  Ireland,  Spain,  Cyprus,  Latvia, 
Netherlands, Portugal). 

37   This  model  requires  to  buy,  or  to  rent,  a  real  estate  property  of  a  definite  value  (Ireland,  Greece,  Spain, 
Cyprus, Latvia, Malta, Portugal). Renting is possible in Malta and Greece. More details are included in the 
Staff Working Document. 

38   Bonds  of  a  definite  value  are  purchased  to  the  Government  by  the  investors.  These  bonds  imply  a 
repayment on a maturity date, with a definite interest rate (Bulgaria, Spain, Italy, Latvia, Hungary, Malta 
and United Kingdom). 

39   Capital is invested in a public project benefiting the arts, sports, health, culture or education philanthropic 

donations artistic and research activities (Ireland, Italy, Portugal). 

40   This  requires  paying  directly  a  certain  amount  of  money  to  the  State  (Latvia,  Malta)  and  does  not  entail 

repayment, contrary to bonds. 

41   The minimum is HRK 100,000 (approximately EUR 13,500) in Croatia. In certain cases, such as in Greece 
for the  “strategic investment” option, the  amount is not  specified by law and left to the discretion of the 
authorities. 
Slovakia and Luxembourg. 

42  
43   Creation of jobs in Bulgaria, Czechia, Spain, France, Croatia, Latvia, Netherlands, Portugal, Romania and 
contribution  to  the  economy  in  Bulgaria,  Czechia,  Greece,  Spain.  More  precisely,  the  criterion  of 
“contribution to the economy” has different forms: it must be “specific to an economically disadvantaged 
region” in Bulgaria; the investment must be made “in the interests of the country or a region” in the Czech 
Republic; the Greek legislation provides for a  “strategic investment”  without defining the concept; Spain 
requires a business project of “general interest”. 

44   See the Staff Working Document for an overview of these schemes. 

7 

 
 
 
 
 
 
 
                                                           
3.2. Investor residence schemes and EU law on legal migration 

EU law regulates the entry conditions for specific categories of third-country nationals45. The 
granting of a residence permit to third-country investors is currently not regulated at EU level 
and remains governed by national law46.  

However, a residence permit granted on the basis of an investor residence scheme set up in 
one  Member  State  also  impacts  on  other  Member  States.  A  valid  residence  permit  allows  a 
third-country national to travel freely within the Schengen area47 for 90 days in any 180-day 
period. It also allows access for short stays to Bulgaria, Croatia, Cyprus and Romania based 
on  the  unilateral  recognition  of  residence  permits  by  these  Member  States.  It  is  therefore 
essential  that  all  relevant  checks,  particularly  security  checks,  are  carried  out  before  the 
issuance of such a permit (see Section 4 below).  

Moreover, there may be an impact on the acquisition of the EU Long-Term Residence status, 
which  is  conferred  on  third-country  nationals  who  have  been  legally  and  continuously 
residing  in  an  EU  Member  State  for  five  years48.  This  status  gives  third-country  nationals 
certain rights49 on the basis of the duration of their residence in a Member State and the fact 
that they have put down roots in the Member State concerned. Continuity of presence in the 
host State is an essential aspect and condition underlying this status50. In contrast, the study 
found that in several Member States51 the residence requirement under the investor residence 
schemes does not require continuous physical residence. In some of them, the law expressly 

45   The EU legal migration policy has harmonised the entry and residence conditions of certain categories of 
third-country  nationals  and  has  granted  them  rights  to  ensure  fair  treatment  with  EU  nationals.  See:  the 
Family Reunification Directive (2003/86/EC); the Long-Term Residents Directive (2003/109/EC); the  EU 
“Blue  Card”  Directive  covering  highly  skilled  workers  (2009/50/EC);  the  Seasonal  Workers  Directive 
(2014/36/EU);  the  Intra-Corporate  Transferees  Directive  (2014/66/EU);  Directive  (EU)  2016/801  on 
Research, study, training, voluntary service, pupil exchange schemes or educational projects and au pairing 
The  Single  Permit  Directive  (2011/98/EU)  does  not  cover  a  category  as  such  but  is  a 
(recast). 
framework  directive  establishing  EU  rules  for  a  single  application/permit  and  equal  treatment  provisions 
for third-country employees. Note that the scope of this Directive excludes self-employment. To be noted 
that the United Kingdom, Ireland and Denmark – based on Protocols 21 and 22 annexed to the Treaties – 
are not bound by the legal migration acquis. 

46   This is one of the items currently examined in the context of the analysis undertaken by an evaluation of 
the EU legislation on legal migration - Evaluation according to European Commission's regulatory fitness 
and  performance 
(REFIT)  programme:  https://ec.europa.eu/home-affairs/what-we-do/policies/legal-
migration/fitness-check_en  

47   The Schengen area, i.e. the area without internal border controls, currently includes 26 countries, of which 
22  Member  States:  Belgium,  Czechia,  Denmark,  Germany,  Estonia,  Greece,  Spain,  France,  Italy,  Latvia, 
Lithuania,  Luxembourg,  Hungary,  Malta,  Netherlands,  Austria,  Poland,  Portugal,  Slovenia,  Slovakia, 
Finland and Sweden) and four associated countries (Switzerland, Norway, Iceland and Liechtenstein). 
48   Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who 

are long-term residents (OJ L 16, 23.1.2004, p. 44). 

49   The rights granted under this status are procedural rights, equal treatment rights in a number of areas (e.g. 
access to employment and self-employment, education and vocational training, recognition of professional 
diplomas, social security and social assistance, tax benefits, access to goods and services and freedom of 
association) and a facilitation of  the right to move and reside (for more than three months) in a Member 
State other than the one which granted the long-term residence status, provided  that  certain conditions are 
met. 

50  Under  the  Directive,  the  continuity  of  presence  is  interrupted  by  absences  of  more  than  six  months 

consecutive absence or an overall absence exceeding ten months within five years. 

51   Bulgaria,  Czechia,  Estonia,  Ireland,  Greece,  France,  Latvia,  Lithuania,  Luxembourg,  Hungary,  Malta, 

Poland, Romania, Slovakia, United Kingdom. 

8 

 
 
 
 
 
                                                           
only  requires  the  investors’  presence  for  a  very  limited  time  (e.g.  seven  days  in  a  year  in 
Portugal, or just on the day of application for Malta, Greece and Bulgaria).   

As  effective  residence  under  investor  residence  schemes  may  be  either  directly  excluded, 
limited  or  not  prescribed  at  all  under  these  national  laws,  the  actual  monitoring  of  the 
residence condition appears challenging.  

This means that there could be situations where, in the absence of an effective monitoring of 
continuity of residence, investors considered to be residing in a Member State on the basis of 
a national permit for five years could acquire EU Long Term Resident status and subsequent 
rights,  in  particular  mobility  rights,  without  fulfilling  the  actual  condition  of  continuity  of 
residence  for  five  years.  This  would  not  be  compliant  with  the  Long-Term  Residence 
Directive.  The  Commission  will  monitor  compliance  by  Member  States  to  ensure  that  they 
implement the condition related to the continuity of residence under the Directive correctly.  

Additionally, holding a  national  investor permit  allows for  family reunification rights  under 
the Family Reunification Directive52, provided applicants meet the conditions. In this context, 
it  is  worth  mentioning  that  in  most  Member  States  family  members  of  investors  are  not 
subject to enhanced due diligence, which could entail security risks53. 

