Commission seeks to clamp down on ‘golden passport’ schemes

Move comes amid concerns over tax evasion and money laundering

European commissioner Vera Jourova said people obtaining EU nationality should need to have a genuine connection to the member state. Photograph: Reuters

European commissioner Vera Jourova said people obtaining EU nationality should need to have a genuine connection to the member state. Photograph: Reuters

 

The European Commission is seeking to clamp down on “golden passports” and “golden residence” cash-for-visa investor schemes run by EU member states. The move comes in response to significant concerns about tax evasion and money laundering.

The Republic is one of 20 EU states that offer residence rights in return for investment. Its scheme is currently under review and in recent years the level of vetting of applicants has increased. The State now does not allow applications from those who borrow to invest.

The commission is particularly concerned about the three states which offer citizenship in return for investment – Cyprus, Malta, and Bulgaria – warning that their schemes also represent a “weak link” in EU security. (Bulgaria announced on Wednesday that it is discontinuing its scheme.)

Citizenship rights allow unrestricted travel and residence within the rest of the EU and some valuable rights to access elements of the single market.

In the last 10 years, EU states have granted citizenship to about 6,000 people under the investor schemes – some 0.1 per cent of EU naturalisations – and residence permits to a further 100,000, typically in exchange for investments in government bonds and property.

The Irish Immigrant Investor Programme provides a range of investment options which allows third-country investors and their immediate family enter the State on multi-entry visas and remain here for up to five years with the possibility of ongoing renewal.

In the past three years there has been a significant rise in the numbers of successful applications granted – 320 in 2018 – over 95 per cent of which have been taken up by Chinese investors.

The scheme is said to have brought some €500 million into the country in the last six years although critics wonder if the cash is simply displacing locally available funds.

European commissioner for Justice, Vera Jourova, who ordered the report, said that in future, people obtaining EU nationality should need to have a genuine connection to the member state. The Republic, for example, requires only a one-day residency in the country to qualify.

“We want more transparency on how nationalities are granted and more cooperation between member states,” she said. “There should be no weak link in the EU, where people could shop around for the most lenient scheme.”

The commission is constrained in what it can do because member states have the absolute prerogative to grant citizenship and residence, although they have obligations under the Schengen Information System database – Ireland included – to vet those who may seek the right to travel and to inform fellow member states of their status.

Tighten up

The commission is appealing to member states to tighten up on their procedures and to be more transparent about who they are giving rights to.

The schemes available around the EU have thresholds for investment that vary from €400,000 to €5 million and offer residency rights from four to ten years.

The commissioner for migration, home affairs and citizenship Dimitris Avramopoulos told journalists on Wednesday that he did not like to see wealthy people bypassing Schengen.

“Legally residing in the EU and in the Schengen area comes with rights and privileges that should not be abused. Member states must at all times fully respect and apply existing obligatory checks and balances - and national investor residence schemes should not be exempt from that.

“The work we have done together over the past years in terms of increasing security, strengthening our borders, and closing information gaps should not be jeopardised. We will monitor full compliance with EU law.”