Will EU Citizenship by Investment Soon Be a Thing of the Past?

In recent years, the European Commission has been grappling with concerns over "golden visas" or citizenship through investment programs. These programs allow wealthy individuals to obtain citizenship or residency in EU member states by making substantial financial investments. Or sometimes, the investment requirements aren’t even substantial. However, in a move to ensure greater transparency and safeguard the integrity of EU citizenship, the Members of the European Parliament (MEPs) have been actively advocating for a ban on these programs.?

Why Ban Citizenship Through Investment?

One of the primary and most obvious concerns driving the EU's push for a ban on citizenship through investment is the potential for abuse and exploitation. Critics argue that these programs create avenues for money laundering, tax evasion, and other illicit activities. By offering citizenship in exchange for financial investments, there is a risk of attracting individuals with questionable backgrounds and motives. The Commission urged member states to rethink their visa schemes and be extra cautious about people with sanctions or who support the Ukraine invasion gaining access to the EU.?

Transparency and security are additional issues that have raised alarm bells within the EU. The lack of standardised rules and procedures across member states has created an environment where potential investors can shop around for the easiest and most lenient programs. For instance, Portugal required investors to invest €500,000 or €280,000 or €350,000 as a reduced option. On the other hand, Ireland required investors to have a minimum net worth of €2 million. This lack of consistency undermines the EU's collective efforts to establish a cohesive and secure immigration framework .

While MEPs have been strongly advocating for a ban, countries are still not clear on which path they should be taking. The Spanish government, for example, has admitted that it is debating either completely abolishing the "golden visa" or increasing the minimum amount of investment required to €1 million in light of pressure from MEPs on member countries to end all golden visa programmes. Portugal and Ireland, which have already begun the process to end their schemes.

Another key concern is the potential impact on the social fabric of member states. Critics argue that these programs, often reserved for the affluent, can exacerbate wealth inequalities and social divisions. The fear is that citizenship by investment may create a two-tiered society, where those with financial means can easily access privileges and benefits, while ordinary citizens may struggle to enjoy the same opportunities.?

Implications of a Ban

While the ban on citizenship through investment programs may have its merits, it is essential to consider the potential positives and negatives of this decision. On the positive side, the ban would help prevent the abuse of these programs by individuals with ulterior motives, protecting the EU from potential security threats, and even criminal activities. Standardised regulations would enhance transparency and make the process of obtaining EU citizenship more equitable and merit-based.?

Additionally, the ban may address concerns about social inequality by ensuring that citizenship is not solely available to the wealthy. Having EU citizenship is highly beneficial, especially for business owners. It allows people access to the Schengen Area, the right to vote, move and trade freely. This privilege should be protected.?

However, the ban could also have some negative consequences. By closing the door to citizenship through investment, member states may lose out on potential foreign investments that could contribute to their economies. Furthermore, some argue that citizenship programs, when appropriately regulated, can attract foreign talent, entrepreneurs, and investors who can bring significant economic benefits and contribute to innovation and job creation within the EU.