3.3. The link between investor residence schemes and naturalisation procedures 

Investor  residence  schemes  may  also  impact  on  the  acquisition  of  citizenship.    A  residence 
permit  acquired  by  investment  can  be  used  under  several54  Member  States'  ordinary 
naturalisation  procedures  to  establish  the  genuine  connection  with  the  country  and  waive 
other  requirements.    In  other  words,  a  residence  permit  obtained  by  investment  –  and 
sometimes without requiring any physical presence – may provide fast-track access or a link 
to  permanent  residence  and then citizenship55.  It  is  also  the case that in  Member States that 
have  both  investor  citizenship  and  residence  schemes,  the  investment  required  for  the 
residence  scheme  may  be  taken  into  consideration  to  qualify  for  the  investor  citizenship 
scheme56. 

4. Areas of concern 

Third-country nationals may invest in a Member State for legitimate reasons57, but may also 
be pursuing illegitimate ends, such as evading law enforcement investigation and prosecution 
in  their  home  country  and  protecting  their  assets  from  the  related  freezing  and  confiscation 
measures.  Hence  investor  citizenship  and  residence  schemes  create  a  range  of  risks  for 

52   Council  Directive  2003/86/EC  of  22  September  2003  on  the  right  to  family  reunification  (OJ  L  251, 

3.10.2003).  

53   See “European Getaway: Inside the Murky World of Golden Visas”, Transparency International, October 

2018, p. 6 and 37. 

54   Bulgaria, Czechia, Estonia, Ireland, Greece, France, Latvia, Lithuania, Hungary, Malta, Poland, Romania, 

Slovakia, United Kingdom.  
See in particular Study Overview, section IV.2, ibid, note 4. 

55  
56    This is the case for Cyprus and Malta. See Study, ibid, note 4, Deliverable C for both Member States. 
57   Under  Article  63  TFEU,  the  principle  of  free  movement  of  capital  applies  between  Member  States  and 
between  Member  States  and  third  countries.  Article  65  permits  the  free  movement  of  capital  to  be 
restricted, in particular for reasons linked to public policy, public security or taxation. 

9 

 
 
 
 
 
 
 
 
 
 
                                                           
Member  States  and  for  the  Union  as  a  whole:  in  particular,  risks  to  security,  including  the 
possibility  of  infiltration  of  non-EU  organised  crime  groups,  as  well  as  risks  of  money 
laundering, corruption and tax evasion.  Such risks are exacerbated by the cross-border rights 
associated with citizenship of the Union or residence in a Member State. 

There  is  also  a  concern  around  lack  of  transparency  and  governance  of  the  schemes.  Both 
citizenship  and  residence  schemes  have  come  under  close  public  scrutiny  following 
allegations  of  abuse  and  corruption  linked  to  them  in  some  Member  States58.    Enhancing 
transparency  and  putting  in  place  adequate  risk  management,  control  systems  and  oversight 
mechanisms could help mitigate as far as possible some of these concerns. 

4.1. Risks posed by Investor citizenship and residence schemes  

4.1.1. Security  

Over the past years, the Commission has presented different initiatives aimed at strengthening 
the security of the EU and creating a Security Union59. The three main centralised information 
systems developed by the EU and used for security checks are (i) the Schengen Information 
System  (SIS)60  with  a  broad  spectrum  of  alerts  on  persons  and  objects,  (ii)  the  Visa 
Information System (VIS)61 with data on short-stay visas, and (iii) the Eurodac system62 with 
fingerprint  data  of  asylum  applicants  and  third-country  nationals  who  have  crossed  the 
external borders irregularly. These three systems are complementary, and – with the exception 
of SIS – primarily targeted at third-country nationals. 

In  addition,  new  IT  systems  like  the  Entry/Exit  System  (EES)63  and  the  Electronic  Travel 
Information and Authorisation System (ETIAS)64 are being established and the reinforcement 
of the VIS65 and the extension of the European Criminal Records Information System to Third 

58   A detailed account of reports of abuse or misuse of the schemes is set out in the Study Overview, ibid, note 

4, pp. 23 & 75.  

59   See  for  examples  the  measures  adopted  by  the  Commission  on  17  April  2018,  including  the  Report  on  
progress  towards  an  effective  and  genuine  Security  Union,  http://europa.eu/rapid/press-release_IP-18-
3301_en.htm  
https://ec.europa.eu/home-affairs/what-we-do/policies/borders-and-visas/schengen-information-system_en  
https://ec.europa.eu/home-affairs/what-we-do/policies/borders-and-visas/visa-information-system_en  
https://ec.europa.eu/home-affairs/what-we-do/policies/asylum/identification-of-applicants_en  

60  
61  
62  
63   Regulation  of  the  European  Parliament  and  of  the  Council  establishing  an  Entry/Exit  System  (EES)  to 
register entry and exit data and refusal of entry data of third-country nationals crossing the external borders 
of the Member States and determining the conditions for access to the EES for law enforcement purposes, 
and amending the Convention implementing the Schengen Agreement and Regulations (EC) No 767/2008 
and  (EU)  No  1077/2011  and  Regulation  of  the  European  Parliament  and  of  the  Council  amending 
Regulation (EU) 2016/399 as regards the use of the Entry/Exit System. 

64   Regulation of the European Parliament and of the Council establishing a European Travel Information and 
Authorisation System (ETIAS) and amending Regulations (EU) No 1077/2011, (EU) No 515/2014, (EU) 
2016/399, (EU) 2016/1624 and (EU) 2017/2226. 

65   Proposal for a  Regulation of  the European Parliament and  of the  Council amending  Regulation (EC) No 
767/2008,  Regulation  (EC)  No  810/2009,  Regulation  (EU)  2017/2226,  Regulation  (EU)  2016/399, 
Regulation  XX/2018  [Interoperability  Regulation],  and  Decision  2004/512/EC  and  repealing  Council 
Decision 2008/633/JHA (COM/2018/302 final). On 19 December 2018, the Council adopted its negotiation 
mandate. The European Parliament is in the process of adopting its mandate. 

10 

 
 
 
 
 
 
 
                                                           
Country Nationals (ECRIS-TCN)66 have been proposed by the Commission. The Commission 
has also proposed to make all information systems interoperable67.  

Practices regarding investor citizenship and residence schemes can undermine these efforts by 
allowing  third-country  nationals  to  avoid  some  of  these  checks,  with  implications  for  other 
Member States and the EU as a whole. It is therefore important that any investor citizenship 
and  residence  schemes  are  organised  in  such  a  way  as  to  prevent  such  security  risks.  The 
absence of internal border checks within the Schengen area makes it particularly important to 
ensure that the commonly agreed and adequate security preventive checks are implemented.  

Security and investor citizenship schemes in the Member States 

The  study  was  able  to  identify  only  very  limited  legislation  or  guidelines  concerning  the 
actual practices in relation to investor citizenship.   

In Malta, checks based on police records from the Maltese police and/or from the competent 
authorities  in  the  country  of  origin  are  made  on  the  criminal  background  of  the  main 
applicants  and  their  dependants  over  12  years  of  age.  The  requirement  to  prove  a  clean 
criminal record may be waived in exceptional circumstances, where the competent authority 
considers  such  a  certificate  impossible  to  obtain68.  The  Maltese  authorities  consult 
INTERPOL  and  Europol  databases  as  part  of  a  four-tier  due  diligence  process  covering69: 
know-your-client  due  diligence  checks  by  the  agent  and  the  Malta  Individual  Investor 
Programme  Agency  (see  section  on  anti-money  laundering  checks  below);  clearance  by  the 
police authorities; a check for completeness and correctness of the application and verification 
of  the  documents  submitted;  and  an  outsourced  due  diligence  check  whereby  the  Malta 
Individual Investor Programme Agency to present evidence that they have commissions two 
reports from international companies on every IIP application70. Malta excludes nationals of 
certain  countries71  and  persons  subject  to  travel  bans  imposed  by  the  United  States  from 
applying for citizenship under its scheme, whereas applicants showing on any other sanctions 
or  watch  lists  must  be  reported  by  agents  to  the  Malta  Individual  Investor  Programme 
Agency72. 

