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1. Citizenship and residency programmes based on investment in the EU
This document outlines the legislative measures in all 28 European Union (EU) Member States that
may result in the immediate acquisition of citizenship or residency rights by a monetary donation.
It considers the obvious clash between the virtues inherent in EU citizenship and the frameworks it
enables for nations to commodify their membership by trading it for investment.
The paper's conclusion analyses the implications of investor citizenship and golden residency
programmes in the larger EU context.
Introduction
In mid-January 2014, the European Parliament convened a discussion titled "EU citizenship for
sale" to explore programmes implemented by European Union Member States that give either
residency or citizenship in exchange for investment.
The controversy was prompted by Malta's decision in October 2013 to provide af
fl
uent people who
invest 650,000 euros in the nation with the right to become Maltese, and therefore EU citizens.
Denmark's rejection of the Maastricht Treaty in 1992 resulted in two articles establishing that
supranational EU membership is only supplementary to national citizenship.
Rights beyond those of national citizenship, activated via mobility in the EU, establish a framework
for nations to consider their citizenship as a commodity and swap it for investment.
Investor citizenship and golden residence programmes generate EU citizens with a vested interest in
attaining the citizenship of an EU Member State.
Such schemes may be thought of as producing "stockholder citizens" (Magni-Berton 2014).
Access to the European market and the bene
fi
ts of EU citizenship make such national memberships
more appealing to investors.

2. This distinguishes investment-based citizenship plans from naturalisation of regular migrants, who
are true "stakeholders" because of their societal commitment.
Citizenship in nested polities: origins, activation, and import
"EU citizenship" does not and cannot exist in and of itself; it is tied to the national citizenship of
Member States. Unlike national citizenship, EU citizenship is linked to a set of rights enshrined in
treaties.
Many of these rights are de facto active only when a person enters the boundaries of the Member
State of which he or she is a citizen.
The relationship between national and EU citizenship is analogous to a 'citizenship constellation,'
which Bauböck (2010: 848) de
fi
nes as a system in which people are related to multiple political
organisations at the same time.
Access to EU citizenship is solely governed by national naturalisation criteria, with rights
transferred on a "bottom-up" basis.
Individuals cannot get EU citizenship and subsequently choose a Member State's citizenship.
They may, however, opt to 'activate' their EU citizenship by using the rights that such citizenship
entails if they become nationals of any particular Member State.
The act of trading a higher-value good (citizenship) for a lower-value good (money) devalues
citizenship and undermines public faith in that institution.
Some nations that conduct investor programmes offer a low threshold for investors to gain EU
citizenship rights, requiring only a clean criminal background, an oath of loyalty, or residency
requirements for as little as one year.
In others, the exchange of membership for money is either impossible or complicated, with several
criteria.
Because investors' interests are established by the number of shares they own in the corporation,
this narrows the scope of citizenship.
"Stakeholder citizenship" differs from "stockholder citizenship" in that it includes the concept of
conceptualising demos in the polity.
The former entails an outright swap of money and citizenship, while the latter requires the person to
focus his or her actions on the new polity.
In the empirical section of the study, we will investigate this pattern in more depth.
Identifying and mapping EU investment-based citizenship and residency programmes
Citizenship by investment is available in a variety of ways within the EU.
The investment may result in the person receiving citizenship outright, or it may allow the
individual to remain in a nation and get citizenship by completing other naturalisation conditions.
Although many governments have the authority to naturalise people based on cultural, economic, or
other accomplishments, few have comprehensive investor citizenship programmes.

3. Investor citizenship programmes in Malta, Bulgaria, and Romania attempt to provide candidates
with citizenship rather than residency.
This suggests that membership is based on "stockholder citizenship."
On the other hand, golden residency programmes, on the other hand, are available in a number of
EU Member States, including Malta, Portugal, Bulgaria, Hungary, Spain, the Netherlands, Greece,
and the United Kingdom.
The basic justi
fi
cation for these programmes is the belief that the investment would provide
economic advantages while also strengthening ties between the applicant and the state.
Discretionary investor naturalisation
Many countries across the world enable the naturalisation of foreign nationals based on their
remarkable contributions to the country's society, business, sports, or culture.
This method of naturalisation is employed just a few times every year, and the number is
occasionally regulated by legislation (e.g., not more than ten people annually in Estonia).
According to statistics from the European Union Democracy Observatory (EUDO) on Citizenship,
22 of the EU's 28 Member States enable discretionary naturalisation based on outstanding
accomplishments, which may include economic, cultural, sporting, or scienti
fi
c ones.
The majority of EU Member States have the discretionary ability to accept people on grounds of
special interest.
Only four of the 22 nations have speci
fi
ed "economic" or "commercial" interest in nationality
legislation as reasons for easier naturalisation.
Except for Bulgaria, the remaining three nations require residency on their territory,
notwithstanding the state's choice to naturalise investors.
EU programmes for investor citizenship
Investor citizenship programmes need a monetary transaction in return for participation.
Only Cyprus has a plan that can be described as a pure investor citizenship programme in the EU.
Among the 28 EU Member States, hybrid programmes exist in Malta, Bulgaria, and Romania.
The various modes of operation demonstrate the iterative link between investor citizenship and EU
membership.
Cyprus
The investor citizenship programme in Cyprus was launched on May 24, 2013, two months after the
Eurogroup, European Commission (EC), European Central Bank (ECB), and International
Monetary Fund (IMF) announced a 10-billion-euro international bailout (IMF).
Many foreign investors who took advantage of Cyprus's favourable tax structure suffered
multimillion-dollar losses as a result of the charges levied on uninsured bene
fi
ts.

