This blog post has been contributed by Dr Oana Stefan, Module Convenor for EU law.
This blog post will look into an important development regarding European Citizenship, and the issues discussed under Topic 11, namely the rules regarding the acquisition of European citizenship. It will be recalled that European citizenship was established through the Maastricht Treaty. Article 20 of the current TFEU reads “Every person holding the nationality of a Member State shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship.” We infer from this that it is the Member States, through their own rules, who decide how national (and hence European) citizenship is granted. As we know from the case law, the Member States are limited in their right to withdraw nationality, in case this would result in the loss of European citizenship. However, there have not been yet cases regarding the acquisition of nationality. This was up until April 2025, when Case C-181/23 – or the so-called Malta Case was decided.
The case concerns the Maltese nationality scheme formally called “Citizenship by Naturalisation for Exceptional Services by Direct Investment” introduced in 2020. Under the scheme, third‑country nationals could acquire Maltese nationality, and therefore EU citizenship, following a successful application based largely on pre‑determined financial contributions and formal conditions. In particular, applicants were required to: make an exceptional direct financial contribution to the Maltese state (€600,000 or €750,000, depending on the route chosen); acquire residential property in Malta (purchase or lease); make a mandatory charitable donation; hold a lawful residence status in Malta for 12 or 36 months (with the shorter period available in exchange for a higher payment); pass a multi‑tier due‑diligence process; and take an oath of allegiance to the Maltese Constitution.
The Commission started infringement proceedings against Malta considering that the Maltese framework enabled the grant of nationality primarily in exchange for financial payments, without establishing a genuine prior connection or integration with Malta. This affected mutual trust between Member States linked to EU citizenship. The case ended up in front of the CJEU. Malta argued that nationality falls within Member State competence under EU law; its scheme included residence requirements and rigorous vetting; and neither EU law nor public international law imposes a requirement that nationality be granted only where a “genuine link” already exists between an individual and the Member State.
In his Opinion of 4 October 2024, Advocate General Collins proposed that the Court dismiss the Commission’s action, concluding that Malta had not breached EU law by operating its investor‑citizenship scheme. He emphasised that the determination of nationality remains a core competence of the Member States, subject to EU law only in exceptional circumstances, and rejected the Commission’s claim that EU law requires a prior “genuine link” between the applicant and the Member State before naturalisation. Drawing on EU law and public international law, the Advocate General reasoned that naturalisation in exchange for investment is not per se unlawful, provided the Member State applies its rules and due‑diligence procedures; in his view, Malta’s residence and vetting requirements meant the scheme did not amount to a general and systematic abuse of Union citizenship, nor did it violate Articles 20 TFEU or 4(3) TEU.
The Grand Chamber accepted that nationality remains a Member State competence, but stressed that where the grant of nationality automatically confers Union citizenship, that competence must be exercised in conformity with EU law, in particular Article 20 TFEU (Union citizenship) and Article 4(3) TEU (sincere cooperation). The Court rejected the Commission’s reliance on a freestanding “genuine link” doctrine. However, it held that a system that grants nationality essentially in exchange for predetermined payments risks commercialising Union citizenship, undermining the mutual trust and solidarity that underpin the EU legal order. The Court focused on the structure and operation of Malta’s scheme as a whole, finding that, in the absence of clearly embedded, binding requirements ensuring a real bond of solidarity and good faith, the scheme reduced naturalisation to a transaction, thereby devaluing the status of Union citizenship and jeopardising reciprocal confidence among Member States.
The Court held that, by establishing and operating the investor‑citizenship scheme, Malta failed to fulfil its obligations under Articles 20 TFEU and 4(3) TEU. While not declaring all investment‑based naturalisation unlawful, the Court condemned schemes that treat nationality as a commodity. It required Member States to ensure that the conferral of nationality is not reduced to a financial exchange. Malta was therefore required to bring the scheme into compliance, marking the first time the Court squarely framed investor citizenship as incompatible with the constitutional nature of Union citizenship when designed as a transactional purchase.
There is already a lot of literature regarding this case, which is very important for your study of EU citizenship. Kochenov criticised that the Court untethered EU citizenship from the Treaties’ allocation of competences and replaced law with normative rhetoric about values. He concluded that the Court posed limits on the Member States’ discretion to grant nationality without proper legal basis. Kochenov warns that the judgment collapses the distinction between national citizenship and Union citizenship and risks turning Article 4(3) TEU into a free‑standing weapon to police Member State sovereignty beyond the Court’s established case law. On the other hand, Coutts defended the judgment as a principled development of EU constitutional law, arguing that Union citizenship is not merely derivative of national law but an integral part of the EU’s constitutional identity, legitimately justifying limits on “transactional” naturalisation to protect mutual trust, solidarity, and democratic membership within the Union. All in all, this is an extremely important judgment, which allowed the Court to delve deeper into what EU citizenship means and how it connects to EU values.