66   Proposal for a Regulation of the European Parliament and of the Council establishing a centralised system 
for  the  identification  of  Member  States  holding  conviction  information  on  third  country  nationals  and 
stateless  persons  (TCN)  to  supplement  and  support  the  European  Criminal  Records  Information  System 
(ECRIS-TCN system) and amending Regulation (EU) No 1077/2011, COM/2017/0344 final  - 2017/0144 
(COD). The negotiations are at an advanced stage in the trilogue process. 

67   Proposal for a Regulation of the European Parliament and of the Council on establishing a framework for 
interoperability  between  EU  information  systems  (borders  and  visa)  and  amending  Council  Decision 
2004/512/EC, Regulation (EC) No 767/2008, Council  Decision 2008/633/JHA, Regulation (EU) 016/399 
and Regulation (EU) 2017/2226.  

68   For  instance,  if  the  competent  authority  in  the  country  of  origin  would  not  issue  certificates  for  short  or 
intermittent  stays.  In  those  cases,  a  sworn  affidavit  from  the  applicant  and  any  dependants,  declaring  a 
clean criminal record, will suffice. 

69   Further details available at: https://iip.gov.mt/due-diligence/  
70  

Information gathered through consultation with national stakeholder (Identity Malta, competent authority, 8 
March 2018) for the purposes of the Study, ibid, note 4. This is based on Regulation 7(2) of LN 47/2014 
that states that the ‘due diligence checks shall be of a four-tier nature’ without further specification. 
71   Nationals  or  residents  of  Afghanistan,  Iran  and  the  Democratic  People's  Republic  of  Korea,  or  with 

significant ties to these countries, are excluded from the Maltese IIP.  

72   Maltese Individual Investor Programme Handbook 2018. Also excluded are persons who have been denied 

a visa by a country with whom Malta has a visa-free travel agreement. 

11 

 
 
 
 
 
 
 
                                                           
In Cyprus, applicants must submit a criminal record report from their country of origin and 
residence (if different), which must be dated no more than 90 days prior to submission. The 
Cypriot police also undertake a search in both the Europol and INTERPOL databases73. The 
investor’s name and family members’ names must not be included in the list of persons whose 
assets,  within  the  boundaries  of  the  European  Union,  have  been  frozen  as  the  result  of 
sanctions.    In  addition,  according  to  new  rules  introduced  in  July  201874,  applicants,  who 
submit their claims via a service provider are required to submit a due diligence report issued 
through an internationally accepted database (for example World-Check75, Lexis Diligence76, 
Regulatory  DataCorp  Inc.77  etc.).    In  cases  where  there  are  concerns  regarding  national 
security,  the  application  is  additionally  evaluated  by  the  Central  Intelligence  Agency  of 
Cyprus. Cyprus is not connected to the Schengen Information System.  

In  Bulgaria,  legislation  requires  the  applicant  to  present  a  clean  criminal  record  certificate 
and  a  document  showing  that  no  criminal  proceedings  are  pending  or  ongoing  against  the 
applicant.  The Council for Citizenship gives an opinion on citizenship requests, following a 
written statement by the Ministry of the Interior and the State Agency for National Security 
(SANS).  The  latter  carries  out  checks  on  all  applicants  for  Bulgarian  citizenship  (including 
those applying through investor schemes) within the scope of its competence, such as police 
intelligence or police record databases. No information was available on the Bulgarian policy 
concerning persons subject to EU restrictive measures, nor whether the authorities use SIS to 
check applicants. 

The study has highlighted a significant number of grey zones concerning security checks. One 
problem relates to the discretion of Member States regarding citizenship applications. In fact, 
the  study  shows  that  authorities  can  admit  requests,  even  when  the  applicants  do  not  meet 
certain security requirements78. Moroever, applications do not need to be submitted in person 
and can be submitted by agents, which is the case in Malta and Cyprus.  

Moreover,  Member  States  currently  do  not  consult  each  other  on  applicants  for  investor 
citizenship.  In  comparison,  prior  consultation  on  security  grounds  between  Member  States 
exists  for  applicants  for  short-stay  visas  from  certain79  third  countries80.  This  is  despite  the 
fact that citizenship entails wide-ranging rights, including residence and the right to vote and 
stand in EU and local elections, awarded for life rather than a mere short-term visiting right. 
Another problem relates to the fact that a lack of coordination and commonly agreed criteria 
leaves  room  for  “shopping  around”  for  the  most  lenient  conditions.  An  applicant  refused 

73  
74  

Information provided by the Ministry of Interior Officer on 29 May 2018. 
http://www.moi.gov.cy/moi/moi.nsf/all/07F0364738A716E4C22582C40023E6C0/$file/CYPRUS% 
20INVESTMENT%20PROGRAMME_13.9.2016.pdf?openelement  
https://risk.thomsonreuters.com/en/products/world-check-know-your-customer.html  
https://www.lexisnexis.com/en-us/products/lexis-diligence.page  
https://rdc.com/  

75  
76  
77  
78   For example, in Malta the requirement to prove a clean criminal record, not to be the subject of a criminal 
investigation  and  not  to  be  a  potential  national  security  threat  to  Malta  can  be  waived  in  exceptional 
circumstances – Overview Study, section II.1 (checks), ibid, note 4. 
https://ec.europa.eu/home-affairs/sites/homeaffairs/files/e-library/documents/policies/borders-and-
visas/visa-policy/docs/prior_consultation_en.pdf  

80   Provided in Article 22 of Regulation (EC) No 810/2009 of the European  Parliament and of the Council of 
13 July 2009 establishing a Community Code on Visas (Visa Code) (OJ L 243, 15.9.2009, p. 1) and carried 
out  through  the  VISMail  mechanism  provided  in  Article  16(2)  of  Regulation  (EC)  No  767/2008  of  the 
European Parliament and of the Council of 9 July 2008 concerning the Visa Information System (VIS) and 
the exchange of data between Member States on short-stay visas (VIS Regulation). 

79  

12 

 
 
 
 
 
                                                           
citizenship in one territory can make a fresh request in another Member State. Member States 
currently do not inform each other of rejected applicants, not even of those rejected for posing 
a security risk. 

Security and investor residence schemes in the EU 

In  contrast  with  procedures  related  to  the  acquisition  of  citizenship,  some  obligations  exist 
under EU law in terms of security checks to be carried out prior to the issuance of visa or a 
residence permit to foreign investors, in order to ensure they are not a threat for public policy 
and  public  security,  including  of  other  Member  States.  Such  checks  are  based  on  the 
Schengen acquis and are compulsory for those Member States that are bound by this acquis. 
In  particular,  pursuant  to  Article  25(1)  of  the  Convention  implementing  the  Schengen 
Agreement, a Member State considering issuing a residence permit must systematically carry 
out  a  search  in  the  Schengen  Information  System  (SIS)81.  Where  a  Member  State  considers 
issuing a residence permit to a person for whom an alert has been issued for the purposes of 
refusing entry, it must first consult the Member State issuing the alert and has to take account 
of its interests.  

While the study found that in the national laws of the Member States concerned, the check of 
public  policy  and  public  security  is  generally  included  as  a  ground  for  refusal  (or  non- 
renewal) of the permit, it also identified both a lack of available information and an important 
level  of  discretion  in  the  way  Member  States  approach  security  concerns82.  This  has  led  to 
some  problematic  cases,  as  highlighted  also  by  other  reports83.  In  that  context,  the 
Commission  has  already  proposed  to  upgrade  the  Visa  Information  System,  which  –  in 
conjunction with the proposal for the Interoperability Regulation84 – will introduce mandatory 
searches in  relevant  EU and international  security  databases85 at  the external  borders for  all 
issued  residence  permits  and  long-term  visas.  Information  on  residence  permit  applications, 
which were refused by a Member State on security grounds, would also be stored and checks 
can be subsequently made against it. 

