There is an uncomfortable question at the heart of the citizenship-by-investment industry: Is citizenship a product, or is citizenship public policy?
For the investment migration industry, the distinction is fundamental. For governments, it may determine whether these programmes have a future.
Citizenship Is Different
Residence and citizenship are not the same thing.
A residence programme gives an individual the right to live in a particular country, subject to the terms of the programme. Citizenship is different. It creates a permanent legal relationship between an individual and a state and, when that state is a member of the European Union, it also creates EU citizenship. The consequences therefore extend beyond the country issuing the passport.
An EU citizen has rights connected with free movement, residence and work throughout the Union. Every national of a Member State is simultaneously a citizen of the European Union, which is one of the principal reasons the European Commission has taken a considerably harder position on investor citizenship than on investor residence.
That distinction has become increasingly important as European governments have reconsidered the relationship between capital, residence and nationality. As I argued in Investment Migration Is No Longer Just About a Passport, the investor increasingly sees mobility as part of a broader wealth strategy rather than as a simple search for another passport.
The Golden Passport Problem
The expression “golden passport” has become politically toxic.
It suggests that citizenship is simply something that can be purchased: pay a predetermined amount, make a qualifying investment, complete the paperwork and receive the passport.
From an investment migration perspective, the reality is more complicated.
Governments can legitimately decide that attracting wealthy investors is in their national interest. Investors can legitimately decide that a second citizenship provides value. The difficult question is whether there is a sufficient connection between the investor and the country granting the citizenship.
That is precisely where the European debate has moved.
The European Commission had already identified concerns surrounding investor citizenship and residence schemes relating to security, money laundering, tax evasion and corruption, while calling for greater transparency and effective, independent oversight.
Malta Became the Test Case
Malta is now at the centre of this debate.
The European Commission had been challenging Malta’s investor citizenship scheme since 2020. In September 2022, it decided to refer Malta to the Court of Justice of the European Union, arguing that granting EU citizenship in return for predetermined payments or investments, without a genuine link to the Member State, was incompatible with the principle of sincere cooperation and the concept of Union citizenship. The Commission subsequently lodged its application with the Court in March 2023. See European Commission: Investor Citizenship Scheme — Commission Refers Malta to the Court of Justice.
This was an important escalation. The issue was no longer simply whether a particular national programme was politically desirable. It had become a question about the relationship between national citizenship and European citizenship.
Why Does the EU Care?
The argument from Brussels is straightforward.
Every citizen of Malta is also an EU citizen. Every EU citizen has rights that extend beyond Malta. Therefore, the consequences of Malta granting citizenship are not limited to Malta.
A residence permit issued by one country does not make the holder a citizen of the European Union. A passport does.
The distinction is fundamental.
The Commission itself explained in September 2022 that EU citizenship automatically gives individuals rights including free movement and access to the EU internal market. It therefore regarded investor citizenship as materially different from investor residence.
This is also why the European debate should not be reduced to a simple argument about whether wealthy individuals should be allowed to acquire a second nationality. The deeper question is whether one Member State can effectively create access to a broader European legal status through a predetermined financial transaction.
But There Is Another Side
There is also a legitimate argument on the other side.
Nationality remains fundamentally connected to the sovereignty of individual states. Countries have historically had broad discretion over who can become their citizens. Citizenship has been granted for many reasons: family connection, birth, naturalisation, marriage, exceptional contribution, military service, long-term residence and economic contribution.
There is nothing inherently unusual about a country deciding that significant economic contribution can form part of its nationality policy.
The controversy arises when the economic contribution becomes essentially a price tag.
The Difference Between Contribution and Purchase
This distinction may ultimately determine the future of the industry.
There is a significant difference between:
“Invest €X and receive citizenship.”
and:
“Make a substantial contribution to the country, establish a genuine connection and satisfy a demanding naturalisation process.”
The first looks transactional. The second looks like public policy.
That distinction matters enormously.
The European Commission’s objection to investor citizenship has increasingly centred on precisely this problem: the absence of a genuine link between the investor and the Member State and the use of predetermined payments or investments as the basis for nationality.
