European Parliament position

Since 2014, the European Parliament has expressed its concern regarding CBI and RBI schemes on numerous occasions and called for their termination. The Committee on Civil Liberties, Justice and Home Affairs (LIBE) adopted a legislative-initiative report on 15 February 2022, which considers that insufficient progress has been made on the issue and that concrete action is needed. Demanding that the Commission submit a proposal by the end of this mandate to phase out CBI schemes completely, on the basis of Articles 21(2), 79(2), 114 and 352 of the Treaty on the Functioning of the European Union (TFEU), the report also calls on the Commission to propose a regulation, possibly based on Articles 79(2) 80, 82, 87 and 114 TFEU, to govern various aspects of RBI schemes with the aim of harmonising standards and procedures. The LIBE report also calls on the Commission to submit certain proposals as early as in 2022. These include: (1) a proposal, on the basis of Article 311 TFEU, for the establishment of a new category of EU own resources consisting of a 'CBI and RBI adjustment mechanism'; (2) a proposal, on the basis of Articles 79(2) 80, 82, 87 and 114 TFEU, for an act that would include EU-level rules on types of investment under RBI schemes, in order to strengthen their added value to the real economy and provide links to the EU's economic recovery priorities; and (3) on the basis of Article 77(2)(a) TFEU, a proposal for an act to amend Regulation (EU) 2018/1806, requiring the absence of CBI schemes in third countries with visa-free access. The resolution also reminds the Commission President of her commitment to Parliament's right of initiative and of her pledge to follow up on Parliament's legislative-initiative reports with proposals for legislative acts.

European Commission Response

On 28 March 2022, the European Commission issued a recommendation urging Member States to immediately repeal any existing investor citizenship schemes and to ensure strong checks are in place to address the risks posed by investor residence schemes. The Commission also recommended that where a person concerned:

• is or becomes subject to EU restrictive measures, or
• where it is otherwise determined that the person concerned significantly supports, by any means, the war in Ukraine or other related activities of the Russian government or the Lukashenko regime that breach international law, 

the Member State concerned should immediately assess, in accordance with the principles resulting from the case law of the Court of Justice of the European Union (C-135/08 Rottmann, C-221/17 Tjebbes), including the principle of proportionality and the protection of fundamental rights, whether naturalisation should be withdrawn from these individuals. Equally, where such a person had acquired a residence permit on the basis of an RBI scheme, the Commission recommended that such a residence permit should be withdrawn or not renewed. Member States were also asked to report on the implementation of the recommendation by the end of May, and to keep the Commission informed on a regular basis from May onwards.

On 6 April 2022, the European Commission sent a reasoned opinion to Malta (INFR(2020)2301) regarding its investor citizenship scheme. This is the final stage before the infringement procedure would be referred to the Court of Justice. The Commission considered that the granting of EU citizenship in return for predetermined payments or investments, without any 'genuine link' to the Member State concerned, was in breach of EU law.

In its proposal of 27 April 2022 concerning the Long-term Residence Directive, while not referring to the Resolution, it was considered that to prevent the risk of abusive acquisition of EU long-term resident status, Member States should ensure that the requirement of legal and continuous residence is duly monitored for all categories of third-country nationals. This risk is particularly relevant for those third-country nationals who hold a residence permit granted on the basis of any kind of investment in a Member State, as the issue of these residence permits is not always subject to the requirement of continuous physical presence in the Member State or is merely subject to the requirement of the investors’ presence in the Member State for a limited time. To prevent this risk, Member States should strengthen checks on the requirement of legal and continuous residence with particular regard to applications for EU long-term resident status submitted by third-country nationals who reside in a Member State in exchange of any kind of investment, such as capital transfers, purchase or renting of property, investment in government bonds, investment in corporate entities, donation or endowment of an activity contributing to the public good and contributions to the state budget.

References

• European Parliament, European Parliament resolution of 9 March 2022 with proposals to the Commission on citizenship and residence by investment schemes (2021/2026(INL))
• European Commission, Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning the status of third-country nationals who are long-term residents (recast), COM/2022/650 final
• European Commission, Commission Recommendation of 28.3.2022 on immediate steps in the context of the Russian invasion of Ukraine in relation to investor citizenship schemes and investor residence schemes, C(2022) 2028 final
  
• EPRS, Avenues for EU action on citizenship and residence by investment schemes - European Added Value Assessment, 2021
• LIBE subject file Citizenship and residence by investment schemes

Further reading

• EPRS, Citizenship and residence by investment schemes, Plenary at a glance briefing, March 2022
• EPRS, Russia's war on Ukraine: Reassessing 'citizenship by investment' schemes, At a Glance, April 2022

Author: David de Groot, Members' Research Service, legislative-train@europarl.europa.eu