81   The SIS is currently in operation in 26 EU Member States (only Ireland and Cyprus are not  yet connected 
to  SIS),  though  with  different  access  rights,  and  four  Schengen  Associated  Countries  (Switzerland, 
Norway,  Liechtenstein  and  Iceland).  While  Bulgaria  and  Romania  are  not  yet  part  of  the  area  without 
internal  border  checks  (the  'Schengen  area'),  they  have  had  full  access  to  the  SIS  since  August  2018. 
Croatia,  which  is  also  not  part  of  the  Schengen  area,  has  still  some  restrictions  regarding  its  use  of 
Schengen-wide SIS alerts for the purposes of refusing entry into or stay in the Schengen area. The United 
Kingdom  operates  the  SIS  but,  as  it  has  chosen  not  to  join  the  Schengen  area,  it  cannot  issue  or  access 
Schengen-wide alerts for refusing entry or stay into the Schengen area. Ireland is carrying out preparatory 
activities to connect to the SIS, but, as is the case for the United Kingdom, it  is not part of the Schengen 
area and it will not be able to issue or access Schengen-wide alerts for refusing entry or stay. Cyprus is not 
yet connected to the SIS. 

82   Security checks relate generally to the background of the applicants and the origin of the funds. Authorities 
in  charge  of  the  management  of  the  investor  residence  schemes  rely  on  police  forces  and  intelligence 
services  to  check  the  background  of  the  applicants  (Bulgaria,  Estonia,  Spain,  Croatia,  Cyprus,  Hungary, 
Portugal, Slovakia) and on authorities in charge of health and employment policies and on the competent 
authorities  for  the  civil  status  of  the  applicant.  These  checks  relate  mainly  to  the  criminal  record  of  the 
applicants and the veracity of the document provided by the applicants. 

83   See Transparency International, ibid, note 5, p. 37 and Overview Study, ibid, note 4, p. 75. 
84   See note 68.  
85   Namely in the VIS, SIS, EES, ETIAS, ECRIS, as well as Europol and INTERPOL databases. 

13 

 
 
  
 
 
 
                                                           
Ex-post checks exist to verify that the conditions under which residence rights were granted 
still  exist  during  the  validity  of  the  permit,  but  only  in  a  limited  number  of  cases86.  They 
consist of verifying that the holder of the permit still fulfils the conditions of the stay during 
the validity of the permit (for more details, see the accompanying Staff Working Document). 
However,  as  there  may  be  no  requirement  for  permit  holders  to  actually  reside  in  the  host 
State (or residence may be required only for a very limited time as indicated above), it may be 
difficult to verify if permit holders still fulfil the conditions for the residence permit. 

The Commission will monitor compliance by Member States to ensure that they carry out all 
obligatory  existing  border  and  security  checks  systematically  and  effectively,  in  order  to 
ensure that investor residence schemes do not pose a threat to the security of other Member 
States and the EU. 

4.1.2. Money laundering 

Regarding checks on the origin of funds, all EU Member States except for one87 have notified 
transposition measures for the fourth Anti-money Laundering Directive88. The Commission is 
currently  carrying  out  a  horizontal  check  of  the  completeness  of  the  notified  national 
legislation  transposing  the  fourth  Anti-money  Laundering  Directive  and  is  pursuing  non-
communication  infringement  proceedings  against  those  Member  States  where  some  gaps  in 
transposition have been identified. Under this legislation, the obliged entities (inter alia, credit 
and  financial  institutions,  notaries  and  lawyers,  and  real  estate  agents)89  must  carry  out 
customer  due  diligence  measures90.  Obliged  entities  have  an  obligation  to  report  suspicious 
transactions  to  the  Financial  Intelligence  Unit  in  their  country  and  they  are  prohibited  from 
informing  clients  about  reporting  of  suspicious  transactions.  In  addition,  the  fourth  Anti-
Money Laundering Directive contains a specific additional requirement for obliged entities to 
carry out enhanced due diligence checks on transactions with customers from high-risk third 
countries. 

The  fifth  Anti-Money  Laundering  Directive,  which  entered  into  force  on  9  July  2018  and 
must be transposed by  Member States by 10 January 202091, introduces an amendment  that 
designates as high risk and requires enhanced customer due diligence for, those third-country 
nationals who apply, “for residence rights or citizenship in the Member State in exchange of 
capital  transfers,  purchase  of  property  or  government  bonds,  or  investment  in  corporate 

86   Estonia, Spain, France, Croatia, Latvia, Lithuania. 
87   Except  for  Romania.  Source:  Eur-lex,  ‘National  transposition  measures  communicated  by  the  Member 
https://eur-lex.europa.eu/legal-
2015/849’ 

available 

at 

States 
(EU) 
concerning  Directive 
content/EN/NIM/?uri=celex:32015L0849 

88   Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention 
of  the  use  of  the  financial  system  for  the  purposes  of  money  laundering  or  terrorist  financing,  amending 
Regulation  (EU)  No  648/2012  of  the  European  Parliament  and  of  the  Council,  and  repealing  Directive 
2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (Text 
with EEA relevance), available at: 
https://eur-lex.europa.eu/legal-content/En/TXT/?uri=CELEX%3A32015L0849 

89   Article 2 of Directive (EU) 2015/849. 
90   Articles 10-24 of Directive (EU) 2015/849. 
91   Directive  (EU)  2018/843  of  the  European  Parliament  and  of  the  Council  of  30  May  2018  amending 
Directive (EU) 2015/849 on the prevention of the  use of the  financial system  for the purposes of  money 
laundering  or  terrorist  financing,  and  amending  Directives  2009/138/EC  and  2013/36/EU,  OJ  L  156, 
19.6.2018, p. 43. 

14 

 
 
 
 
 
 
                                                           
entities in that Member Stateˮ92. However, the Directive lays down these obligations only in 
relation to economic operators and does not cover governmental organisations and agencies, 
which are not obliged entities under the Directive.  This means that the authorities responsible 
for investor citizenship and residence schemes are not covered. 

The  study  showed  a  variety  of  practices  by  investor  citizenship  schemes  to  combat  money 
laundering and also pointed to a number of grey areas.  Formally, there is no obligation on the 
bodies  involved  in  carrying  out  the  checks  on  the  origin  of  funds  in  investor  schemes  to 
communicate  to  the  Member  States’  competent  authorities  the  results  of  these  checks. 
However,  in  practice  some  cooperation  exists  in  relation  to  investor  citizenship  schemes. 
Identity  Malta93  confirmed,  for  the  purposes  of  the  study,  that  the  due  diligence  definitions 
and procedures  of the fourth  Anti-money  Laundering Directive  are  followed in  the four-tier 
process of due diligence it uses. The Cypriot legal framework on investor citizenship schemes 
makes  direct  cross-reference  to  the  Cypriot  anti-money  laundering  legislation.  This  requires 
Cypriot  Banks’  compliance  departments  to  implement  due  diligence  measures  to  verify  and 
validate the origin of the funds used in the investment. In Bulgaria, the check on the origin of 
funds  (in  accordance  with  the  Bulgarian  Law  on  Measures  against  Money  Laundering)  is 
carried  out  by  the  Invest  Bulgaria  Agency94.  In  this  procedure  the  applicant  must  provide a 
declaration of the origin of funds in compliance with the anti-money laundering law95. 