Investment Migration Has Always Been About More Than Money
The strongest investment migration programmes are not simply capital-raising mechanisms. They are policy instruments.
A government may want foreign direct investment, entrepreneurs, new businesses, employment, investment into strategic sectors, philanthropic contributions, development capital, innovation or international networks.
Citizenship or residence can then become an incentive for achieving those objectives.
This is a much more defensible proposition than simply selling a passport.
It is also consistent with the broader evolution of investment migration. Portugal’s experience is instructive. Its Golden Visa had become one of Europe’s most successful programmes, but political pressure increasingly focused on the relationship between property investment, housing and the country’s wider economic objectives. See Portugal’s Golden Visa: When Success Becomes a Problem.
The lesson is broader than Portugal. Governments increasingly want to be able to explain not merely how much capital a programme attracts, but what that capital actually does.
The European Commission Has Drawn the Line
The Commission’s position had already become clear by 2022.
In March 2022, following Russia’s invasion of Ukraine, the Commission urged Member States to repeal existing investor citizenship schemes and to strengthen checks on investor residence schemes. It specifically distinguished citizenship schemes from residence schemes while arguing that both required stronger scrutiny. See European Commission: Commission urges Member States to act on ‘golden passports’ and ‘golden residence permits’ schemes.
The message was unusually direct. The Commission argued that investor citizenship schemes posed risks to security, money laundering, tax evasion and corruption, and that the sale of citizenship raised particular concerns because nationality in a Member State automatically carries EU citizenship.
The political environment had therefore changed dramatically.
Cyprus Had Already Learned the Lesson
Cyprus provides another important example.
The country terminated its investor citizenship programme for new applications on November 1, 2020 after coming under scrutiny from the European Commission. The Commission had launched infringement proceedings against Cyprus in October 2020 and subsequently issued a reasoned opinion in June 2021 concerning the continued processing of pending applications. Cyprus completed the examination of those pending applications in July 2021.
The lesson for other countries was clear. An EU Member State could no longer assume that an investor citizenship programme would be treated purely as a domestic matter.
The Industry Has a Choice
This creates a strategic choice for the investment migration industry. It can continue presenting citizenship as a financial product, or it can reposition itself around economic contribution and public policy.
I believe the second model has a much better future.
The industry should not be asking:
“How much does a passport cost?”
It should be asking:
“What does the country want the investor to contribute?”
That is a much more sustainable proposition.
It also changes the nature of the professional adviser. The adviser is no longer simply selling access to a programme. The adviser is helping structure a cross-border investment and mobility strategy in which immigration status is only one component.
The Investor Also Wants More
There is another reason this matters.
The sophisticated investor is not necessarily looking simply for a passport.
They may want mobility, security, political optionality, access to markets, education, business opportunities, family protection, succession planning, tax flexibility or a long-term alternative residence.
Citizenship is only one part of the equation.
This is why the investment migration market is increasingly moving toward a broader concept of wealth mobility.
The investor is not necessarily asking, “Where can I buy citizenship?” The more sophisticated question is, “Where should my family have options?”
That is a fundamentally different proposition.
Citizenship as an Option
For a wealthy family, a second citizenship can be extremely valuable.
It can provide an additional layer of security, an alternative jurisdiction, access to a different legal and political environment, greater international mobility and options for future generations.
But these benefits do not necessarily require citizenship to be treated as a commodity.
The value is precisely that citizenship is a long-term relationship.
This is one reason why The New Geography of Wealth remains relevant to the investment migration debate. Wealth is becoming increasingly mobile, but mobility is not simply about passports. It is about where capital, families, businesses and future opportunities can be positioned.
The Public Policy Test
Perhaps every citizenship-by-investment programme should therefore be judged against five questions.
What does the country receive?
What does the investor receive?
Is there a genuine connection?
Is the economic contribution measurable?
Would the programme still make sense if the passport itself had no monetary value?
That last question is particularly revealing.
If the answer is no, the programme may simply be selling citizenship.
If the answer is yes, it may actually be pursuing an economic policy.
This is also where the distinction between citizenship and residence becomes critical. The Commission’s March 2022 recommendation acknowledged that residence-by-investment remained a national competence, even while calling for much stronger security and compliance controls.
