Understanding Investment Migration in the EU After the ECJ’s Landmark Ruling

The European Court of Justice (ECJ) rules that Malta’s Naturalisation for Exceptional Services by Direct Investment (MEIN) must be discontinued.

This article focuses on ECJ’s ruling Commission v. Malta (C-181/23).

The landscape of investment migration in the European Union has recently undergone a significant shift. A pivotal decision by the ECJ in April of this year has reshaped how countries within the EU can offer pathways to residency and citizenship through investment. This ruling, specifically targeting Malta’s “golden passport” scheme, sends a clear message: European Union citizenship is a profound status, not a commodity to be bought.

For individuals and families considering investment migration to Europe, understanding the nuances of this decision and its implications is crucial. This article will shed light on the ECJ’s ruling, distinguish between “citizenship by investment” and “residency by investment” programs, and highlight why certain approaches, like Portugal’s Golden Visa, remain a compliant and attractive option.

The ECJ’s Stance

Malta’s “golden passport” program allowed individuals to acquire Maltese and, by extension, EU citizenship by making a substantial financial contribution. While this scheme generated significant revenue for Malta, it faced considerable criticism. The core issue wasn’t just the financial transaction itself, but the lack of genuine connection required between the applicant and the country. Investigations revealed that conditions like residency were often not genuinely fulfilled, leading to concerns about security, integrity, and the very essence of EU citizenship.

The European Commission, the EU’s executive arm, had long voiced concerns, ultimately bringing an infringement proceeding against Malta.

The ECJ’s 2025 ruling in Commission v. Malta (C-181/23) definitively declared Malta’s “golden passport” scheme illegal.

The Court’s decision wasn’t about dictating how individual nations grant their own citizenship entirely. Instead, it underscored a fundamental principle: while EU member states retain sovereignty over their nationality laws, this power must be exercised with due respect for EU law and its core values. Granting EU citizenship to individuals without rigorous checks or a genuine link to the country undermines the mutual trust and cooperation essential among member states. It essentially provides a passport to all EU countries, impacting their security and economic interests without adequate safeguards.

This ruling is a powerful reminder that EU citizenship is a valuable status, conferring significant rights such as freedom to live, work, and travel across the Union, and access to consular protection. Its “commercialization” was deemed incompatible with European treaties and the fundamental nature of belonging to the Union. Malta is now obligated to dismantle its “golden passport” scheme.

Portugal’s Golden Visa: An Alternative?

In the wake of this landmark decision, it’s essential to differentiate between citizenship-by-investment programs and residency-by-investment programs, such as Portugal’s “Golden Visa.” The ECJ’s ruling, while specifically aimed at Malta, sets a precedent that validates the Portuguese model.

Launched in 2012 to attract foreign capital during a period of economic recovery, Portugal’s Golden Visa (officially, the Residence Permit for Investment — ARI) grants a temporary residence permit to investors and their families in exchange for their contributions to the Portuguese economy.

The key distinction, and why Portugal’s program remains compliant with EU expectations, lies in its focus on residency, not immediate citizenship. While Malta was granting citizenship outright, Portugal offers a pathway to residency, which can, after a considerable period and fulfillment of additional requirements, lead to the possibility of citizenship.

Here’s why this difference is critical and aligns with EU principles:

• No Immediate Citizenship: Golden Visa holders in Portugal do not immediately acquire Portuguese or EU citizenship. They receive a temporary residence permit, renewable over five years. This means they are not instantly granted the full spectrum of EU citizen rights, which is a crucial safeguard for other EU member states.
• Genuine Link Required for Citizenship: While a Golden Visa allows travel within the Schengen Area, the right to live or work permanently in other EU countries as a resident is not the same as that of a citizen. For a Golden Visa holder to eventually apply for Portuguese citizenship, they must meet additional, stringent requirements, including demonstrating a genuine connection to Portugal, passing a language test, and spending a significant amount of time in the country. This ensures that any eventual citizenship is based on genuine integration and not based on financial transactions alone.
• Adherence to Security and Due Diligence: Portugal has consistently demonstrated its commitment to robust background checks and security screenings for Golden Visa applicants. The program has evolved to address concerns, for example, by no longer accepting real estate investments as of 2023, reflecting a proactive approach to align with societal concerns.

Portugal’s approach has been consistently within the bounds of EU tolerance and requirements. It provides a legal and ethical avenue for individuals seeking to establish a connection with Europe through investment, without undermining the value of EU citizenship.

What This Means for Investors

The ECJ’s decision marks a new era for investment migration in the EU. While schemes that offer immediate citizenship for investment are now deemed illegal, the genuine interest in Europe among international investors is expected to continue.

For those considering a move to Europe, the emphasis will increasingly be on programs that offer a legitimate path to residency, with the potential for citizenship down the line, but only after fulfilling substantial requirements and demonstrating a true connection to the country.

Portugal’s Golden Visa stands as a testament to a responsible and compliant model within this evolving landscape. It allows investors to gain a foothold in Europe, enjoy the benefits of residency, and, if they choose to make Portugal their long-term home, work towards citizenship through a process that respects both Portuguese and EU law.

The ECJ’s ruling is more than just the termination of one country’s policy; it is a powerful declaration in defense of European Citizenship and its values. It reinforces that while investment is welcome, it must be on EU’s terms, demanding not only financial contribution but also respect for the profound status of its nationality. For those seeking to invest in their future in Europe, choosing a program that aligns with these principles is more important than ever.

A final note

It’s worth noting that the ECJ’s ruling hasn’t been universally acclaimed in legal and academic circles.

Scholars and industry experts have expressed concerns, arguing that the decision overreaches into an area traditionally considered a core element of national sovereignty: the right of a state to determine who its citizens are.

EU treaties explicitly grant Member States the power to establish their own nationality laws, and that the ECJ’s imposition of a “genuine link” requirement for citizenship, particularly for investment schemes, constitutes an undue encroachment on this fundamental prerogative. These divergent opinions highlight the ongoing tension between national sovereignty and the evolving nature of EU law, particularly when it comes to a sensitive area like citizenship that defines political community.

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