Similarly,  there  are  variable  practices  among  Member  States  operating  investor  residence 
schemes to guard against money laundering. While some Member States require all payments 
to  be  made  through  their  national  banks,  which  as  obliged  entities  under  the  fourth  Anti-
Money  Laundering  Directive,  must  apply  the  necessary  customer  due  diligence  checks 
(Cyprus), the study also showed that some legislation does not provide for particular checks 
(Croatia,  Portugal).  In  Hungary,  where  the  scheme  is  currently  suspended,  there  was  no 
obligation  to  actually  transfer  the  money  to  the  Hungarian  territory,  which,  as  a  result, 
excluded  the  funds  from  checks.  In  other  cases,  funds  are  double-checked,  first  through 
evidence submitted by the country of origin of the fund, and then by the competent services in 
the  Member  State  (Ireland).  The  competent  authorities  in  charge  of  those  particular  checks 
vary: it can be the national investment agency (Bulgaria) or a Commission dedicated to anti-
money  laundering  (Spain).  These  entities  can  be  private  or  public  and  include  independent 
professionals. These checks differ as they can consist in validating the documents relating to 
the monies used to make the investment, such as bank transfer receipts, financial statements 
tax  return  report,  purchase  or  lease  contract  from  the  land  or  property  registries,  when  the 
investment  is  immovable  property,  or  they  can  consist  of  a  limited  declaration  of  the 
competent authority. 

As  provided  for  by  new  EU  anti-money  laundering  rules,  Member  States  should  devote 
particular attention to enhanced customer due diligence in the context of investor citizenship 
and residence schemes. Member States should ensure that the application of EU rules on anti-
money  laundering  is  not  circumvented.  This  should  be  ensured  when  funds  are  paid  by 

92   See Article 1, point 44, which adds an additional point into point (1) of Annex III of the fourth Anti-money 

Laundering Directive. 

93    The due diligence checks are currently made by the Malta Individual Investor Programme Agency; at the 

time the interviews for the Study were conducted, the authority in charge was Identity Malta. 

94   The Invest Bulgaria Agency is an executive agency of the Bulgarian Minister of Economy and supports the 

Minister in the application of the state policy in the field of encouragement of foreign investment. 
95   Article 39, paragraph 6 of the Regulations for the Application of the Foreign Nationals in Bulgaria Act. 

15 

 
 
 
 
 
                                                           
investor  citizenship  applicants  and  are  channelled  through  bodies  that  do  not  qualify  as 
obliged entities under the fourth and fifth Anti-Money Laundering Directives. Moreover, the 
bodies involved in carrying out the checks on the origins of the funds in investor citizenship 
and  residence  schemes  should  always  communicate  their  findings  to  the  Member  State 
authorities competent for the processing of applications. Member States could also take into 
account  the potential risks of money laundering  linked to  investor citizenship  and residence 
schemes  in  their  national  risk  assessments  carried  out  according  to  the  EU  anti-money 
laundering rules and take the necessary mitigating measures96. 

In cases where payments are made in  cash directly to  governmental organisations, these are 
not  covered by European anti-money laundering legislation. The rules  for payments in  cash 
are  currently  not  harmonised  throughout  the  EU.  Member  States  therefore  may  lay  down 
certain restrictions for payments in cash as long as these are compatible with other provisions 
of EU law.   

4.1.3. Circumvention of EU rules 

There  is  also  the  possibility  that  the  status  given  by  investor  citizenship  and  residence 
schemes may be used to circumvent EU law.  Investor citizenship schemes in particular may 
provide  a  route  for  third-country  nationals  to  circumvent  certain  nationality  requirements  in 
EU  law.  For  instance,  EU  rules  stipulate  that  an  operating  licence,  i.e.  an  authorisation  to 
provide  air  services,  may  only  be  granted  by  the  competent  (national)  licensing  authorities 
where  Member  States  or  Member  State  nationals  own  more  than  50%  of  the  undertaking 
concerned  and  effectively  control  it97.    The  Commission  has  received  one  complaint  and 
several  enquiries  from  national  licensing  authorities  about  third  country  investors  who  have 
obtained citizenship of the Union in a Member State via an investor citizenship scheme and 
subsequently applied for an airline operating licence.  

4.1.4. Tax evasion 

Another  concern  is  whether  tax  incentives  derived  from  the  use  of  investor  citizenship  and 
residence schemes drive demand for such schemes98. The use of these schemes in itself does 
not  equate  to  tax  evasion,  although  they  may  enable  individuals  to  benefit  from  existing 
privileged  tax  rules.  However,  there  may  be  room  for  abuse  based  on  the  misuse  of  the 
benefits  and  documentation  obtained  through  the  schemes,  which  varies  from  scheme  to 
scheme, i.e. some may facilitate and be used as an instrument in aggressive tax planning and 
evasion. 

The study did  not  look  at  the tax aspects  of such schemes.  The discussions at  both  EU  and 
international levels focus on the impact such schemes may have on the automatic exchange of 
financial  account  information  between  tax  authorities,  implemented  within  the  EU  through 
Council  Directive  2014/107/EU  (first  amendment  to  the  Directive  on  Administrative 
Cooperation)  and  with  third  countries  via  the  Common  Reporting  Standard.  The  first 

96   Malta  carried  out  a  national  money  laundering  risk  assessment  in  2017.  However,  the  potential  risks  of 

money laundering linked to the citizenship scheme were not analyzed. 

97   Regulation (EC) 1008/2008 on common rules for the operation of air services in the Community, OJ L 293, 
31.10.2008,  p.  3;  See  also  the  European  Commission’s  forthcoming  Evaluation  of  Regulation  (EC) 
1008/2008 (to be published in first half of 2019). 

98   See the discussion in the European Parliamentary Research Service study, ibid, note 5, pp. 32-35. 

16 

 
 
 
 
 
 
 
 
                                                           
amendment  to  the  Directive  on  Administrative  Cooperation  and  the  Common  Reporting 
Standard  require  the  relevant  banking  information  to  be  sent  to  all  jurisdictions  of  tax 
residence of the account holder. 

Tax residence can be different from other definitions of residence for non-tax purposes. The 
criteria for residence for tax purposes may vary considerably from jurisdiction to jurisdiction 
and  is  usually  linked  to  the  number  of  days  of  physical  presence  in  a  jurisdiction.  Some 
jurisdictions  also  determine  residency  of  an  individual  by  reference  to  a  variety  of  other 
factors,  such  as  citizenship,  the  ownership  of  a  home  or  availability  of  accommodation, 
family, and financial interests. As such, there are situations where the same individual may be 
deemed a tax resident in more than one jurisdiction. Moreover, being deemed a tax resident in 
a new jurisdiction does not extinguish other tax residence status in other countries. 

However, the documentation issued under some of these schemes may make it very difficult 
for financial institutions to  identify  correctly the  legitimate places of tax residence.  In some 
cases the information on financial accounts may be sent to the wrong State and/or not sent to 
the correct State. For example if information is sent only to the State operating a citizenship or 
residence  scheme  (which  often  does  not  tax  the  income  or  require  physical  presence  in  the 
country) and not to the genuine state of tax residence the income may escape taxation in the 
correct State.  

Schemes in countries which do not tax the income, or tax it at a very low rate, carry a greater 
risk of account holders hiding evidence of the real state of residence and thereby evading tax. 
In particular, third-country schemes carry a higher risk that Union citizens  may use them to 
deliberately  evade  taxation  in  their  EU  State  of  residence.  EU  financial  institutions  may  be 
less familiar with schemes in place outside the EU and although some schemes offered by EU 
States also do not tax foreign income most target (and limit access to) non-EU residents. 

The  mandatory  disclosure  obligations  for  intermediaries  adopted  through  an  amendment  to 
the  Directive  on  Administrative  Cooperation  in  201899  requires  promoters  of  tax  avoidance 
schemes  and  service  providers  involved  in  their  design  or  implementation  to  inform  tax 
authorities of any schemes they market or put in place. It includes specific provisions to target 
schemes that may have the effect of circumventing the reporting obligations laid down by the 
EU legislation on automatic exchange of financial account information.  