4. The Cypriot government revised the investor citizenship programme with the purpose of improving
the country's economic environment and compensating international customers for their losses.
Previously, Cypriot laws required a 10 million euro investment in exchange for citizenship;
however, the 2013 Scheme for Naturalisation of Investors in Cyprus by Exception on the basis of
subsection (2) of section 111A of the Civil Registry Laws of 2002–2013 established several paths
for the wealthy to obtain EU citizenship.
One of these approaches, is aimed speci
fi
cally at repaying investors for losses caused by taxes
(A6).
This path indicates a "stockholder citizenship" approach, since membership is commodi
fi
ed and
swapped not just for
fi
nancial bene
fi
t received by the polity via investment but also for loss
sustained by investors as a result of the state's activities.
The programme was updated again in March 2014, and the investment amounts were modi
fi
ed.
The main condition for naturalisation via investment in Cyprus, (above), is the monetary
contribution, which ranges from 3 million for losses to 5 million for direct investments, deposits, or
purchases.
A clean criminal record and at least one visit to the country are also required.
Surprisingly, the 2013 Scheme for Naturalisation of Investors in Cyprus provides for frequent
inspections to ensure that applicants satisfy the requirements are feasible, and that failure to do so
may result in loss of citizenship (B3, 2013 Scheme for Naturalisation of Investors in Cyprus).
The latter clause stems from a 2011 scandal involving billionaire businessman Rami Makhlouf, a
cousin of Syrian President Bashar al-Assad.
Makhlouf got Cypriot citizenship on January 4, 2011, only a few weeks before the commencement
of the Syrian demonstrations.
Makhlouf was sanctioned by the EU in May 2011 for his involvement with Syria's authoritarian
administration.
His Cypriot citizenship was revoked as a result of the EU penalties.
The above illustration depicts the cyclic link between EU citizenship and investor citizenship
programmes.
On the one hand, Cyprus leverages the advantages of EU membership to boost the value of its
national citizenship and attract more investors.
The EU, on the other hand, and notably EU membership, has proved to provide both possibilities
and limits to the Cypriot investor programme.
First, after the bailout, the Cypriot government altered the investor citizenship programme,
decreasing the investment limits and establishing a unique avenue for people who suffered losses
due to taxes.
Second, Cypriot EU membership resulted in limits and frequent inspections.

5. These rules enable Cyprus to deprive people whose property is frozen at the EU level of their
nationality and hence of their EU membership.
This is an intriguing twist in the dynamic between the status of (EU) citizenship and property rights,
a relationship that has traditionally been important to the formation of the concept of citizenship
(Morgan Kouser 1979).
The possession of property is a precondition for the status of (national and EU) citizenship in the
case of investor citizenship in Cyprus, whereas the freezing or deprivation of property by the EU
(and not necessarily the individual's material losses) may result in the loss of (national and EU)
citizenship.
Malta
Malta passed Act XV of 2013, which altered the Maltese Citizenship Act, Cap 188, and established
the contentious Individual Investor Programme (IIP).
This initial draught of the IIP elicited harsh responses both inside Malta and across the EU.
It offered a straight swap of Maltese citizenship for a 650,000-euro payment (due diligence and
criminal record checks apply).
The money linked with investor programmes has been the motivation for Malta's IIP programme.
The Maltese authorities got a strong signal from Brussels that IIP needed to be altered, but no
changes were implemented immediately after the discussion (Carrera 2014).
The General Directorate of Justice contemplated commencing infringement actions due to the
scheme's inconsistency with EU legislation.
After a meeting in late January between Malta and DG Justice, the two sides agreed to change the
plan to add a residency requirement as proof of real links to the country.
Following that, Malta revised its IIP in February 2014, introducing a one-year effective residency
requirement.
The instance of Malta also demonstrates the connection between investor citizenship and EU
membership.
While the former consequence provided chances for Malta to grow IIP, the latter resulted in top-
down pressures that
fi
nally resulted in the program's curtailment with the implementation of the
resident requirement.
It demonstrates how investment-based naturalisation distorts citizenship regimes since certain
Member States perceive national membership as a commodity, but EU citizenship is considered a
framework of opportunities.
Romania and Bulgaria.
Bulgaria and Romania, both of which joined the EU in 2007, have 'hybrid' investor citizenship
programmes.
The awarding of citizenship in these nations is conditional on the investor preserving the residency
privileges granted prior to his or her application for naturalisation.

