The European Commission has just issued a recommendation urging member states to immediately repeal any existing citizenship-by-investment (CBI) schemes and to ensure strong checks are in place to address the risks posed by residence-by-investment (RBI) schemes.
It also recommended that member states should immediately assess whether citizenship granted under a CBI scheme or residence permits granted under an RBI to Russian or Belarusian nationals on an EU sanctions list in connection to the war in Ukraine should be withdrawn.
The 'strong checks' for RBI schemes cover all necessary measures to prevent them from posing security, money laundering, tax evasion and corruption risks. This includes establishing and carrying out checks related to the conditions of residence and security before issuing such residence permits and verifying whether residence is continuous.
The Commission said it had frequently and consistently raised serious concerns about CBI and RBI schemes and the inherent risks they posed. It opened infringement proceedings against Cyprus and Malta in On October 2020 in respect of their CBI schemes, and also urged Bulgaria to end its scheme.
"We consider that the sale of citizenship through 'golden passports' is illegal under EU law and poses serious risks to our security," said Commissioner for Justice and Consumers, Didier Reynders. "All Member States concerned should end their investor citizenship schemes immediately. In addition, they should assess whether they should revoke any 'golden passports' already granted to sanctioned individuals and others significantly supporting Putin's war."
Bulgaria responded by announcing proposals to scrap its CBI scheme, although it will continue to operate an RBI scheme, while the Cyprus CBI scheme is currently suspended and the government is only processing applications submitted prior to November 2020. The Maltese government has announced that it is suspending its CBI scheme to Russian and Belarusian nationals.
The Latvian parliament has voted to close its RBI scheme completely, while several member states, including the Czech Republic, Ireland, Greece, Portugal, Malta and Spain, have suspended their RBI schemes for Russian citizens.
The Commission said its recommendation was only one element of its overall policy to take determined action on both CBI and RBI schemes. It might take additional action in the future as required. It asked the member states concerned to report on the implementation of the recommendation by the end of May and keep the Commission regularly informed afterwards.
Separately, the UK government announced the closure of the Tier 1 (Investor) visa route to new applicants with immediate effect on 17 February. To qualify for investor visas, applicants had to show they had at least £2 million to invest in the UK. No official advance notice of the change was provided. Existing visa holders will still be able to apply to extend their stay.
On 18 March, the UK Home Office revealed that eight oligarchs under UK sanctions "had been identified as holding or having held leave as a Tier 1 (investor) migrant or as a Tier 1 (investor) migrant dependent".
"For some time, we have been suggesting that those who are interested in either CBI or RBI schemes should proceed with haste because none will last forever," said Sovereign Group Chairman Howard Bilton. "The EU makes recommendations but it's up to the individual EU member states to decide whether to act on them or not. For the moment, therefore, most of the existing schemes remain in place but perhaps not for much longer.
None of this is designed to stop immigration to the EU entirely. There are many different ways to enter the EU legitimately but most require actual residence. What the Commission appears to object to is the granting of either residency or citizenship that does not require residency or does not deliver benefits in the real economy.
Portugal may make changes to its 'golden visa' RBI scheme, but the much cheaper and simpler D7 immigration plan, which requires physical presence in Portugal, remains. Likewise, while the UK has abolished the fast-track 'golden residency' scheme for investors who put £2 million into static non-employment producing investments, it still continues to encourage investors with £200,000 to invest in a business that has a wider economic benefit."
The Commission's move followed a vote in the European Parliament on 9 March requesting that it to come up with a legislative proposal that would ban CBI schemes, phasing them out by 2025, while regulating RBI schemes to ensure that investments flow into the real economy. MEPs also asked for stringent background checks, including on family members and on the origin of funds.
The vote further called on the Commission to ban Russian nationals who are subject to EU sanctions from all RBI schemes and to put pressure on third countries, such as Panama or Saint Kitts & Nevis, to abolish visa schemes that allow people who receive the documents to travel freely across the EU.
A study by the European Parliamentary Research Service found that three member states – Bulgaria, Cyprus and Malta – currently offered CBI schemes, while RBI schemes were offered by 13 member states ¬– Bulgaria, Cyprus, Estonia, Greece, Spain, Hungary, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands and Portugal.
It estimated that, between 2011 and 2019, over 132,000 people had secured residence or citizenship in EU member states through these schemes. Over the same period, the total investment inflow from these schemes was estimated to be at least €21.4 billion.
"It is always going to be the case that every country in the world offers an opportunity to people to immigrate and eventually obtain citizenship in return for a certain level of investment and after a certain length of time," said Bilton.
"It is only the amounts and the time that will vary. It is highly unlikely that any country will completely close its borders to new immigrants, except perhaps as a temporary measure in times of war or emergency. And none of this should affect anybody who has already applied for a golden visa."
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