In fact, the Directive includes a reporting obligation which targets schemes or arrangements 
that  undermine  or  exploit  weaknesses  in  the  due  diligence  procedures  used  by  financial 
institutions  to  report  information  to  the  tax  authorities,  such  as  the  identification  of  the 
jurisdiction  of  residence  of  the  account  holder.  This  is  the  case  when  the  account  holder 
acquires  citizenship  or  residence  rights  in  a  country  other  than  that  of  effective  residence. 
Whenever  such  a  scheme  is  marketed,  or  entered  into,  a  reporting  obligation  befalls  the 
intermediary that is providing the service.  

Pursuant to the 2018 amendment to the Directive on Administrative Cooperation, the schemes 
entered  into  as  of  25  June  2018  will  be  reported  to  the  EU  tax  authorities,  which  will 
exchange  this  information  automatically  with  each  other  as  of  2020,  providing  these 

99   Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory 
automatic  exchange  of  information  in  the  field  of  taxation  in  relation  to  reportable  cross-border 
arrangements, OJ L 139, 5.6.2018, p. 1.  

17 

 
 
  
 
 
 
 
 
                                                           
authorities with intelligence that may lead to the early detection of possible abuses. This is the 
case both for schemes established within the EU and in third countries. 

To address the risks posed by investor citizenship and residence schemes, and in addition to 
ensuring  the  effective  implementation  of  the  Directive  on  Administrative  Cooperation,  EU 
Member  States  providing  such  schemes  should  make  use  of  the  available  tools  in  the  EU 
framework  for  administrative  cooperation,  in  particular  the  spontaneous  exchange  of 
information  to  the  Member  State(s)  of  residence,  as  prescribed  in  the  Directive  on 
Administrative Cooperation100. 

Moreover,  the  existence  of  investor  citizenship  and  residence  schemes  and  the  issues  they 
raise  for  taxation  purposes  should  also  be  considered  in  the  work  being  carried  out  by 
Member  States  in  the  Council,  for  example,  in  the  ongoing  work  to  reform  the  Code  of 
Conduct  for  business  taxation101,  which  aims  at  ensuring  a  coordinated  action  at  European 
level  to  tackle  harmful  tax  competition,  limited  to  business  taxation  under  the  current 
mandate.  The  reform  of  the  Code  is  an  opportunity  to  broaden  the  scope  of  the  work  to 
include other types of harmful tax practices, including those targeted at individuals. Member 
States should also note the possible role of investor citizenship and residence schemes in tax 
avoidance and evasion and consider if the risks posed by such schemes merit their inclusion in 
the EU listing criteria102. 

As part of its work to identify loopholes in the Common Reporting Standard, the international 
equivalent  to  first  amendment  to  the  Directive  on  Administrative  Cooperation,  the 
Organisation  for  Economic  Co-operation  and  Development  (OECD)  analysed  the  potential 
such  citizenship  and  residence  schemes  may  have  to  circumvent  the  reporting  obligations 
under  this  standard  and  therefore  facilitate  tax  evasion.   In  particular,  the  OECD  concluded 
that identity cards and other documentation obtained through such schemes can be potentially 
misused  to  misrepresent  an  individual's  jurisdiction  of  tax  residence  and  to  endanger  the 
proper  operation  of  the  Common  Reporting  Standard  due  diligence  procedures103.  In  this 
respect,  the  OECD  identified  a  list  of  investor  citizenship  and  residence  schemes  that  may 
present  a  high  risk  to  the  effective  implementation  of  the  Common  Reporting  Standard104. 
Both investor citizenship and residence schemes in Cyprus and in Malta are included on this 
list.  The  OECD  has  also  published  additional  information  and  guidance  to  financial 
institutions in order to minimise the room for potential abuse. 

On  9  March  2018,  the  OECD  published  “Model  Mandatory  Disclosure  Rules  for  Common 
Reporting Standard Avoidance Arrangements and Opaque Offshore Structures”. These model 

100   Council Directive 2011/16/EU, of 15 February 2011 on administrative cooperation in the field of taxation 

and repealing Directive 77/799/EEC.  

101  Conclusions of the ECOFIN Council Meeting on 1 December 1997 concerning taxation policy - Resolution 
of  the  Council  and  the  Representatives  of  the  Governments  of  the  Member  States,  meeting  within  the 
Council  of  1  December  1997  on  a  code  of  conduct  for  business  taxation  -  Taxation  of  saving  (OJ  C  2, 
6.1.1998, p. 1). 

102  Council  Conclusions  on  the  criteria  for  and  process  leading  to  the  establishment  of  the  EU  list  of  non-
cooperative jurisdictions for tax purposes (OJ C 461, 10.12.2016, p. 2); Council Conclusions on the EU list 
of non-cooperative jurisdictions for tax purposes (OJ C 438, 19.12.2017, p. 5).  

103   OECD 

conclusions  on 

residence/citizenship  by 

investment 

schemes,  16  October,  2018: 

http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/residence-citizenship-by-
investment/  

104   https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/residence-citizenship-by-

investment/#faqs  

18 

 
 
 
 
  
 
                                                           
rules are similar to those included in the 2018 amendment to the Directive on Administrative 
Cooperation aimed at avoidance schemes targeting the automatic exchange of information of 
financial  account  information.  However,  it  should  be  noted  that  these  rules  have  not  been 
endorsed as a minimum standard. As such, they are optional for jurisdictions to adopt. 

4.2. Transparency and governance 

Firm regulatory oversight and transparency of investor citizenship and residence schemes at 
national level are of critical importance in determining their impact. The study shows a lack 
of clear information about the applicable procedures and about the operation of the schemes, 
including  the  numbers  and  origins  of  the  applicants  and  those  obtaining  citizenship  or 
residence rights. 

4.2.1. Transparency and governance of investor citizenship schemes today 

In  Malta,  there  is  a  regulator  for  the  investor  citizenship  scheme,  which  publishes  annual 
reports, which are subject to parliamentary scrutiny105. On 22 May 2018, Cyprus announced 
the establishment of a Supervisory and Control Committee and the introduction of a code of 
conduct for its investor citizenship scheme. In Bulgaria, there is neither a regulator nor a code 
of conduct.  

In Malta, applications for investor citizenship must be submitted by the main applicant to the 
Malta  Individual  Investor  Programme  Agency  either  through  Approved  Agents  or  the 
concessionaire106.  These  are  non-public  bodies  with  a  significant  role  throughout  the 
application process, acting on behalf of applicants and interacting directly with the competent 
authorities  on  their  behalf.  In  Bulgaria  and  Cyprus,  applicants  can  choose  to  employ 
consultants or lawyers to advise on and make applications on their behalf. The new Cypriot 
Code  of  Conduct  applies  to  the  agents  and  intermediaries,  which  deal  with  citizenship 
applications on behalf of their clients. The Code aims to encourage high ethical standards and 
imposes  an  obligation  to  abstain  from  advertising  the  sale  of  citizenship  in  public  places. 
Adverts for the sale of “EU citizenship” were common in Cyprus.  It remains to be seen what 
effect the new Code of Conduct will have. 

Under none of the three investor citizenship schemes is comprehensive information available 
about  the  identity  of  people  who  successfully  obtain  citizenship  on  the  basis  of  investment 
and their countries of origin. The reports of the Maltese regulator contain information about 
the number of applications made and the number of those approved and turned down. These 
reports  also  contain  information  about  the  income  generated  by  the  Maltese  investor 
citizenship  scheme.  Maltese  legislation  requires  the  yearly  publication  in  the  Government 
Gazette  of  the  names  of  all  persons  who  during  the  previous  twelve  calendar  months  were 
granted Maltese citizenship by registration or naturalisation, including (although not explicitly 
identifying)  those  persons  who  were  granted  Maltese  citizenship  under  the  investor 
citizenship scheme107. Similar information is not available for Bulgaria and Cyprus. 

