An IMGW News Report
In this exclusive IMGW interview, Ray de Bono, Editor-in-Chief of IMGW News, spoke with Dr Niklas J.R.M. Schmidt, a renowned immigration and citizenship expert based in Austria, to discuss the European Commission’s case against Malta’s Citizenship by Investment (CBI) Programme. The verdict on the case, which follows the Advocate General’s non-binding opinion on October 3, 2024, recommending the dismissal of the case against Malta, is expected soon.
“I propose that the Court dismiss the Commission’s action and order the Commission to pay its costs, as well as those of the Republic of Malta.”
– The Advocate General (Court of Justice of the European Union, Luxembourg, October 3, 2024).
The Advocate General acknowledged that while granting nationality by a Member State automatically confers EU citizenship and rights, the decision on who qualifies for national citizenship remains solely within the competence of Member States, in line with the principle of conferral, which restricts EU law to areas where authority has been explicitly granted by Member States.
The Interview
In the following Q&A session, Dr Schmidt discussed the European Commission’s infringement case against Malta’s citizenship-by-investment programme. He criticised the Commission’s intervention, stressing that nationality laws are the exclusive competence of member states. Dr. Schmidt warned that a ruling in favour of the Commission could set a dangerous precedent, extending EU powers into other national areas such as taxation. He also stressed the importance of preserving the sovereignty of member states in setting citizenship criteria and advised policymakers to protect their rights in this domain.
Q.1. How do you assess the European Commission’s infringement case against Malta’s citizenship-by-investment programme?
💬 Dr Schmidt’s reply: “The European Commission’s infringement case against Malta represents an overreach into member state sovereignty. There’s no legal basis for EU intervention in citizenship matters – this is clearly a domain reserved for member states.”
Q.2. The Advocate General has recommended dismissing the case, reaffirming that nationality is an exclusive competence of member states. Do you expect the ECJ to follow this opinion?
💬 Dr Schmidt’s reply: “The Advocate General’s opinion correctly recognises member state sovereignty over nationality matters. Given the clear legal principles and lack of EU competency in this area, the ECJ should follow this recommendation. There’s simply no legal room for any other interpretation.”
Q.3. If the ECJ were to rule in favour of the European Commission, what precedent would this set for other core national competencies, such as taxation or immigration?
💬 Dr Schmidt’s reply: “A pro-Commission ruling would set an extremely dangerous precedent. If the EU can intervene in citizenship matters without explicit treaty competency, other core sovereign powers like taxation could be next. This could lead to a gradual erosion of member state sovereignty.”
Q.4. Do you believe that the EU is shifting from a supranational organisation towards a more centralised federal structure? If so, what are the implications for member state sovereignty?
💬 Dr Schmidt’s reply: “This case exemplifies a concerning trend of EU institutional overreach. The EU exists solely through the will of its member states and should remain a supranational organisation. Attempts to expand EU competencies without treaty changes undermine this fundamental structure.”
Q.5. Some argue that EU citizenship should be more than just a secondary status derived from national citizenship. Do you see any legal basis for the EU to claim a more active role in determining citizenship rules?
💬 Dr Schmidt’s reply: “EU citizenship is and must remain strictly derivative of national citizenship. The treaties are clear on this – EU citizenship complements, but never replaces, national citizenship. There’s no legal basis for the EU to claim any direct role in determining citizenship rules.”
Q.6. Germany’s 2024 citizenship reform introduced value-based criteria for naturalisation. Could an ECJ ruling in favour of the Commission lead to EU-wide standards that override national preferences?
💬 Dr Schmidt’s reply: “Germany’s citizenship criteria demonstrate how naturalisation requirements reflect distinct national values and historical contexts. EU-wide standardisation would inappropriately override these legitimate national preferences and histories.”
Q.7. The concept of a ‘genuine link’ between an individual and a country has been a key argument in the case. Do you see this as a legitimate legal requirement, or is it merely an attempt to restrict national discretion?
💬 Dr Schmidt’s reply: Member states must retain full discretion over their citizenship criteria. While ’genuine links‘ may be relevant for individual states’ policies, this shouldn’t become a supranational requirement imposed by the EU.
Q.8. Could this case open the door for further EU interventions in nationality laws, such as requiring stricter anti-corruption or anti-money laundering measures in citizenship programmes?
💬 Dr Schmidt’s reply: Yes, this case could open a concerning precedent for EU intervention in nationality laws. While anti-corruption measures are important, they should be addressed through appropriate legal frameworks, not by expanding EU competencies beyond treaty limits.
Q.9. How might this case impact private clients seeking second citizenships, particularly high-net-worth individuals considering investment-based programmes?
💬 Dr Schmidt’s reply: This case creates significant uncertainty for citizenship planning. Any EU intervention in national citizenship programmes would fundamentally affect how such programmes operate and could restrict legitimate options for international mobility.
Q. 10. Many view the EU’s legal action against Malta as selective enforcement or even bullying. Germany naturalises 200,000 people annually, has invited millions of Syrians to move in, and other countries like Portugal and Spain (which is now shutting down its Golden Visa programme) have far larger migration and citizenship numbers. Meanwhile, Malta’s due diligence process is stringent. Why do you think Malta was singled out?
💬 Dr Schmidt’s reply: “The targeting of Malta appears selective and disproportionate. When Germany naturalises more people in three years than Malta’s entire population, questioning Malta’s relatively small programme seems politically motivated rather than legally justified.”
Q. 11. What advice would you give to policymakers in EU member states regarding their approach to nationality laws in light of this case?
💬 Dr Schmidt’s reply: “Member states should actively defend their sovereign competency over citizenship matters. This isn’t just about investment migration – it’s about preserving fundamental state powers and the proper constitutional structure of the EU.”
IMGW’s Editorial Comment
As the European Commission’s case against Malta’s Citizenship by Investment (CBI) programme nears its much-anticipated verdict, Dr Schmidt’s insights highlight a pivotal moment for national sovereignty within the EU. He warns that EU overreach in nationality matters could set dangerous precedents, potentially extending into core areas like taxation. For policymakers, the message is clear: defending member states’ authority over citizenship laws is essential not only for investment migration but also for preserving the EU’s balance of power. Meanwhile, investment migration professionals worldwide, concerned about the fallout if Malta loses the case, are growing increasingly anxious about the next steps. A win for Malta, however, could pave the way for a surge in new programmes. Nonetheless, with recent developments in France and Germany, the future direction of the EU’s approach to Investment Migration remains uncertain.
About Dr. Niklas Schmidt
Dr Schmidt is a partner at the Vienna office of Wolf Theiss, one of the leading law firms in the CEE/SEE region, advising HNWIs and family offices on tax, immigration, and citizenship matters. Prior to joining the firm in 2000, he worked for several years at a ’Big Four‘ accounting firm and as a research assistant at the University of Vienna. A frequent international speaker and visiting lecturer, Dr Schmidt has authored several books and holds leadership positions in various global organisations, including the International Bar Association (IBA). He has also been instrumental in organising private wealth-related conferences in London.