This Is Where Funds Become Interesting
There is a potentially important evolution here.
Instead of requiring investors to make fragmented individual investments, a country could establish qualifying investment vehicles directed towards national economic priorities.
A fund could invest in businesses, infrastructure, technology, real estate development, renewable energy, private equity or other strategic industries.
The investor receives a qualifying investment opportunity. The country receives professionally managed capital. The investment can potentially be directed toward identifiable economic objectives and its impact can be measured.
That is a much stronger public-policy argument.
It is also consistent with the direction in which investment migration was already moving. Why Investment Funds Are Replacing Real Estate in Migration Programmes examines why professionally managed investment structures can become more attractive as governments move away from passive property-based models.
The Difference Between a Fund and a Donation
There is also an important distinction between investment and contribution.
A donation is money given away. An investment is capital deployed with an expectation of economic return.
For investors, that distinction matters enormously.
A wealthy individual may be prepared to invest €1 million in a professionally managed fund if there is a credible investment thesis, appropriate governance and a reasonable prospect of financial return. They may be much less interested in simply writing a cheque to a government.
That means the investment migration industry has an opportunity to move from selling access to structuring investment.
The difference is not merely semantic. It changes the proposition from an immigration transaction into an investment strategy with an immigration component.
The Next Generation of Programmes
I expect investment migration programmes to become more sophisticated.
The weakest programmes will be increasingly difficult to defend. Programmes based primarily on passive residential property purchases will face greater political scrutiny. Programmes that appear to sell citizenship for a fixed price will face even greater scrutiny.
But programmes that generate genuine economic value may remain viable.
That means investment migration could evolve from an immigration product into a form of economic policy.
The same question is increasingly visible in residence programmes. Portugal’s decision to move away from real-estate-based Golden Visa investment was an early indication that governments were beginning to ask whether the capital attracted by an investment migration programme was producing the economic outcomes they actually wanted.
The European Union Is Forcing the Issue
The EU has effectively forced governments to confront the distinction.
Residence by investment remains primarily a national competence, although the Commission has raised concerns about security, money laundering, tax evasion and corruption.
Citizenship is more complicated because it automatically carries EU citizenship with it.
The Commission’s 2022 position was that existing investor citizenship schemes should be repealed, while investor residence schemes should be subject to strong checks. The distinction is important because it suggests that Europe may tolerate investment migration, but increasingly wants investment migration to be connected to genuine economic and personal substance. See European Commission: Commission urges Member States to act on ‘golden passports’ and ‘golden residence permits’ schemes.
That does not necessarily mean the end of investment migration. It means the standard for legitimacy is changing.
What Happens to the Passport?
The passport itself is therefore becoming less important.
The real product is optionality: the ability to live somewhere else, invest somewhere else, educate children somewhere else, establish a business somewhere else, protect family wealth across jurisdictions and respond if political or economic circumstances change.
Citizenship can be part of that strategy.
But it is not necessarily the whole strategy.
This is ultimately why investment migration should be viewed as part of a broader wealth-management and jurisdictional strategy rather than as a stand-alone immigration product.
The Future Is Not Necessarily the End of Investment Migration
There is a temptation to conclude that the political attack on Golden Passports means the end of investment migration.
I do not think that is correct.
It may instead mark the end of a particular type of investment migration.
The transactional model is under pressure. The policy-driven model has considerably more room to evolve.
That could mean fewer programmes, higher standards, greater due diligence, more substantial investments, more genuine residence requirements, greater economic substance and potentially greater emphasis on productive investment.
The industry may therefore become smaller, but more institutional.
That may ultimately be a positive development.
Product or Public Policy?
That brings us back to the original question.
Is citizenship a product?
For an investor, it can certainly have economic value.
But for a government, citizenship is something fundamentally different.
It is a public institution.
That is why governments that want to attract wealthy investors need to be careful about how they structure and market these programmes.
The strongest proposition is not:
“Buy a passport.”
It is:
“Make a meaningful investment in our country, establish a genuine connection and become part of our economic future.”
That is a very different proposition.
And it may be the only version of investment citizenship that can survive the political scrutiny now emerging across Europe.