As regards limits on the number of applications granted, Cyprus and Malta both have caps on 
the  numbers  of  applicants  who  can  benefit  from  their  investor  citizenship  schemes.  The 

105   Office of the Regulator Individual Investor Programme (ORiip): https://oriip.gov.mt/en/Pages/Home.aspx 
106   Regulation 4(3) of LN 47/2014. 
107   Regulation 14(2) of LN 47/2014. 

19 

 
 
 
 
 
 
 
 
 
                                                           
Cypriot  Government,  as  of  2018,  decided  to  limit  such  citizenships  to  700  per  year108.  In 
Malta, the number of successful main applicants (excluding dependants) for the scheme as a 
whole is capped at 1,800109. However, the Maltese authorities are in the process of updating 
the  law  and,  following  a  public  consultation,  intend  to  increase  the  cap  by  another  1,800.    
Bulgaria imposes no cap on the number of foreign investors who can apply for citizenship.  

4.2.2. Transparency and governance of investor residence schemes today 

Regarding  governance  of  investor  residence  schemes,  in  Malta,  unlike  for  the  investor 
citizenship scheme, there is no regulator. In Cyprus, it is not foreseen that the Supervisory and 
Control  Committee  announced  for  the  investor  citizenship  scheme  be  in  charge  also  of 
residence  permits.  In  Bulgaria,  the  only  obligation  provided  for  by  the  legislation  is  a 
notification  by  the  Migration  Directorate  to  the  Bulgarian  Investment  Agency  about  the 
permanent  residence permits  issued  under the scheme. Specific monitoring mechanisms  and 
reporting obligations exist in a very limited number of Member States110. This means that, in 
most cases, the oversight of the scheme is left to general monitoring mechanisms when they 
exist, such as parliamentary scrutiny, administrative liability, general reporting of activities to 
the  government,  or  access  to  documents  requests,  and  no  additional  and  specific  diligence 
mechanism exists111. 

A limited number of Member States have made the choice to involve private companies in the 
running  of  their  residence  schemes112,  sometimes  with  a  significant  role113.  In  Cyprus, 
applicants are free to decide to present their application through an authorised representative 
whose  role  is  limited  to  act  as  facilitators  and  providers  of  consultancy  services.  In  Malta, 
applications may be submitted to the competent authorities by registered agents or accredited 
persons;  these  registered  agents  act  on  behalf  of  the  applicant  for  all  correspondences, 

108   Council of Ministers’ Decision 906/2018.  
109   Regulation 12 of LN 47/2014. 
110   Spain,  Ireland  and  Portugal.  For  example,  in  Spain,  the  law  includes  an  obligation  to  prepare  an  annual 
report  on  the  implementation  of  the  rules  which  is  prepared  by  the  Ministry  of  Employment  and  Social 
Affairs  on  a  joint  request  of  the  Ministries  of  Foreign  Affairs,  Interior  Affairs  and  Economy  and  is  then 
submitted to the Council of Ministers. In Portugal, the General Inspection of Internal Affairs carries out, at 
least  once  a  year,  an  audit  of  the  procedure  of  the  investment  residence  permit.  The  conclusions  and 
recommendations are notified to the First Commission of the Portuguese Parliament (Constitutional Affairs 
and  Fundamental  Rights,  Freedoms  and  Guarantees)  and  are  also  made  available  on  the  Government's 
website.  However,  this  website  only  contains  one  report,  which  dates  back  to  2014.  It  mentions  several 
recommendations, issued due to some inefficiencies of the procedure, inter alia, the development of internal 
supervision  mechanisms  and  of  a  procedures  manual.  Follow-up  to  this  recommendation  is  unknown.  In 
Ireland, the Evaluation Committee (made  up of senior managers in relevant government departments and 
State  agencies  involved  in  Enterprise  and  Development)  convenes  at  least  four  times  per  year,  to  assess 
applications for residency under the investor scheme, and provides considerations and recommendations to 
the Minister for Justice and Equality on the approval or rejection of applications. 

111   Bulgaria, Ireland, France, Italy, Cyprus, Latvia, Hungary, Malta, Netherlands, Romania, United Kingdom. 
In  Ireland,  the  Irish  Naturalisation  and  Immigration  Service  has  provided  information  via  Parliamentary 
questions on the following items: the number and value of investor scheme applications per annum since 
2012 under each investment option, the number and value of immigrant investor programme applications 
for social housing investment and nursing home investment in 2017, the criteria against which applications 
are  evaluated,  the  number  of  applications  approved  under  the  investor  scheme,  the  investment  funds  for 
which applications under the IIP have been approved to date, the four investment options available under 
the  programme,  the  amount  of  money  invested  in  the  investor  scheme,  the  members  of  the  Evaluation 
Committee. 

112   Cyprus, Hungary, Malta. 
113   Hungary, Malta. 

20 

 
 
 
 
 
                                                           
applications,  submissions,  filings,  notifications  under  the  regulations.  In  Hungary,  the 
Hungarian Parliament’s Economy Committee authorised a number of businesses whose role 
was to issue the residency bonds to be purchased by the applicants. Only one company could 
receive the authorisation to issue bonds in a given third country114. 

4.2.3. Measures to improve transparency, governance and security 

The  study  shows  that  annual  reporting  exercises  are  still  very  limited.  As  regards  investor 
citizenship schemes, there is in general a lack of transparency as regards the applications and 
the persons who obtain citizenship. In the case of investor residence schemes, the absence of 
desegregation  of  statistics,  does  not  allow  for  the  specific  ground  for  residence  or  the 
investment  option  that  was  chosen  to  be  identified.  Data  on  the  numbers  of  received 
applications,  country  of  origin  and  on  the  number  of  citizenships  and  residence  permits 
granted  could  be  usefully  published,  for  example  in  the  form  of  annual  reports.  Member 
States  could  also  clarify  and  publicise  criteria  for  assessing  applications,  security  checks 
performed in the framework of the scheme and ensure ex-post monitoring of compliance with 
these criteria (in particular of the investment) on a regular basis.  

In  addition,  a  characteristic  of  these  schemes  is  the  use  of  businesses  which  advise  the 
governments  on operating the scheme or carry out  proactive tasks  involving the exercise of 
the powers of a public authority in managing such schemes, yet at the same time also advise 
individuals  on  their  applications  to  the  scheme.  In  none  of  the  Member  States  studied, 
whether for citizenship schemes or for residence schemes, is there a mechanism to deal with 
the risk of conflict  of interest  that could  arise from  this situation. The oversight  of all other 
intermediaries is also important. Given the significance of citizenship and residence rights, it 
might  be  expected  that  the  examination  of  applications,  interviews  and  any  other  decision-
making or screening activities would always be done by government authorities, as part of the 
general  need  for  an  effective  and  independent  oversight  of  the  schemes  and  all  actors 
involved.  

Clarity  in  procedures  and  in  responsibilities,  coupled  with  transparency  through  regular 
monitoring  and  reporting,  is  the  best  way  to  guard  against  the  concerns  that  investor 
citizenship and residence schemes raise.  

As regards the investor citizenship schemes, to ensure coherence in the practices of Member 
States  and  an  efficient  exchange  of  information,  including  as  regards  prior  consultation  on 
security  grounds,  a  system  of  exchange  of  information  and  statistics  on  the  number  of 
applications received, accepted and rejected, as well as consultation on rejected applications 
for reasons of security should be established. For this reason, the Commission intends to set 
up  a  group  of  experts  from  Member  States  to  look  into  the  specific  risks  that  arise  from 
investor citizenship schemes and to address the aspects of transparency and good governance 
with regard to the implementation of both investor citizenship and residence schemes. More 
specifically,  the  group  of  experts  should  develop  of  a  common  set  of  security  checks  for 
investor  citizenship  schemes,  including  specific  risk  management  processes  that  take  into 
account security, money laundering, tax evasion and corruption risks by the end of 2019. 

