The CJEU ruling in context
The CJEU found that Malta's 2020 investor citizenship scheme infringed EU law because it:
- Commercialized access to EU citizenship, undermining the notion of a genuine link between the individual and the member state.
- Violated the principle of sincere cooperation (Article 4(3) of the Treaty on European Union).
- Threatened mutual trust among member states, which is essential to the functioning of Union citizenship (Article 20 of the Treaty on the Functioning of the European Union).
Although member states remain competent to determine how nationality is granted, this competence must be exercised in accordance with EU law and its foundational principles. The judgment reinforces the view that EU citizenship cannot be treated as a tradable asset.
Luxembourg's residency by investment scheme
Current framework
Luxembourg introduced its investor residence permit in 2017 for third-country nationals seeking to relocate and invest in the Grand Duchy. Applicants may obtain residence by making one of the following qualifying investments:
- EUR 500,000 in an existing Luxembourg company.
- EUR 500,000 to set up and operate a new company based in Luxembourg.
- EUR 3 million in an existing or newly created investment fund established in Luxembourg.
- EUR 20 million placed in a Luxembourg financial institution for at least five years.
The program requires a clean criminal record, absence of Schengen alerts and residence in Luxembourg following permit approval. After five years of lawful residence, individuals may apply for Luxembourg nationality, subject to meeting integration conditions such as language proficiency and civic instruction.
Despite these options, the scheme has seen very limited uptake — only around 15 permits granted over a seven-year period.
What's changing? Political signals and EU pressure
While no draft legislation has been introduced to repeal the investor program, Luxembourg's government has publicly confirmed that discussions are underway regarding its potential abolition. This policy reevaluation appears to align with increasing EU scrutiny of residency and citizenship schemes perceived as undermining the integrity of EU law.
Potential implications for Luxembourg's scheme
The CJEU's reasoning in Commission v. Malta, although focused on nationality, may extend in spirit to investment-based residency programs that:
- Lack meaningful integration requirements or create a de facto fast track to citizenship.
- Are seen as commodifying access to long-term EU residence or rights.
- Do not ensure a genuine link — economic, cultural, or social — between the investor and the host member state.
Luxembourg may therefore face the following consequences:
- Increased EU scrutiny, particularly if the scheme is viewed as a stepping-stone to naturalization without substantive integration.
- Risk of infringement proceedings, should the scheme be deemed incompatible with EU principles by the Commission.
- Political momentum for reform, with Luxembourg possibly phasing out the program preemptively to avoid reputational or legal exposure.
