In a significant ruling delivered on 29 April 2025, the Court of Justice of the European Union (CJEU) provided guidance on Malta’s citizenship by investment regulations, concluding proceedings initiated by the European Commission regarding the legislation which was introduced in 2020.
The Court reiterated that while Member States retain sovereignty in setting their own nationality laws, that competence must be exercised in a manner that respects EU law. The ruling focused on Article 20 of the Treaty on the Functioning of the European Union (TFEU), which defines Union citizenship, and Article 4(3) of the Treaty on European Union (TEU), which outlines the principle of sincere cooperation between the EU and its Member States.
Key Legal Arguments
The European Commission’s main contention was that Malta’s laws, which grant nationality in exchange for predetermined investments, could impact the integrity of Union citizenship by not requiring a genuine connection between the applicant and the State. The Commission argued that this approach could affect mutual trust among Member States and the essence of EU citizenship.
In response, Malta defended its framework, stressing that nationality matters fall squarely within national sovereignty, a principle protected under Article 4(2) TEU. The Maltese government pointed out that its programme is not automatic but discretionary, subject to stringent due diligence and compliance procedures.
The Court’s Deliberations and Judgment
The Court reaffirmed that while Member States enjoy wide discretion over nationality matters, they must exercise this power with due regard for EU law, both when granting and withdrawing citizenship. Referencing established case law (Michelletti, Rottmann), the Court stressed that nationality must be underpinned by a “special relationship of solidarity and good faith” between the State and the individual.
The judgment confirmed that naturalisation procedures which are transactional in nature, hence where nationality is granted in exchange for predetermined payments or investments may not align fully with the principles of sincere cooperation and mutual trust that underpin EU citizenship, in the absence of genuine connections.
The Court concluded:
“By establishing and operating an institutionalised citizenship investment scheme, which implements a transactional naturalisation procedure in exchange for predetermined payments or investments and thereby amounts to the commercialisation of the grant of the nationality of a Member State and, by extension, that of Union citizenship, the Republic of Malta has not fully complied with its obligations under Article 20 TFEU and Article 4(3) TEU.”
Malta’s Official Response
Following the judgment, the Government of Malta issued a formal press release (PR250702), confirming its full respect for the Court’s decision. The government stated that it is currently studying the legal implications of the ruling to ensure that the legislative framework is aligned with the principles outlined by the Court.
The government highlighted that it has consistently maintained that nationality falls within the exclusive competence of Member States, a position it has defended robustly since the start of proceedings in 2020. This stance was supported by the Advocate General’s opinion of 4 October 2024, which concluded there was no case against Malta.
While acknowledging the judgment, Malta pointed out that the Court reaffirmed the principle of national competence over citizenship matters. The government also clarified that all citizenships granted under both the current and previous frameworks remain valid and fully recognised.
The Maltese authorities took the opportunity to emphasise the positive economic impact of the programme, which has contributed significantly to a national investment and savings fund designed to benefit both present and future generations.
Next Steps
The Government of Malta has confirmed that it is currently analysing the judgment in detail and will be amending the citizenship regulations to ensure alignment with the principles outlined by the Court. We will keep you updated with further developments as they unfold.
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