114   The  companies  that  received  authorisation  were  located  in  the  following  countries:  Grand  Cayman 
(Hungary State Special Debt Fund), Malta (Discus Holdings Ltd.), Cyprus (Migrat Immigration Asia Ltd., 
Innozone  Holdings  Limited),  Hungary  (Arton  Capital  Hungary),  Russia  (VolDan  Investments  Limited), 
Liechtenstein (S & Z Program Limited), and Singapore (Euro-Asia Investment Management Pte Ltd.). 

21 

 
 
 
 
 
 
 
                                                           
5.  External dimension 

There is also a rising trend in third countries setting up schemes where investors can purchase 
citizenship, which may have implications for the EU.  

5.1. Candidate countries and potential candidates  

Due  to  the  prospect  of  future  Union  citizenship  of  the  citizens  of  candidate  countries  and 
potential  candidates115,  citizenship  of  these  countries  becomes  increasingly  attractive  to 
investors.  This  is  the  case  already  during  the  accession  process  as  candidate  countries  and 
potential  candidates  develop  closer  relations  with  the  EU  and  can  obtain  the  right  for  their 
citizens to enter the Schengen area visa-free for short stays116. 

A citizenship investor scheme is in place in Turkey117 while, in Montenegro, preparations for 
the implementation of such a scheme, which was adopted in November 2018, were launched 
in January 2019118. 

In  order  to  prevent  such  schemes  causing  risks  in  the  areas  outlined  in  Section  4.1  above, 
conditions regarding citizenship investor schemes will be included as part of the EU accession 
process  (from  the  opinion  on  a  country's  application  for  membership  up  to  the  closing  of 
negotiations). Countries  concerned will be expected to have very robust monitoring systems 
in  place,  including  systems  to  counter  possible  security  risks  such  as  money  laundering, 
terrorist financing, corruption and infiltration of organised crime linked to any such schemes. 

As  concerns  candidate  countries  and  potential  candidates,  the  Commission  will  monitor 
investor citizenship schemes in the context of the EU accession process. 

5.2. Other third countries enjoying visa-free access to the EU 

Investor citizenship schemes run by third countries can be problematic for several reasons, if 
the citizenship in question grants visa-free access to the European Union for short stays. For 
example, the Republic of Moldova, whose citizens have enjoyed a visa-free regime for short 

115   https://ec.europa.eu/neighbourhood-enlargement/countries/check-current-status_en   
116   Citizens  of  Montenegro,  Serbia  and  the  former  Yugoslav  Republic  of  Macedonia  can  travel  to  the  EU 
without a visa since December 2009. For citizens of Albania and Bosnia and Herzegovina, this is possible 
since the end of 2010. Concerning the visa liberalisation dialogue with Kosovo* launched on (19 January 
2012),  the  Commission  reported  in  2018  that  all  established  benchmarks  had  been  fulfilled  (*this 
designation is without prejudice to positions on status, and is in line with UNSCR 1244(1999) and the ICJ 
Opinion  on  the  Kosovo  declaration  of  independence).  Concerning  the  visa  liberalisation  dialogue  with 
Turkey (launched on 16 December 2013), the Commission continues to support Turkey to fulfil the seven 
remaining benchmarks. 

117   Regulation on the Application of Turkish Citizenship Act (Official Gazette 6 April 2010, 27544), amended 
by the Regulation on the Changes on the Regulation Regarding the Application of Turkish Citizenship Act 
(Official  Gazette  12  January  2017,  29946)  and  by  the  Presidential  Decree  No.  106  (Official  Gazette  19 
September 2018, 30540). 

118   Decision  of  22  November  2018  on  the  criteria,  method  and  procedure  for  selection  of  persons  who  may 
acquire  Montenegrin  citizenship  by  admission  for  the  purpose  of  implementation  of  special  investment 
programs  pf  special 
interests  of  Montenegro 
for 
http://www.gov.me/ResourceManager/FileDownload.aspx?rId=344979&rType=2 

the  business  and  economic 

importance 

22 

 
 
 
 
 
 
 
 
 
 
 
 
                                                           
stays in the EU since 2014, introduced an investor citizenship scheme in 2018119. Some third 
countries, or the contractors supporting them, have explicitly marketed their citizenship with 
the argument that it gives visa-free access to the European Union. Investors interested in such 
schemes are often wealthy nationals of visa-required countries, who could use such schemes 
to  bypass  the  regular  Schengen  visa  procedure  and  the  in-depth  assessment  of  individual 
migratory  and  security  risks  it  entails,  including  a  possible  evasion  of  measures  to  prevent 
money laundering and financing of terrorism. 

While  the  European  Union  respects  the  right  of  sovereign  countries  to  decide  on  their  own 
naturalisation  procedures,  visa-free  access  to  the  Union  should  not  be  used  as  a  tool  for 
leveraging  individual  investment  in  return  for  citizenship120.  The  implementation  of  such 
schemes  will  be  duly  taken  into  account  when  assessing  third  countries  that  could  be 
considered  for  a  visa-free  regime  with  the  European  Union.  Moreover,  third  countries  that 
already enjoy visa-free status must carry out security and background checks of applicants for 
citizenship  schemes  to  the  highest  possible  standards;  any  failures  in  this  regard  could  be 
grounds  for  re-imposing  a  visa  requirement  and  suspending  or  terminating  visa  waiver 
agreements. 

The  Commission  will  monitor  the  impact  of  investor  citizenship  schemes  implemented  by 
visa-free countries as part of the visa-suspension mechanism.  

6. Conclusions  

Investor citizenship and residence schemes pose risks for the Member States and the Union as 
a whole, including in terms of security, money laundering, corruption, circumvention of EU 
rules and tax evasion.  

The abovementioned risks are further accentuated by shortcomings in the transparency and 
governance  of  such  schemes.  The  study  commissioned  by  the  Commission  shows  that  the 
information  available  on  both  investor  citizenship  and  residence  schemes  operated  by 
Member States is incomplete. For instance, clear statistics on applications received, accepted 
and  rejected  are  missing  or  insufficient.  Furthermore,  there  are  no  mechanisms  to  ensure 
cooperation between the Member States on investor citizenship schemes, notably on security 
checks.  The  Commission  has  concerns  about  the  risks  inherent  in  investor  citizenship  and 
residence schemes and about the fact that the risks are not always sufficiently mitigated by the 
measures taken by Member States. 

The Commission will monitor the steps taken by Member States to ensure transparency and 
good governance in the implementation of the schemes, with a view to address, in particular 
risks  of  infiltration  of  non-EU  organised  crime  groups  in  the  economy,  money  laundering, 
corruption  and  tax  evasion.  With  a  view  to  Member  States  improving  the  transparency  and 
governance  of  the  schemes,  the  Commission  will  establish  a  group  of  experts  to  further 
address matters of transparency, governance and security. 

119   The Moldova Citizenship-by-Investment (MCBI) programme is governed by the Law No. 1024 of June 2, 
2000 “on the citizenship of the Republic of Moldova” and the Government Decision No. 786 of October 4, 
2017 “on acquiring citizenship by investment”. On 6 November, the Moldovan Citizenship-by-Investment 
program was officially launched at the 12th Global Residence and Citizenship Conference, held in Dubai. 

120   See for instance: https://vic.vu/citizenship/  (“Key benefits of Vanuatu Citizenship”). 

23 

 
 
 
 
 
 
 
 
 
                                                           
The Commission will monitor wider issues of compliance with EU law raised by the schemes 
and it will take necessary action, as appropriate. 

24