6. Such programmes vary from those in Malta, where applying for residency is a requirement of the
investor citizenship programme.
Romania has a "hybrid" citizenship by investment system, which includes obligatory residency and
the ful
fi
lment of additional conditions in addition to the 1 million euro investment.
Unlike Bulgaria, which waives all other standard naturalisation requirements, Romania preserves all
others, including age, devotion to the Romanian state, a clean criminal background, language and
culture, and knowledge of the Constitution and the anthem.
Residence programmes based on investment in the EU
Applicants for investment-based residency programmes must reside in the country prior to
naturalization.
They do not provide the applicant with the advantages of European citizenship since they limit the
applicant's residence and work rights to a single Member State.
However, they assist at least one of the prerequisites for af
fl
uent people's naturalisation.
Based on empirical facts, there are two kinds of residential programmes based on monetary
contribution.
In some EU Member States, a signi
fi
cant
fi
nancial investment is necessary to qualify for residence.
These nations have developed certain regulations for how the application should be processed in
order to assure the ef
fi
cacy of the investment.
This may require the candidate to renew the residence visa after one to two years, as well as
complete additional requirements for ultimate citizenship.
Naturalisation is conditional on retaining resident status in the speci
fi
ed EU Member State for a
number of years.
In Romania, the contribution under golden residency programmes ranges from 70,000 euros to 10
million euros.
The cause of such a disparity is the economy, which is more favourable in certain nations and hence
more appealing to investors than in others.
Golden home programmes already adhere to market logic, with prices determined by supply and
demand.
However, these programmes are not static, and some nations have altered or reintroduced them
since the beginning of the crisis in 2009.
Malta's reduction of investment criteria is evidence of a 'race to the bottom', which does not occur
as a consequence of a country's competitiveness.
This dynamic may also be observed in the case of the United Kingdom, which administers a golden
residency scheme for investors in the same manner as other nations.
However, the UK provides a more stable economic environment than nations such as Malta, Spain,
and Bulgaria.

7. Entrepreneurial Residency Programs
Some EU member states have entrepreneurial residency programmes.
These programmes seek to recruit either independent economic migrants or entrepreneurs seeking
to establish a
fi
rm in an EU Member State.
Investors generally acquire a one-year renewable residence permit, and naturalisation is conditioned
upon satisfying the standard residency restrictions.
Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, Germany, Lithuania,
Slovenia, Slovakia, and Sweden all have such programmes.
Conclusions and recommendations
Citizenship by investment is a lens that offers a new perspective on the complexities of citizenship
outside the con
fi
nes of the state.
The section stated that EU membership boosts the value of national citizenship by examining the
activation of rights associated with EU citizenship.
This opens the door for governments to implement investor citizenship programmes, since national
membership provides extra advantages at the nested polity level.
Both the discretionary naturalisation and the investor programmes pose two risks.
Treating citizenship as a commodity that can be traded for money has already resulted in a "race to
the bottom."
These programmes represent not just a con
fl
ict within EU citizenship but also a dif
fi
culty with
Member States' approaches to national membership.
The empirical examination of programmes implemented in 11 EU Member States reveals a dynamic
distinct from that of investor citizenship programmes.
They provide admission to the nation with restricted rights based on residency, but not full
citizenship rights or those based on the country's EU membership.
Despite being less controversial on these two points, the "golden home" and entrepreneurial
programmes continue to pervert the principles that constitute democratic citizenship.
References
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le/255366/tier1entrepre neurguidance1.pdf
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8. 4. Morgan Kousser, Joseph. 1974. The Shaping of Southern Politics: Suffrage Restriction and
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fi
cial
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14. Photo by Igor Starkov: https://www.pexels.com/photo/chairs-outside-restaurant-1693945/
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